Mari v. Sanjer, 2025 ONSC 1787
As transactional real estate lawyers, we draft agreements anticipating smooth closings. But what happens when your client agrees to reduce the purchase price to help a struggling buyer, only to have the deal fall through anyway? The recent Ontario Superior Court decision in Mari v. Sanjer offers important lessons about contract amendments, consideration, and the duty to mitigate in failed real estate transactions.
The Facts
In February 2022, the defendants agreed to purchase the plaintiff’s Hamilton property for $1,450,000, with a $100,000 deposit and an August 15, 2022 closing date. By August, the real estate market had declined significantly. An appraisal obtained by the defendants valued the property at only $1,160,000—a $290,000 drop that created financing difficulties.
Rather than simply walking away, the defendants’ lawyer acknowledged their legal obligations but essentially asked the plaintiff to share the pain of the market downturn. On August 25, 2022, the parties signed an amended agreement reducing the purchase price to $1,315,000, extending the closing to September 6, 2022, and adjusting commission arrangements.
The defendants still couldn’t close on September 6. After requesting yet another extension, the parties agreed to one more day. By September 7, negotiations had broken down. The plaintiff relisted the property on September 12 for $1,199,888 and ultimately sold it to a third party on October 7, 2022 for $1,030,000.
Notably, the defendants obtained conditional mortgage approval on September 28, 2022—after the plaintiff had already relisted the property and negotiations had ceased.
The Key Legal Issues
The plaintiff brought an action for damages arising from the failed transaction. Thereafter, the plaintiff moved for summary judgment, leading to four critical issues:
- Which Agreement Governs Damages?
The central question was whether damages should be calculated based on the original $1,450,000 purchase price or the reduced $1,315,000 price. The defendants argued the amended agreement was binding because it was executed “under seal” (the standard OREA form includes a small preprinted spot with the word “seal” below it), which eliminates the need for fresh consideration.
Justice Krawchenko rejected this argument. Following Freidman Equity Developments Inc. v Final Note, 2000 SCC 34, the court must find evidence that parties intended to execute a document under seal. The presence of a preprinted seal on a standard form, without more, is insufficient.
The court also applied the leading Ontario authority on contract modifications: Gilbert Steel Ltd. v. University Construction Ltd. (1976), 12 O.R. (2d) 19 (C.A.). That case establishes that post-contractual modifications require fresh consideration to be enforceable. Here, there was none—the plaintiff simply agreed to accept less money and wait longer, receiving nothing new in return.
Takeaway for practitioners: When negotiating amendments to purchase agreements, ensure there is genuine fresh consideration flowing to both parties. A mutual promise to extend time, a modification to the property’s condition, or other tangible benefits can constitute consideration. Simply accepting less money or more time rarely will.
- The Duty to Mitigate
The defendants argued the plaintiff failed to mitigate her damages by not giving them yet another chance to close, particularly since they eventually obtained mortgage approval.
The court firmly rejected this argument, relying on Azzarello v Shawqi, 2019 ONCA 820. The duty to mitigate prevents a wronged party from recovering losses that could reasonably have been avoided. But “reasonably” is the operative word.
Justice Krawchenko noted that after the defendants failed to close in August, the plaintiff did attempt mitigation by agreeing to the amended agreement with a reduced price and new closing date. When the defendants failed again in September, the plaintiff was not required to “engage in wishful thinking and place further faith in the defendants with hope upon hope that the next time, the deal would actually close.”
The court emphasized that the plaintiff sold to an arm’s length purchaser, the defendants didn’t allege the sale price was improvident, and real estate prices were falling throughout this period.
Takeaway for practitioners: Advise vendor clients that they are entitled to enforce their agreements and seek alternative buyers after a breach. They are not required to give defaulting purchasers unlimited opportunities to perform, particularly when there have been multiple failures and market conditions are deteriorating.
- Additional Damages
The plaintiff successfully claimed additional damages that flowed from the failed closings, including insurance ($372.06), property taxes ($567.91), utilities ($451.31), property maintenance ($300), and legal fees for the failed transactions ($1,655.51), totaling $3,346.79.
Importantly, the court denied the plaintiff’s claim for real estate commissions, finding these would have been payable from the gross proceeds regardless of the breach.
The Result
The plaintiff obtained judgment for $420,000 (the difference between $1,450,000 and $1,030,000) plus $3,346.79 in additional damages. The $100,000 deposit held in trust was to be released to the plaintiff and credited against the judgment.
Practice Points
For transactional lawyers, Mari v. Sanjer reinforces several important principles:
- Document consideration carefully when amending agreements of purchase and sale. Don’t rely on preprinted seals in standard forms.
- Manage client expectations about the finality of agreements. Helping a struggling purchaser by reducing the price may seem compassionate, but without proper consideration, such amendments may not be enforceable.
- Understand the limits of mitigation. Vendors who make good faith efforts to work with defaulting purchasers are not required to give endless chances when facing a declining market.
- Calculate damages properly, including carrying costs but excluding expenses the vendor would have incurred anyway (like commissions).
While we all hope our transactions close smoothly, Mari v. Sanjer provides a valuable roadmap for when they don’t.
