Buyers win after developer tries to raise price at closing by $60,000

FAST HITS

• The developer’s attempt to add nearly $60,000 in additional costs beyond the APS terms was determined to be a breach of contract.
• Courts have ruled that sellers must provide clear documentation and justification for any additional costs stated in the adjustment statements.
• Because the seller had breached the APS, buyers were entitled to recover their deposit and upgrade payments
• Because the buyers took possession of the property for at least a year, the buyers were found responsible for paying fees totaling $68,000 to compensate the seller for the time they lived there.

In lawsuits arising from disputed real estate transactions, courts are often confronted with circumstances in which a buyer attempts to close for less than the agreed sales price.

In many cases where a buyer attempts to close for less than the price agreed upon by the parties, the buyer is the party in default and the seller has the right to retain the deposit paid, in addition to seeking other damages from the buyer.

However, in some cases, failure to close may be due to additional unexpected costs imposed by the seller on top of the originally agreed upon price. A seller’s demand for more than the agreed purchase price is just as much a defect as a buyer’s demand to pay less. Whether or not such charges are permitted is generally determined by the wording of the Purchase and Sale Agreement (APS) between the parties.

Taheripouresfahani v Dormer Bond Inc., 2025 ONSC 5833 (CanLII) arose from a dispute between the buyers and the developer/seller of a new construction home in Richmond Hill, Ont.

The purchase and disputed costs

In 2020, the buyers entered into an APS with the developer to purchase the property for $761,490. The buyers paid installments of more than $114,000 as a down payment and $11,540 for additional upgrades. The final closing date had to be determined by the developer’s lawyer with at least 14 days’ notice.

Under the terms of the APS, the buyers were allowed to occupy the property prior to the closing date once occupancy was permitted. In April 2023, the buyers moved into the property as permitted and began making monthly occupancy payments of $3,782.

On July 31, 2023, the developer filed a notice with a closing date of September 15, 2023.

On September 7, 2023, the developer provided a Statement of Adjustment to the buyer’s attorney, which included additional costs totaling nearly $60,000. The costs would relate to:

• Development costs/increased levies: $8,000 plus HST
• Meters (hydro/gas): $8,163 plus HST
• Seller’s legal and administrative fees: $8,605 plus HST
• Alternate Materials Cost: $27,021.08 plus HST

A flurry of correspondence ensued between the lawyers as to whether or not the charges were permissible under the APS. The developer offered to reduce some of the costs, but demanded a mutual release in return. The buyers refused and demanded that all additional charges be removed. The transaction was not completed by the closing date of September 15, 2023, but the lawyers continued to exchange correspondence over the following days regarding the breakdown of adjustments and additional costs.

On September 26, 2023, the developer’s lawyer confirmed that the transaction had ended. The developer demanded that the buyers vacate the property.

Court finds sellers in violation

A lawsuit followed, with each party demanding summary judgment.

The motion judge noted that a buyer is generally entitled to proof of figures included in an adjustment statement: Bellisary and v. 2200 Busgrove Development Inc., 2025 ONSC 2546at paragraph 61.

The motion judge further noted that the APS specifically stated that the balance due at closing would be adjusted to include “any development, education, park or other fees or levies or taxes imposed by the governmental authorities.” Therefore, although the $8,000 development cost may have been allowed by the APS, the developer had an obligation to explain how the cost was calculated. The developer had not provided any evidence to substantiate the accusation, referring only to an unexplained ‘formula’ used by the municipality.

In addition, although the APS allowed adjustments for the costs of installing hydro and gas meters, the developer did not provide any documents to the buyers or the court on the request to demonstrate how the amounts were determined.

A similar problem arose with regard to legal and administrative costs. Although the APS provided that such fees could be added to the adjustment schedule under specific conditions relating to NSF or “stop payment” checks, they did not apply in this case.

Finally, the motion judge found that the APS did not include any of the “alternative material costs” charges and that there was no evidence to support the amount charged by the developer.

The motion judge concluded that it was not the buyers who violated the APS, but the developer who attempted to close for more than the agreed upon price in the APS by adding approximately $60,000 in fees that were either unwarranted or unauthorized. The developer’s attempt to claim any of these charges was a violation of the APS.

As a matter of law, the motion judge determined that the demand for additional payment as a condition of closing was an anticipatory breach of contract, based on the principles discussed by the Court of Appeal for Ontario in Spirent Communications of Ottawa Limited v Quake Technologies (Canada) Inc., ONCA92 from 2008at paragraph 37.

The movement judge decided that buyers were therefore entitled to a refund of their deposit and amounts paid for upgrades to the property.

Occupancy and financial responsibility of the buyer

While that outcome would normally have determined the dispute, the case was unusual due to the fact that the buyers took possession of the property in April 2023 and lived in it for at least a year thereafter. At the time of the hearing in 2025, they still had furniture in the property and continued to pay for internet and security cameras. The buyers also refused to consent to an order of possession in favor of the developer. The motion judge ruled that the buyers’ refusal to pay the developer for their possession of the property was an untenable position.

The result showed that the buyers were responsible for monthly occupancy of $3,782 until the date of the decision in October 2025 (totaling $68,076), as well as reimbursement of property taxes of $6,586.56 paid by the developer during that period and unpaid condominium fees of $3,882.

The costs of the lawsuit based on the apportioned success of the summary judgments must be determined.

The decision shows that sellers wishing to impose additional charges on top of the agreed purchase price will be required to substantiate such charges in the specific terms of the APS and will be required to provide satisfactory backup documentation to substantiate the charges. Buyers who take possession of a property prior to closing should be prepared to compensate a seller for the time spent in possession of the property before it is resold to another buyer.