Can You Cancel a Purchase & Sale Agreement in Ontario?

Buying or selling real estate in Ontario is a major legal commitment. Once a Purchase and Sale Agreement (APS) is signed, many buyers and sellers assume the deal is locked in permanently. In reality, cancellation may be possible but only in specific situations.

This guide explains when an APS can be cancelled, when it cannot, and why legal advice is critical before taking action.

What Is a Purchase & Sale Agreement?

A Purchase and Sale Agreement is a legally binding contract outlining the terms of a real estate transaction. Once both parties sign and all conditions are satisfied or waived, the agreement becomes firm.

Many disputes arise because buyers or sellers misunderstand what they can and cannot cancel, especially when emotions, financing issues, or unexpected circumstances occur.

To understand how purchase agreements work in Ontario, you can review this page:
View this page: https://khanllp.com/purchase-and-sale

Can You Cancel an Agreement After It Has Been Signed?

The short answer is: sometimes.

Whether an APS can be cancelled depends on:

• Whether the agreement includes conditions
   
• Whether those conditions were satisfied or waived
   
• Whether either party breached the contract
   
• The exact wording of the agreement
   

Once an agreement becomes firm, cancelling without legal grounds can result in serious financial consequences.

Cancelling During the Conditional Period

Most APS documents include conditions such as:

• Financing approval
   
• Home inspection
   
• Status certificate review (condos)
   

During the conditional period, buyers generally have the right to cancel if a condition is not met, provided cancellation occurs before the deadline.

If conditions exist and have not yet been waived, cancellation may be possible without penalty.

What Happens After Conditions Are Waived?

Once conditions are waived or fulfilled, the agreement becomes firm. At this stage, cancellation is extremely difficult.

Backing out of a firm APS without legal justification can lead to:

• Loss of deposit
   
• Lawsuits for damages
   
• Court-ordered completion
   
• Additional legal costs
   

This is why legal review before waiving conditions is critical.

Can a Buyer Cancel Due to Financing Issues?

Financing issues are one of the most common reasons buyers attempt to cancel an agreement.

If the APS includes a financing condition and financing is not approved within the specified time, the buyer may cancel properly.

However, if:

• The financing condition was waived
   
• The buyer failed to act in good faith
   
• Financing issues arose due to the buyer's negligence
   

Then cancellation may not be allowed.

Can a Seller Cancel a Purchase & Sale Agreement?

Sellers cannot cancel simply because:

• They received a higher offer
   
• They changed their mind
   
• Market prices increased
   

A seller may only cancel if the buyer:

• Fails to close
   
• Breaches a material term
   
• Does not meet contractual deadlines
   

Seller cancellations often lead to legal disputes and require careful handling.

What If One Party Breaches the Agreement?

If one party breaches the APS, the non-breaching party may have legal remedies such as:

• Termination of the agreement
   
• Claiming the deposit
   
• Seeking damages
   
• Court action for specific performance
   

Each situation depends on the facts and the contract language.

What About Cooling-Off Periods in Ontario?

Ontario does not have a general cooling-off period for resale homes.

Cooling-off rights typically apply only to:

• Pre-construction condos
   
• Certain consumer protection scenarios
   

For resale properties, once the APS is firm, buyers do not have the right to cancel.

Cancelling an Agreement as a Non-Resident Buyer

Non-resident buyers face additional complexities when cancelling agreements due to:

• Tax implications
   
• Cross-border financing
   
• Remote closings
   
• Withholding obligations
   

Legal advice is especially important for non-residents navigating APS disputes.

For non-resident purchase guidance, view this page:
Visit this page to learn more: https://khanllp.com/purchase-and-sale-for-non-residents

What Happens to the Deposit?

The deposit is often the biggest concern when cancellation occurs.

Depending on the circumstances:

• The deposit may be returned
   
• The deposit may be forfeited
   
• The deposit may be disputed in court
   

Improper cancellation almost always puts the deposit at risk.

Why Legal Advice Is Critical Before Cancelling

Many buyers and sellers attempt to cancel agreements based on assumptions or informal advice. This often leads to:

• Legal claims
   
• Lost deposits
   
• Expensive litigation
   
• Delayed resolutions
   

A real estate lawyer reviews the APS, timelines, and facts to determine whether cancellation is legally justified.

Key Takeaways

• A Purchase & Sale Agreement is legally binding
   
• Cancellation depends on conditions, deadlines, and contract wording
   
• Firm agreements are very difficult to cancel
   
• Deposits are commonly lost when cancellation is improper
   
• Legal advice should be obtained before taking action
   

Understanding your rights early can prevent costly mistakes.

Cancelling a Purchase & Sale Agreement in Ontario is not always possible, and doing so incorrectly can lead to serious financial and legal consequences. Whether you are a buyer or seller, reviewing your agreement carefully and seeking legal guidance can help protect your interests.

If you’re unsure about your rights, reviewing the purchase process and seeking professional advice is the safest step forward.