Court enforces new higher purchase price in revised APS after the buyer is a few minutes late

Correa v. Valstar Homes (Oakville Sixth Line) Inc., 2025 ONCA 156

The Ontario Court of Appeal’s recent decision in Correa v. Valstar Homes serves as a stark reminder to transactional real estate lawyers about the unforgiving nature of “time is of the essence” clauses. This case demonstrates how a mere eight-minute delay in closing can cost purchasers over $100,000 and highlights critical considerations for drafting and advising on purchase agreements.

The Facts: A Costly Eight Minutes

The Correas entered into an Agreement of Purchase and Sale (APS) with Valstar Homes in February 2020 to purchase a newly built home in Oakville. The original closing date was January 27, 2021, “no later than 5:00 p.m.,” with the standard “time is of the essence” clause included.

When Valstar extended the closing date to April 20, 2021, the stage was set for disaster. On closing day, the Correas encountered financing difficulties. Despite their efforts to secure alternative private financing and their solicitor wiring the funds at 4:52 p.m., the money didn’t arrive in  the account of Valstar’s solicitor until 5:09 p.m. – just eight minutes late.

Valstar immediately terminated the APS, invoking the “time is of the essence” clause. The company then offered to “revive” the agreement for an additional $100,000 plus HST, claiming the property’s value had increased since the original contract was signed. Faced with the possibility of losing the property, the Correas reluctantly agreed and closed the next day.

The Litigation: Multiple Arguments, No Success

The Correas sued Valstar, alleging they agreed to the price increase under protest. They brought a summary judgment motion, raising several arguments that may interest practicing lawyers:

1. Contractual Interpretation Issues: The Correas argued that when the closing date was extended to April 20, 2021, no specific time was mentioned, creating ambiguity about the 5:00 p.m. deadline.
2. Contra Proferentem: They sought to invoke this doctrine to interpret any ambiguity against Valstar as the party who drafted the contract.
3. Penalty Clause: The Correas argued the $113,000 “revival fee” constituted an unenforceable penalty.
4. Economic Duress: The Correas claimed they were forced to pay under economic compulsion.

The Court’s Analysis: No Mercy for Late Closings

Both the motion judge and Court of Appeal rejected all arguments, providing important guidance for practitioners:

Time is of the Essence Means What It Says
The Court of Appeal affirmed that the APS clearly stated closing must occur “no later than 5:00 p.m.” When the date was extended to April 20, 2021, this time requirement remained unchanged. The court found no ambiguity, particularly since:

• Both parties’ solicitors understood the 5:00 p.m. deadline
• Valstar explicitly reminded the Correas that morning that the transaction “must close by 5:00 today”
• The correspondence throughout the day reiterated this deadline

No Room for Contra Proferentem
Since the court found no ambiguity regarding the closing time, the doctrine of contra proferentem didn’t apply. This reinforces the importance of clear, unambiguous drafting.

New Contract, Not Penalty
The court characterized the “revival fee” as part of an entirely new contract entered into after the original APS was terminated. This wasn’t a penalty clause within the original agreement, but rather consideration for a fresh contractual arrangement.

Economic Duress Standard Not Met
Applying the test from Kawartha Capital Corp. v. 1723766 Ontario Ltd., the court found insufficient evidence of economic duress. Key factors included:

• The Correas didn’t protest during the contracting process
• They had independent legal advice
• Valstar’s pressure wasn’t illegitimate given their right to enforce the “time is of the essence” clause

Practical Implications for Transactional Lawyers

This decision offers several important takeaways:

1. Draft with Precision: Ensure closing times are explicitly stated in any amendments or extensions. Don’t assume the original time provisions will automatically carry forward.
2. Understand the Harsh Reality: “Time is of the essence” clauses are strictly enforced. Even minimal delays can have catastrophic consequences for clients.
3. Plan for Contingencies: Consider building in buffers or alternative arrangements for clients who may face financing delays.
4. Client Education: Ensure clients understand the serious implications of these clauses and the importance of meeting deadlines.
5. Documentation Matters: The court noted that, based on their written communications, the solicitors for both parties acted under the understanding that closing was at 5:00 p.m., reinforcing the importance of clear communication and documentation.

The Bottom Line

Correa v. Valstar Homes demonstrates that Ontario courts will not rescue parties from the consequences of their contractual bargains, even when the results seem harsh. The eight-minute delay cost the Correas over $100,000 – an expensive lesson in the importance of precise timing in real estate transactions.

For transactional lawyers, this case underscores the critical importance of careful drafting, clear client communication, and understanding that “time is of the essence” means exactly that. In the high-stakes world of real estate transactions, minutes can literally cost hundreds of thousands of dollars.