Title defect was significant enough to permit purchasers to refuse to close

Real Property - Sale of Land - Title

Vendor agreed to sell residential property to purchasers. Between signing of agreement of purchase and sale (APS) and closing date, neighbouring property owners asserted that vendor did not own all of property’s driveway. Neighbours pursued that assertion, including by fencing off two-foot-wide strip of driveway allegedly encroaching on neighbours’ property. Vendor disputed the neighbours' assertion but could not resolve dispute before closing date. Purchasers refused to close purchase under APS on basis that vendor could not convey clear title to entire driveway. Vendor commenced action for damages for failure to close and respondents counterclaimed for return of deposit. Parties moved for summary judgment. Motion judge found in favour of purchasers. Judge found defect in vendor’s title sufficient to permit purchasers to refuse to close. Vendor appealed. Appeal dismissed. Physical and visual appearance of property at time of contract were objective facts known to parties. Motion judge was entitled to find that any reasonable person would assume that driveway referred to in APS included what appeared to eye to be driveway. Title defect was significant enough to permit purchasers to refuse to close. Vendor admitted that blocking of two-foot strip with fence interfered with use of driveway and that, when property was sold with knowledge of neighbours’ claim, selling price was greatly reduced.

Himidan v. Farquharson (2019), 2019 CarswellOnt 10900, 2019 ONCA 575, Grant Huscroft J.A., G.T. Trotter J.A., and B. Zarnett J.A. (Ont. C.A.).

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