What to Do When Real Estate Deals Go Wrong:

Published on January 7, 2026

Real estate transactions don’t always go smoothly. Deals fall through, agents make mistakes, and disputes arise. Understanding your rights and options helps you navigate these situations and protect your interests.

What Happens If a Real Estate Deal Falls Through?

When a real estate transaction collapses, the consequences depend on why it failed and what stage you’re at.

Before Firm Agreement: If you haven’t removed conditions yet, like financing or home inspection, either party can typically walk away without penalty. Your deposit is returned, and no one owes anything.

After Conditions Are Removed: Once the deal becomes firm and binding, walking away has serious consequences. If a buyer backs out without legal justification, they lose their deposit and may face a lawsuit for damages. If a seller backs out, the buyer can sue for specific performance (forcing the sale) or damages.

Protecting Yourself

Before Buying: Always include inspection and financing conditions. Don’t waive conditions unless you’re absolutely certain.

When Selling: Disclose all known defects honestly.

Working With Agents: Communicate expectations clearly. Insist on regular updates. Don’t be pressured into decisions.

Contact Pinto Shekib LLP, Your Toronto Real Estate Litigation Lawyers

Real estate transactions involve large amounts of money and complex legal issues. When things go wrong, the financial consequences can be severe. Don’t hesitate to seek legal advice when problems arise.