QUICK HITS:

• The seller told the buyers that there were multiple competing offers. In reality, no other written offers existed.
• The court found that the buyers were wrongfully induced to overpay for the property due to the seller’s misrepresentations. They were awarded damages based on the loss of a chance to negotiate a fair price uninfluenced by false claims.
• The Divisional Court upheld that only signed, written offers are valid under the Statute of Frauds and Real Estate Business Brokers Act, 2002, and dismissed the appeal. It clarified that oral “puffery” or expressions of interest do not count as registered or legally binding offers.

In order to drive up the sale price for a property, sellers may be inclined to raise the spectre of other potential buyers who are waiting in the wings to snap up the property. In heated markets, there may even be bidding wars that require potential buyers to formally register their offers with the seller’s agent. 

In situations involving multiple offers, excited buyers may end up agreeing to pay considerably more than they otherwise would have. If it turns out that there weren’t other offers being made, contrary to what a buyer was led to believe, the buyer may understandably feel that they were wrongfully induced to overpay.

The Ontario Divisional Court decision in Tran v. Brickman, 2025 ONSC 4341 (CanLII), arose from a decision involving a misrepresentation about competing offers being made for a residential property owned by an experienced real estate agent. 

Initially, the seller tried to sell the property for $1.5 million in February 2020. The plaintiff buyers offered $1.25 million at that time. The seller delisted the house because she could not get her desired price.

The seller then relisted the house in March of 2020 at $1.25 million. She claimed that she undervalued the house, hoping to create a bidding war.

Seller claims she had multiple offers

Early on, the plaintiffs’ agent told the seller that they might be willing to go up to $1.3 million, but that they were straining at the top of their budget to get there.

The sale price was negotiated via text messages between the plaintiffs’ real estate agent and the seller. During the exchange, the seller made several statements concerning other offers she said that she had received:

• She had “two other registered offers for tonight”;
• She had “2 [offers] besides [the plaintiffs’];
• One offer had “just dropped”;
• “Two other agents that say the same [as the plaintiffs’ agent]”;
• Another agent told her that a party was going to “improve their offer.”;
• The offer from the plaintiffs and that other offer “are very close”;
• She had a “current offer until 11 p.m.” that night that she may accept if she did not hear from the plaintiffs; and
• The plaintiffs’ offer was “a lot less” than another offer she had received

The plaintiffs ultimately bid $1.305 million for the property, which was accepted by the seller.

Buyers learn about false bidding war

After the transaction was completed, the plaintiffs learned that there were no other registered offers as claimed. They sued the seller for the amount they claimed to have overpaid.

The seller denied liability, arguing that she had no intention of selling the property for less than $1.35 million, and that any discussion of competing offers occurred after she had received the plaintiffs’ offer for $1.3 million. She also claimed that the plaintiffs’ agent was aware that any other offers received were not “written offers” since she had not stated they were.

Judge finds buyers were misled

In the trial judge’s view, the overall impression left by the seller’s text messages was that the plaintiffs were competing for the purchase of the property with other buyers who had made “registered” offers.

Further, the seller’s representation that she had an offer that she could accept until 11 p.m. that night unless the plaintiffs increased their bid was false. The trial judge found that there were no offers received in writing by the seller and therefore no offer capable of acceptance in law (whether described as “registered” or not).

The trial judge found that the plaintiffs were induced by the seller’s misrepresentations concerning competing offers to increase the amount they agreed to pay for the property.

Calculating the damages

The measure of damages was based upon the plaintiffs’ loss of a chance based upon the Court of Appeal for Ontario’s decision in Folland v. Reardon, 2005 CanLII 1403 (ON CA). In the case at hand, the loss of chance was the opportunity to negotiate a fair price uninfluenced by the seller’s “false portrait of what competition they faced”.

The plaintiffs argued that they should have been able to purchase the property for the listing price of $1.25 million. The seller argued that the plaintiffs had communicated via their agent that they were willing to go up to $1.3 million, so the damages should only be the additional $5,000 that they agreed to pay.

The trial judge seemingly split the difference by concluding that the plaintiffs lost a real and substantial chance to negotiate a final price at the midpoint between $1.25 million and the sale price of $1.305 million. Damages were awarded based on this calculation.

Appeal dismissed

On appeal, the seller argued that the trial judge erred in failing to find that the offers were “registered offers” and erroneously classifying them as “phantom offers.”

The Divisional Court noted, however, that as a matter of law, an offer that is capable of being accepted must be signed and in writing, whether made by express notice or “registered”.

The appellate court agreed with the trial judge that there were no written offers capable of acceptance received by the seller because there were no offers made in writing as required in Ontario by the Statute of Frauds, Real Estate Business Brokers’ Act, 2002, and the common law. 

While it may be industry standard for agents to exchange informal verbal offers in advance of the formal presentation, the appellate court noted that this was irrelevant as to whether the plaintiffs were induced by the misrepresentations in this case.

The Divisional Court expressly disagreed with the seller’s argument that a “registered” offer simply meant that there were interested parties. In the Court’s words, “Oral puffery is not a registered offer or an offer capable of acceptance or presentation”.

As for damages, the Divisional Court agreed with the seller that it would have been an error to simply split the difference between the parties’ positions. However, there was a principled basis for the trial judge’s decision to do so. 

The trial judge had rejected the seller’s evidence that $1.305 million was her hard minimum because he rejected her credibility as a witness. Had the misrepresentations not been made, there would have been a fair back and forth, not infused by unlawful conduct. A finding of $28,600, or the midpoint between bid and ask, was a reasonable view of the likely outcome given the parties’ proven positions and was a “just and agreeable” outcome to the dispute. The appeal was therefore dismissed.

The decision demonstrates that sellers should take care with any representations made during the bidding process that influence the buyers into increasing their offer. In some jurisdictions, during heated markets, properties may have multiple formal offers that are registered. Any representations made by the seller as to the number of offers and terms may be subject to scrutiny after the transaction is completed. 

James R.G. Cook

James Cook is a partner at Gardiner Roberts in Toronto and has been with the firm since he articled there in 2002. As a litigator in the firm’s Dispute Resolution Group, he has experience in a broad range of commercial, real estate and professional liability litigation. Phone 416-865-6628; email [email protected]. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.