Real Estate Contracts

What is a Contract?
A contract is a legally binding agreement between two or more parties and describes the rights and obligations of the parties to the contract. Where a contract is properly drafted and signed by the parties to the contract, where the terms are clear, and the contract is not for an illegal purpose, it’s likely that the contract is enforceable.

What do I need to know before I sign a real estate contract?
Never sign a contract that you don’t fully understand! Go through it, line by line, with your REALTOR®, your REALTORS®’ managing broker, and/or your lawyer for advice. Canadian courts generally expect that if you have signed a contract, you’ve agreed to it and you will be bound by its terms. You may not be protected if you claim that you didn’t understand what you were signing.

What type of contracts are used by OREB REALTORS®
The real estate contracts used by OREB REALTORS® are standard form contracts. The wording and terms of these contracts have been prepared by lawyers and have been tested in Canadian courts.

How can I get out of a real estate contract?
You should first speak to your REALTOR® and explain the situation. Being upfront will help to manage expectations so that you can find the best way to move forward. If you’re not comfortable with that, you can go directly to your REALTORS®’ managing broker. Remember – your listing agreement is with the brokerage, not with your REALTOR®.

Your brokerage may offer to suspend your listing or cancel your agreement. However, the brokerage is under no obligation to release you from your listing before the expiry date as originally agreed. If the brokerage agrees to cancel your listing agreement, you are released from your contract. However, there may be conditions where certain terms can’t be cancelled e.g., if you cancel the agreement and then sell your property privately to someone who was introduced to it during the term of your contract with the brokerage or during the holdover period, you may still owe fees to the brokerage.

What happens if a buyer or seller doesn’t fulfill the terms of a contract?
Even though your REALTOR® may have drafted the contract to sell or buy a property for you, they’re not a party to that contract. A REALTOR® can’t force their client to fulfill the terms of a contract with the buyer or seller. If the buyer or seller doesn’t fulfill the commitments they’ve made in the contract, you may have legal recourse and should seek legal advice. If you don’t have a lawyer, you can contact organizations like who will direct you to the services of the Law Society of Upper Canada (LSUC) Lawyer Referral Service at

What are some examples of issues for which the buyer or seller (not the REALTOR®) is responsible?
A few examples are:

  • Buyer doesn’t close the sale.
  • Buyer doesn’t remove the contract’s subject clauses.
  • Seller doesn’t close the sale.
  • Seller doesn’t remove the contract’s subject clauses.
  • Property is left untidy or dirty by the Seller.
  • Seller has removed items that were included in the contract.
  • Transaction doesn’t close on time.
  • Appliances break down or a previously unknown property defect reveals itself after closing.

Your REALTOR® and their brokerage may be able to help resolve this type of complaint. Typically your REALTOR® will contact the other party’s REALTOR® or brokerage and let them know about your concerns and ask them for assistance. As noted, your REALTOR® can’t force the other party to do what they said they would do in the contract. (For this, you need the assistance of a lawyer or the courts). If you have a monetary claim of less than $25,000 you don’t need a lawyer to represent you in court – although legal representation is recommended. You can file small claims online through Service Ontario at