In Ontario, an agreement of purchase and sale is a contract that will legally bind both parties to the contract. It is enforceable in law and parties cannot usually break the contract without facing consequences. If either the buyer or the seller fails to close the transaction, they may be liable to pay compensation and extra fees to the other party.
Although some buyers and sellers are willing to renegotiate the deal or forgive the deposits, this is an uncommon practice. In fact, the opposite generally occurs, and one party chooses to sue the other for their losses. For example, if a buyer backs out of the deal, not only will the seller be able to retain the deposits, but the seller may also sue them for the difference if they sold the home for a lower price.
On the other hand, if a seller cancels the deal, the seller may be liable to the buyer for any damages resulting from the failed transaction. Such costs can be paying the buyer’s appraisal fees and commission, and the seller may even be liable to pay the price difference if the buyer buys another home for a higher price. The court may also force the sale of the property through a remedy called specific performance.
Overall, if you are unsure about your ability to follow through with the real estate transaction, it is best not to sign the agreement of purchase and sale as backing out of the transaction may be extremely expensive.