Closing Adjustments Gone Wrong: Lessons for Buyers and Builders
Unexpected charges that pop up right before pre-construction closings can quickly turn the transaction into a standoff. Buyers may refuse to close, builders may threaten to terminate, and both sides risk losing more than what they bargained for.
In this article, the real estate litigation lawyers at Walker Law break down the Ontario Superior Court’s recent decision of Taheripouresfahani v. Dormer Bond and what it means for buyers and builders navigating pre-construction closings.
Closing Adjustment in Pre-Construction Deals
Pre-construction purchase agreements in Ontario typically include a schedule of potential closing adjustments. These clauses authorize builders to pass through certain categories of costs at closing, including development charges, utility meter installations, and material substitution costs.
One thing both buyers and builders often miss is that authorizing a category of charge is not the same as authorizing any amount within that category. The buyer is entitled to proof of figures contained in the Statement of Adjustments.[i] Where a contract gives the vendor discretion over pricing, the duty of honest performance still applies.[ii] A builder cannot issue inflated or unsupported invoices and expect them to go unchallenged.
Similarly, a seller who demands more than the agreed purchase price at closing is in the same legal position as a buyer who attempts to pay less.[iii] Both constitute a breach of contract.
The Facts: What Happened in Taheripouresfahani v. Dormer Bond
In March 2020, the buyers agreed to purchase a stacked condominium townhome in Richmond Hill, from Dormer Homes (the builder). The total contract price, including upgrades, was approximately $773,000. The buyers paid deposits totaling over $125,000.
By April 2023, the unit was substantially complete and the buyers moved in as interim occupants paying $3,782 per month. The closing date was set for September 15, 2023.
When the builder delivered its Statement of Adjustments in early September 2023, it included nearly $60,000 in additional charges across four categories:
- $9,040 – Development Charges
- $9,224 – Hydro and Gas Meter Costs
- $9,724 – Vendor Legal and Admin Costs
- $30,534 – Alternative Materials Costs
The buyers’ lawyers immediately requested clarification on these additional charges and advised the builder that the buyers would not close until the charges were addressed. What followed was a week of increasingly urgent communications.
The builder initially refused any changes, then offered partial concessions, but conditioned each offer on the buyers signing a mutual release (which was not a requirement in the Agreement of Purchase and Sale). The buyers rejected each offer. On September 25, 2023, the builder purported to terminate the agreement, retain the deposits, and demanded that the buyers vacate the property.
The Court’s Findings
The Court examined each of the four additional charges individually and for each, asked the following questions: 1) Was the category of charge authorized by the Agreement of Purchase and sale?; and 2) was the amount charged supported by evidence?
Three of the four categories (Development Charges, Hydro and Gas Meter Costs, and Alternative Material Costs) were authorized in principle by the Agreement of Purchase and Sale. However, Dormer Homes failed to provide any documentation or calculation to support the amounts charged.
The builder’s director testified that the development charges were based on a municipal formula, but that formula was never produced. Meter costs were supposedly calculated by a consultant, but no report was ever shared. Charges for alternative materials were supposed to be confirmed by a certificate from the builder, but no certificate was ever issued.
The fourth category of charge (Legal and Administrative Fees) was not authorized at all. The Agreement of Purchase and Sale only permitted those fees in specific circumstances that had not occurred.
The Court held that the builder’s inflated Statement of Adjustments constituted an anticipatory breach of contract.[iv] By demanding nearly $60,000 above the agreed price as a condition of closing, it was Dormer Homes that effectively walked away from the deal. The requirement that the buyers sign a mutual release, not contemplated by the Agreement of Purchase and Sale, was found to be a separate breach.[v]
Accordingly, the buyers were awarded the return of their deposits in full, with interest. However, the buyers did not walk away unscathed.
For Buyers: Winning the Breach Argument Is Not the End
After the deal collapsed in September 2023, the buyers did not vacate the unit. The buyers continued to live in the unit until around April 2024. Even then, once the buyers stopped living in the unit, they continued to use it to store furniture and belongings without paying occupancy fees, condominium fees, or property taxes.
The Agreement of Purchase and Sale required the buyers to vacate within 30 days if the deal could not be completed.[vi]
The Court granted Dormer Homes with possession of the unit and a writ of possession[vii] (which would empower a sheriff to evict the buyers and transfer possession to the builder). The Court also ordered the buyers to pay to the builder: the unpaid occupancy fees as well as the condominium fees and property taxes that the builder has been covering.
In total, the buyers were ordered to pay $78,644.56 to the builder, and the builder was ordered to pay $125,765.19 to the buyers; an offset that favoured the buyers by $47,120.63.[viii]
How the Real Estate Lawyers at Walker Law Can Help
The Taheripouresfahani v. Dormer Bond case is a reminder that obligations in real estate transactions, including pre-construction deals, run both ways.
Builders cannot pad a Statement of Adjustments with unsupported charges and expect buyers to simply absorb them. That said, even buyers with legitimate grievances over closing charges must still meet their own obligations under the agreement, including vacating a property promptly if they are required to do so.
The real estate lawyers at Walker Law advise both buyers and builders on pre-construction disputes, closing adjustments, and related real estate litigation matters in Ontario. Contact Walker Law today if you are in need of advice on a real estate transaction.
Tags: Residential Real Estate Disputes, Commercial Real Estate Disputes
[i] Taheripouresfahani v. Dormer Bond Inc., 2025 ONSC 5833 at para 35 [Dormer]; BELLISARIO et al v. 2200 BROMSGROVE DEVELOPMENT INC., 2025 ONSC 2546 at para 61.
[v] Dormer at para 77; Savo v. Moursalien, 2018 ONCA 981 at para 9.
[viii] Dormer at paras 108 – 111.