Real estate litigation covers disputes arising from failed purchase and sale transactions, mortgage default and power of sale proceedings, and title or easement conflicts. Buyers and sellers who breach an agreement of purchase and sale can face damages claims or, in some cases, an order for specific performance forcing the deal to close. Lenders enforcing a mortgage in default must generally follow the Mortgages Act notice requirements before a power of sale can proceed.
- A collapsed real estate deal can lead to a damages claim, or in limited cases an order for specific performance forcing the sale to close, since real property is treated as legally unique.
- A deposit paid on an agreement of purchase and sale is not automatically forfeited or automatically refundable — it depends on the terms and who breached.
- Lenders pursuing power of sale must generally give the borrower a statutory notice period before proceeding, under Ontario's Mortgages Act.
- Title disputes — easements, boundary conflicts, and competing claims — can cloud a property's marketability and delay a sale or refinancing.
- Real estate litigation often runs on a tight timeline, especially where closings, financing deadlines, or power of sale proceedings are already underway.
- Professional negligence by a real estate agent, lawyer, or lender can sometimes form part of a real estate litigation claim.
When a Real Estate Deal Falls Apart
Agreements of purchase and sale are binding contracts, and a party who breaches — failing to close without a legally valid reason — can face real financial consequences. Because courts treat real property as legally unique, a wronged buyer can, in the right circumstances, seek specific performance — an order forcing the sale to actually close — rather than settling for money damages alone. More commonly, however, the remedy is damages: the difference between the contract price and the property's value on resale, plus provable carrying costs and other losses. These principles closely track our general guide to breach of contract remedies.
Deposits — Forfeited or Refundable?
Whether a deposit is forfeited to the seller or must be returned to the buyer depends on the specific agreement and who breached. A buyer who backs out without a valid contractual escape hatch (such as a financing or inspection condition) typically forfeits the deposit and can remain liable for further losses beyond it. A seller who improperly refuses to close, by contrast, is typically required to return the deposit and may face additional damages.
Whether a deal legitimately fell through — versus a party simply changing their mind — often comes down to whether a financing, inspection, or other condition was properly and timely exercised.
Mortgage Default & Power of Sale
When a borrower defaults, Ontario lenders commonly use power of sale — a faster alternative to judicial foreclosure that lets the lender sell the property after giving the borrower a statutory notice period under the Mortgages Act to cure the default. Borrowers facing a power of sale notice have options, including curing the arrears, negotiating a forbearance arrangement, or in some cases challenging the process if the lender did not follow the required statutory steps.
Once a power of sale notice is issued, the timeline moves quickly. Getting legal advice immediately — not after the notice period has run — preserves the most options.
Title and Easement Disputes
Disputes over title — competing ownership claims, undisclosed easements, or boundary disagreements — can cloud a property's marketability and stall a pending sale or refinancing. These often require reviewing the chain of title and, where necessary, court intervention to clarify or correct the registered interests. Where the dispute is with an adjoining property owner specifically, see our related guide on neighbour disputes in Ontario.
A Toronto buyer discovers, just before closing, an undisclosed easement affecting a significant portion of the backyard. Depending on the agreement's terms, this may give the buyer grounds to negotiate a price reduction, seek other remedies, or in some cases walk away from the deal entirely.
How We Help
Real estate litigation often moves on tight, externally imposed timelines — a closing date, a financing deadline, or a power of sale notice period. We assess the urgency of your situation immediately, and where necessary, seek urgent relief such as an emergency injunction to preserve your position while the underlying dispute is resolved.
Call our Toronto real estate litigation lawyers at 416-274-2222 — especially if you are facing a tight deadline.
Frequently Asked Questions
You may be entitled to keep the deposit and sue for any additional losses, such as the difference if you had to sell at a lower price to a new buyer, plus carrying costs. In some circumstances, sellers can also seek specific performance, though damages are the more common remedy.
In limited circumstances, yes — courts have recognized that real property is legally unique, which can support an order for specific performance requiring the sale to close, rather than just paying damages. This remedy is not automatic and depends on the specific facts.
Power of sale is a lender's right to sell a mortgaged property after the borrower defaults, without going through full judicial foreclosure. Ontario's Mortgages Act generally requires the lender to give the borrower a statutory notice period before proceeding, giving the borrower a chance to cure the default.
Sometimes — by curing the default (paying the arrears), negotiating with the lender, or in some cases challenging the process if the lender did not follow the required statutory steps. Acting quickly is essential once a notice is received.
A title dispute involves competing claims or restrictions on a property's ownership rights — such as easement disputes, boundary disagreements, or challenges to how a prior transaction affected title. These can cloud a sale or refinancing until resolved.
It varies significantly — a deposit dispute may resolve in months, while a complex title or mortgage enforcement matter can take longer, particularly where urgent relief (such as an injunction to delay a closing or a power of sale) is needed first.