QUICK HITS

• The developer’s attempt to add nearly $60,000 in extra fees beyond the APS terms was determined to be a breach of contract.
• Courts ruled that sellers must provide clear documentation and justification for any additional charges listed in statements of adjustments.
• Because the seller breached the APS, buyers were entitled to recover their deposit and upgrade payments
• Because the buyers took possession of the property for at least a year, the buyers were found responsible for paying fees totalling $68,000 to compensate the seller for the time they lived there.

In litigation arising from disputed real estate transactions, courts are frequently confronted with circumstances where a buyer tries to close for less than the agreed sale price.

In many cases where a buyer tries to close for less than the price agreed to by the parties, the buyer is the party in default, and the seller is entitled to retain the deposit paid in addition to seeking other damages from the buyer.

In some cases, however, a failure to close may be due to additional unanticipated charges imposed by the seller on top of the original agreed-upon price. A seller’s demand for more than the agreed purchase price is just as much a default as a buyer’s demand to pay less. Whether or not such charges are permitted is generally determined by the wording of the Agreement of Purchase and Sale (APS) between the parties.

Taheripouresfahani v. Dormer Bond Inc., 2025 ONSC 5833 (CanLII) arose from a dispute between the buyers and the developer/seller of a newly built property in Richmond Hill, Ont.

The purchase and disputed charges

In 2020, the buyers entered into an APS with the developer for the purchase of the property for $761,490. The buyers paid installments of more than $114,000 as a deposit and $11,540 for additional upgrades. The final closing date was to be designated by the developer’s lawyer upon at least 14 days’ notice.

Pursuant to the terms of the APS, the buyers were allowed to move into the property before the final closing date once occupancy was permitted. In April 2023, the buyers moved into the property as permitted and began to make monthly occupancy payments of $3,782.

On July 31, 2023, the developer delivered a notice scheduling the closing date of Sept. 15, 2023.

On Sept. 7, 2023, the developer delivered a Statement of Adjustments to the buyers’ lawyer, which included additional charges totaling almost $60,000. The charges were stated to be for:

• Development charges/increased levies: $8,000 plus HST
• Meters (hydro/gas): $8,163 plus HST
• Vendor’s legal and administrative fees: $8,605 plus HST
• Alternative materials cost: $27,021.08 plus HST

A flurry of correspondence ensued between the lawyers over whether or not the charges were permitted under the APS. The developer offered to reduce some of the charges but demanded a mutual release in return. The buyers refused and demanded that all the additional charges be removed. The transaction was not completed by the Sept. 15, 2023 closing date, but the lawyers continued to exchange correspondence in the following days concerning the statement of adjustments and additional charges.

On Sept. 26, 2023, the developer’s lawyer confirmed that the transaction had been terminated. The developer demanded that the buyers vacate the property.

Court finds sellers in breach

Litigation ensued, with each party moving for summary judgment.

The motion judge noted that a buyer is generally entitled to proof of figures contained in a statement of adjustments: Bellisario et al v. 2200 Bromsgrove Development Inc., 2025 ONSC 2546, at paragraph 61.

The motion judge further noted that the APS specifically stated that the balance due on closing would be adjusted to include “any development, education, park or other levies or imposed charges or taxes by Government Authority”. Accordingly, while the development charge of $8,000 was potentially allowed by the APS, the developer had an obligation to explain how the charge was calculated. The developer had failed to provide any evidence to substantiate the charge, referring only to an unexplained “formula” used by the municipality.

Further, while the APS permitted adjustments for the cost of hydro and gas meter installation, the developer did not provide any documents to the buyers or the court on the motion to demonstrate how the amounts were determined.

A similar issue arose regarding the legal and administrative fees. While the APS provided such fees to be added to the statement of adjustments under specific conditions relating to NSF or “stop-payment” cheques, these did not apply in this case.

Lastly, the motion judge found that none of the “alternative materials cost” charges were provided for in the APS and that there was no evidence to support the amount charged by the developer.

The motion judge concluded that it was not the buyers who breached the APS but the developer who tried to close for more than the agreed-upon price in the APS by adding approximately $60,000 in charges that were either unjustified or not authorized. The developer’s attempt to claim any one of these charges was a violation of the APS.

As a matter of law, the motion judge determined that the demand for additional payment as a condition of closing was an anticipatory breach of contract based on the principles discussed by the Court of Appeal for Ontario in Spirent Communications of Ottawa Limited v. Quake Technologies (Canada) Inc., 2008 ONCA 92, at paragraph 37.

The motion judge decided that buyers were therefore entitled to the return of their deposit and amounts paid for upgrades to the property.

Buyer’s occupancy and financial responsibility

While that result would have ordinarily been determinative of the dispute, the case was unusual due to the fact that the buyers had taken possession of the property in April 2023 and resided in it for at least a year thereafter. By the time of the hearing in 2025, they still had furniture in the property and continued to pay for internet and security cameras. The buyers also refused to consent to an order of possession in favour of the developer. The motion judge found the buyers’ refusal to pay the developer for their possession of the property to be an untenable position.

In the result, therefore, the buyers were found to be responsible for the monthly occupancy of $3,782 up to the date of the decision in October 2025 (totaling $68,076), as well as for reimbursement of property taxes of $6,586.56 paid by the developer during that period and unpaid condominium fees of $3,882.

Costs of the litigation based on the divided success of the summary judgment motions are to be determined.

The decision demonstrates that sellers seeking to impose additional charges on the agreed-upon purchase price will need to ground such charges in the specific terms of the APS and have an obligation to provide satisfactory back-up documentation to substantiate the charges. Buyers who take possession of a property before closing should be prepared to compensate a seller for their time in possession of the property before it is re-sold to another buyer.

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 jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Buyers win after developer tries to up the price by $60,000 at closing appeared first on REM.

QUICK HITS

• Several Ontario homebuyers challenged a developer’s attempt to add tens of thousands of dollars in surprise utility-related charges just before closing, arguing those costs weren’t clearly allowed in their contracts. 
• The court agreed, finding that the Agreement of Purchase and Sale only permitted charges for certain utility costs paid directly to municipalities or utility providers, not to private contractors. 

Over the past few years, there have been several media reports of developers in Ontario attempting to levy charges against buyers for various matters that were not included in the original purchase price. 

Such issues may arise during the process of construction or at the time of closing, and buyers may be left feeling that they have no choice but to agree to the charges or lose their deposit. 

Whether a seller is legally entitled to demand additional payments from a buyer generally comes down to the wording of the Agreement of Purchase and Sale (APS).

Buyers challenges surprise closing costs

In Bellisario v. 2200 Bromsgrove Development Inc., several buyers of units in a townhouse complex challenged a developer’s attempt to charge them certain adjustment amounts on closing. The buyers had entered into their respective APSs for amounts varying from $400,000 to $700,000 before the units were constructed.

In the APSs, there were provisions for adjustments to the purchase price related to matters, including utilities, to be calculated and paid as of the closing date. A few days before closing, the developer delivered final statements of adjustment that included alleged “Utility Meter Installation Charges” for electrical, gas, water/sanitary and permits/fees. 

These charges also covered amounts paid to various contractors and trades for work on utilities, construction management, and landscaping. In some cases, the additional charges were as high as $86,000.

In response to one buyer’s request for evidence, the developer provided a “Certificate” outlining costs reflected in the statement of adjustments. The certificate included only total amounts under various subheadings for the entire project, which were then divided among the buyers based on their proportionate share.

The buyers closed the transactions but challenged the developer’s position afterward.

What the contract actually said

The clause at issue in the APS stated that the developer was entitled to reimbursement for:

1. the cost of any water and water check/sub meter costs, installation and connection charges and hydro and gas/BTU check/sub meter costs, installation and connection charges; and
2. a proportionate share of all electricity, gas, water, sanitary, drain and sewer infrastructure, installation, connection and energization costs (or security relating thereto) paid by the Vendor to or deposited by the Vendor with the Municipality or utility service provider.
   

Differing views on interpretation

The developer argued that the above term permitted it to charge the buyers for all costs associated with the engineering, installation, and connection of the necessary utility services, irrespective of who such amounts were paid to. Such costs were unknown at the time that the parties entered into the APSs. While the term expressly referenced the developer’s ability to pass along amounts paid to a “Municipality or a utility service provider”, the developer argued that the term “utility service providers” was not defined and therefore included third-party contractors and trades.

The buyers’ position was that the developer was attempting to recoup costs that it should have borne as part of the overall infrastructure development costs and that these costs could not be passed on to individual buyers at the time of closing. The buyers argued that there was no basis to interpret “utility service provider” to include trades and others paid by the developer in respect of the utility infrastructure costs.

The judge applied general principles of contract interpretation, such as avoiding unjust or unreasonable results, and resolving ambiguities in favour of the party that didn’t draft the contract.

In the application judge’s view, the plain and ordinary meaning of the words in the APS term at issue supported the buyers’ position. The APS provided that the developer was permitted to charge buyers for the cost of installing meters for the services in their respective units, but this did not include infrastructure and energization costs. The APS did not provide the developer with the right to charge for matters that related to the utility infrastructure if these amounts were not paid to the municipality or to utility service providers. There was no ambiguity in that regard, but even if there was, it ought to be resolved in the buyers’ favour.

The developer argued that the buyers had agreed to amounts in the certificate and that the APSs provided that the Certificate shall “constitute sufficient evidence” for the purpose of calculating the adjustments. However, the application judge noted that “evidence” can always be challenged or rebutted with other evidence and this did not mean that the Certificate was conclusively binding.

Further, the application judge was satisfied that the Statement of Adjustments and Certificates provided by the developer were misleading and amounted to bad faith, such that it would be inequitable to permit the developer to rely upon a Certificate that included charges that it was not entitled to pass on to the buyers. 

Lastly, the developer attempted to rely on a limitation of liability clause in the APS which purported to limit a buyer’s remedies to return of the deposit. The application judge found the limitation clause to be inapplicable for several reasons, including an overriding public policy interest in preventing developers from escaping liability “where they secretly and not transparently charge for amounts to which they are not entitled”.

Court sides with buyers

The court concluded that the developer could only charge for meter installations and infrastructure costs paid to municipalities or utility providers. A further hearing was ordered to determine what amounts, if any, should be reimbursed to buyers.

This case illustrates that buyers may have recourse when they believe a developer has added unauthorized charges to the purchase price. It underscores the importance of closely reviewing the wording of the APS when disputes arise.

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 jcook@grllp.com. This article is provided for educational purposes only and does not necessarily reflect the views of Gardiner Roberts LLP.

The post Closing costs or cash grab? Ontario buyers push back against developer appeared first on REM.