Expert: Cinzia Dalgarno - 6/9/2009

Question
I am a Canadian non resident.  I have recently sold a house that was my
principal residence from 2004-2007 when we left the country.  We recently
listed and sold the house.  The closing date is in 2 days.  CCRA is now
requesting that our lawyers must hold back on the sale.  If we do not complete
this sale, will we be in breach?

Answer
Hello there. First, I should clarify that I am a Mortgage Broker rather than a Realtor; my expertise lies in the mortgage aspect of purchasing a house, rather than the legalities of not performing on a Sale agreement. So I will say this, without prejudice:
Clearly, a Purchase and Sale Agreement is a legal document; once all parties have signed and all subjects have been removed, this document is binding, and should either party wish to back out of the deal without the consent of the other party, they would indeed be in breach. If the buyer reneges, the seller has recourse; they can demand that the deposit (which is held in trust until the completion date) be paid to them, to cover costs, lost opportunity, etc. This would, I believe, be worked out in court.  Should the seller back out, the buyer has the option of demanding that the sale go through. They can sue the seller for specific performance, meaning they want the deal to go ahead regardless of the seller’s wishes. I believe this can potentially be time consuming and very costly. In your case, your realtor and your lawyer should be aware of the government requirement for 25% hold back on all sales of properties owned by non-residents, for taxes, etc. That you are only aware of this requirement now, at this late stage of the game, seems very unfortunate. I would strongly recommend that you a) discuss the possibility of not going ahead with the sale, with the buyer, and if this is not possible or does not satisfy you, you really need to speak with a lawyer regarding your options.
Warm regards,
Cinzia