Written by: Dina Nikseresht
Clauses in Real Estate
The case of 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes)¹ dealt with a dispute over a real estate transaction that was terminated due to a late payment by the purchaser. The core of the disagreement arose when the purchaser, 3 Gill Homes Inc., failed to deliver the payment by the agreed-upon deadline, missing it by a mere 35 minutes. Despite the seemingly minor delay, the seller, 5009796 Ontario Inc. (operating as Kassar Homes), opted to enforce the “time is of the essence” clause contained within their contract, subsequently terminating the agreement.
The real estate contract specified a closing date, which was agreed upon by both parties, and included a clear stipulation that the purchase price must be paid no later than 3 PM on the closing date. Leading up to the closing date, the seller’s lawyer issued multiple reminders to the purchaser’s lawyer about the importance of meeting this deadline to receive funds. Despite these warnings and a denied request for an extension, the purchaser failed to comply, leading to the contract’s termination by the seller.
The Ontario Court of Appeal, in reviewing the case, supported the seller’s decision to terminate the agreement, emphasizing the contractual provision that deemed time a crucial element of the agreement. The court’s decision was informed by the clear language of the contract and the actions taken by both parties leading up to the failed transaction. This decision illustrates the court’s strict interpretation of “time is of the essence” clauses in real estate contracts, affirming that such clauses enforce the need for strict compliance with agreed-upon timelines.
In their decision, the Court of Appeal highlighted the contract’s clarity regarding the time stipulation and the absence of any valid reason for the purchaser’s failure to meet the deadline. The court rejected arguments that the seller’s decision was harsh, instead focusing on the contract’s terms and the principle that parties must be held to their agreements, especially in transactions where both parties are sophisticated and aware of the implications of their contractual commitments.
This case serves as a pivotal example of the legal enforceability of time clauses in real estate transactions, reinforcing the message that deadlines in such contracts are to be taken seriously and adhered to, without exception.
¹ 3 Gill Homes Inc. v. 5009796 Ontario Inc. (Kassar Homes), 2024 ONCA 6
