When a Deposit Becomes a Penalty: Relief From Forfeiture in Real Estate Transactions

Canadian common law has long considered deposits in real estate transactions to be in a special class, treated distinctly from penalty clauses in other contracts. Deposits are generally deemed to be a partial pre-payment that a vendor may retain if the purchaser breaches the contract. In rare circumstances, however, courts have departed from this practice and ordered that a deposit be returned to a defaulting purchaser. Vendors in real estate transactions should familiarize themselves with these... By: Bennett Jones LLP