Overview
In the world of real estate transactions, a party’s conduct can result in a contract continuing to be enforceable, even after there has been an initial breach of the terms of the agreement.
The Ontario Court of Appeal’s (“ONCA”) recent decision in VanderMolen Homes Inc v Mani, 2025 ONCA 45 (“VanderMolen”) reinforced this principle.[1]
Background and Facts
The Appellants, a couple purchasing a newly constructed home in Exeter, Ontario, entered into an agreement of purchase and sale (“APS”) on January 13, 2022, with a scheduled closing date of August 31, 2022.
The $937,400 deal was conditional upon removal of conditions by January 20, 2022. Upon waiver of the conditions, a second deposit was due.
On January 20, 2022, the Appellants proposed extending the conditional date to January 26, 2022 and submitted an amendment to the APS (the “Amendment”) in that regard to the Respondent. The Amendment was open for acceptance until 11:59 p.m. on January 21, 2022. The Respondent—the builder of the home— signed the Amendment on January 22, 2022, a day after it expired. Nevertheless, shortly thereafter, the Appellants signed a waiver of conditions and paid the second deposit.
From then on, there was very little communication between the Appellants and the Respondent for a few months. On August 17, 2022, counsel for the Appellants informed the Respondent’s real estate counsel that the Appellants would not complete the purchase. This was confirmed again on August 29, 2022, and the Appellants requested the property be listed for sale to lessen damages. The property was subsequently sold for considerably less than the Appellants had agreed to pay for it.
Summary Judgment Motion
The motion judge granted summary judgment to the Respondent and rejected the Appellants’ argument that the APS became void when the Amendment expired without acceptance.
The motion judge relied on Coffey v High, 2024 ONSC 420 (“Coffey”). In Coffey, a purchaser paid a deposit late, the vendor accepted it, and then months later the vendor tried to claim the agreement was void. The Court found that the innocent party must elect, within a reasonable time, whether to accept the repudiation or treat the contract as ongoing.
Applying that same logic in VanderMolen, the motion judge found that the Appellants had effectively relinquished any objections to the Respondent’s late acceptance of the Amendment by paying the second deposit and waiving conditions after the alleged expiry. The Respondent, for its part, accepted the deposit and continued communications for planning interior designs and the pre-delivery inspection, which further supported the conclusion that both sides intended to proceed.
The Appellants’ subsequent refusal to close amounted to an anticipatory breach, entitling the builder to expectation damages, including the resale loss and carrying costs.
The Appeal
On appeal, the Appellants maintained that the missed deadline, coupled with a “time is of the essence clause,” meant no binding deal existed.
The ONCA disagreed. The appellate judges emphasized that while the Respondent did miss the irrevocable deadline, that did not automatically terminate the APS. Although the Appellants had the right to treat the contract as void, their subsequent conduct indicated otherwise. As the ONCA noted, post-deadline behaviour can constitute a waiver or affirmation of the contract, and in this case, it was the latter.
The ONCA also found no error in the motion judge’s reliance on subsequent conduct. While such post-contract conduct is typically reserved for resolving contractual ambiguity, in VanderMolen, it was relevant to assess whether the parties affirmed the contract’s validity.
Key Takeaways
VanderMolen highlights a familiar situation: a purchaser’s condition expires, but instead of enforcing the deadline, both parties carry on as if the deal is still alive. When one party later argues that the agreement was void, courts are increasingly focused on the parties’ conduct, not just what is contained within the four corners of the agreement.
This case reinforces several key principles:
- Deadlines are important, but subsequent conduct can override: A missed condition date or lapsed extension does not automatically void a deal. What parties do subsequently may affirm the contract.
- Waivers of breaches can be implied: When a party accepts late performance or continues acting under the agreement, they may waive the right to later rely on a technical breach.
The Importance of the Decision
For lawyers and clients navigating real estate transactions, VanderMolen is a crucial reminder that, while deadlines are important, conduct matters. If faced with the breach of a contractual term, an innocent party must make an election and communicate it to the repudiating party within a reasonable time, otherwise the contract may continue to subsist.
[1] VanderMolen Homes Inc v Mani, 2025 ONCA 45 [VanderMolen].
The author would like to thank Derren Forman, Summer Student-at-Law, for his assistance with this article.