The prospective buyer of a property has only an obligation to use reasonable efforts in obtaining their financing and not an obligation to obtain specific results.
When signing a purchase offer for a property, there is usually an agreement stating that the offer is conditional upon obtaining a mortgage loan for a predetermined amount.
Therefore, a prospective buyer who was unable to obtain the desired loan amount refuses to proceed with the purchase. Following this refusal, the real estate agent, citing the buyer's ability to pay, claims their commission.
Firstly, the Court of Appeal* ruled that the prospective buyer was justified in refusing to purchase the property, as its value was substantially lower than what the real estate agent had presented. It was the agent's wrongful actions that misled the prospective buyer.
Secondly, the prospective buyer only had an obligation to make reasonable efforts to obtain financing, not a guaranteed outcome. As the financing institution refused to finance the prospective buyer "to the requested extent," they were not obliged to increase their down payment or provide additional guarantees to the institution in order to purchase the property.
This decision confirms the customary practice that a prospective buyer does not have to hire a professional appraiser to determine the commercially reasonable price before making a purchase offer on a property. This is why the impossibility of obtaining financing only adds to the impossibility of purchasing.
*C.A. 200-09-007290-114
