2 weeks Ago By Bob Aaron Special to the Star
In the world of residential real estate transactions, it is not uncommon for parties to schedule a purchase and sale on the same day, so that the proceeds of the sale of one house can be used for the purchase of the next one. But the process carries some risks if everything does not go smoothly. That’s what happened in Brampton three years ago.
On April 1, 2021, Andrea Bonner, her mother Maureen Bonner and her grandmother Fredericka Williams signed a contract to buy a house on Emerald Coast Trail. They planned to live in the house together. Eleven days later Andrea Bonner agreed to sell her house on Crystal Glen Cr.
The sale proceeds would be applied toward the Emerald Coast purchase. On April 17, 2021, Maureen Bonner and Fredericka Williams agreed to sell their house on Muirland Cr. to four members of the Gill family — Sukhpal, Amandeep, Jagdeep and Kamaljit.
The proceeds of that sale would also be applied toward the Emerald Coast purchase. All three transactions were set to close May 17, 2021. The Gill buyers did not know that the funds were needed for the Emerald purchase.
At 1:54 p.m. on the day of closing, the Gills advised the sellers that the funds from their mortgage lender would be delayed, and that they needed a two-day extension of closing.
The Bonners and Williams in turn informed the seller of Emerald Coast that they had not received the sale proceeds of Muirland and needed a two-day extension as they could not close. The sellers of Emerald Coast demanded an additional $75,000 for the extension. The Bonners and Williams, in turn, asked the defaulting Gill purchasers to reimburse them for the $75,000.
All three deals closed on May 19. The Bonners and Williams paid the extra $75,000 to the sellers of Emerald Coast, but the Gills did not pay the $75,000. The Bonners and Williams reserved the right to claim the additional $75,000 from them.
After closing the Bonners and Williams sued the Gills for damages of $75,000 for breach of contract — not being ready on closing. The dispute was heard without a full trial before Justice Roger Chown, who released his decision this past June. The Gills conceded liability for failing to close, but disputed the amount of the damages.
In his ruling, the judge wrote that it was reasonably foreseeable that sellers in the Bonners’ position might rely on the proceeds of sale to meet their contractual obligations on another house, and, if deprived of those moneys, they would default on their purchase. In awarding the plaintiffs the full $75,000 against the Gills, the judge noted that “it is not unreasonable for parties to real estate deals to co-ordinate closing dates on more than one deal. This allows parties to avoid expenses such as bridge financing, short-term accommodation, storage costs, and extra moving costs.
” It’s always best to have a plan B — such as backup financing — if something goes wrong on two same-day transactions..
