Damages Awarded When Prospective Buyers Failed to Complete the Sale of Their Home #18

By Gerry Neely
B.A. LL.B.

Two commissions paid but only one completed sale, and damages awarded of $43,588.98, all arising from the failure of prospective purchasers to complete the sale of their own home. The unfortunate prospective purchasers made an unconditional offer to purchase Horton's house, expecting to receive funds from the sale of their home. That did not occur, leaving the purchasers no alternative but to advise Horton that they could not complete their purchase of his house on July 15th, 1981, for $152,000.00 cash. Horton re-listed his property for sale in late July at $142,000.00, but because of the weak market conditions prevailing in Victoria in the second half of 1982, it was not until February 9th, 1982, that Horton received $125,000.000 upon the re-sale of his home. Horton sued and the Court held that there was a binding contract of purchase and sale between the parties which the purchasers had repudiated. Horton was entitled to the following damages:

Loss on Resale was fixed at $24,000.00, the difference between the price which should have been paid on July 15th, 1981, namely $152,000.00, less the sum of $125,000.00, less the deposit of $3,000.00 paid to the real estate agent.

Interest of $16,457.64 for the interest lost by Horton on the purchase price that he should have received on July 15th, 1981. This calculation was based on rates set for Court Order interest.

Loss of Second Commission was fixed at $5,545.00. The Hortons had entered into the usual Victoria Real Estate Board Multiple Listing contract, which provides that the commission is payable upon "a binding contract of sale/exchange of the said property being entered into during the said period". The Court having held that a binding contract of sale had existed, the real estate agent who had the first listing, was entitled to his commission. The repudiation having forced Horton to re-list his property, the measure of his damages included the commission he had to pay upon the re-sale of his property.

Municipal Taxes - $863.98.

Insurance - $173.00.

Total - $47,038.98.

Deducted from this amount was the sum of $3,500.00, an amount equal to five months' rental which might have been earned at the rate of $700.00 per month had Horton attempted to mitigate his damages by renting his home for at least five of the seven months it was vacant. The Hortons had moved into their new home one week before they expected to give possession to the prospective purchasers on July 15th, 1981. The Court agreed that they could not realistically be expected to move back in to mitigate their damages, but seven months vacancy seemed unreasonable. This, in spite of evidence by Horton of advice from his counsel to leave it empty because it would probably take three months to get an interim tenant out if an offer were accepted from a purchaser who wanted possession. Undoubtedly, the advice was good when given because no one expected it to take seven months to find a purchaser.

The plaintiff had tried to claim a larger amount of interest paid by the plaintiff for interim financing arranged before the first listing of the property was given. The purpose of the interim financing was to cover the financing needed on the property they intended to sell and on their newly purchased home. The Court held that since the defendants in the action were not aware of Horton's financial arrangements, they should not be required to reimburse Horton for the unforeseeable (by the defendants) extra interest charges which Horton had to pay.

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