What Happens If a Buyer Walks Away After Waiving Conditions 

In Ontario real estate, once a buyer waives their conditions, the deal is considered firm. At that point, both parties are legally bound to complete the transaction. But what happens if the buyer has second thoughts—or simply walks away?

It’s not as rare as people think. Life changes quickly: financing falls through, cold feet set in, or a buyer finds another home they like better. But after conditions are waived, walking away can have serious financial and legal consequences.

The Role of Conditions

Most offers include one or more “conditions” that protect the buyer. Common examples include financing, home inspection, or the sale of the buyer’s current property. These give the buyer a chance to back out if something important doesn’t go as planned.

When a buyer waives those conditions—either because they’ve been satisfied or they’ve chosen to move ahead regardless—the deal becomes firm. The buyer is now obligated to close.

When the Buyer Backs Out

If a buyer decides not to close after waiving conditions, it’s considered a breach of contract. The seller is entitled to keep the deposit and may also seek additional damages if they suffer a financial loss as a result.

The most common example? The seller has to re-list the home and it sells later for less money. The difference between the original sale price and the new, lower sale price may be claimed as damages—along with carrying costs such as mortgage interest, utilities, taxes, and legal fees.

The Deposit Isn’t Always the End of It

Many people assume the deposit is simply “forfeited” and that’s the end of it. But that’s not how it works. The deposit is usually held in trust (by the listing brokerage or lawyer) until both parties agree on its release—or a court orders it.

If the seller wants to claim more than the deposit amount, they can take legal action for damages. Courts in Ontario have often sided with sellers in these cases, awarding not only the deposit but also additional compensation for proven losses.

Real-World Example

Imagine a buyer agrees to purchase a home for $1,000,000 and waives all conditions. A few weeks before closing, their financing falls apart. They walk away.

The seller re-lists the home quickly and eventually sells it for $950,000. They’ve also spent $8,000 in extra mortgage payments, utilities, and legal fees during the delay.
The total loss: $58,000.

If the original deposit was $30,000, the seller can typically keep that deposit and pursue the buyer for the remaining $28,000. Whether or not they’ll collect it depends on the buyer’s ability to pay and the outcome of any court proceedings—but the legal right is clear.

The Buyer’s Side of the Story

Not all walk-aways are malicious. Sometimes the buyer’s lender changes terms at the last minute, or an unexpected life event makes closing impossible. While courts can show some sympathy, intent doesn’t erase the breach.

That said, most sellers prefer to negotiate a settlement rather than spend years in court. A buyer who acts quickly, communicates honestly, and offers a partial settlement may avoid a larger judgment later.

When a Seller Fails to Close

It’s worth noting that sellers can breach too. If the seller refuses to close—perhaps because they received a higher offer after going firm—the buyer has similar rights. They can sue for damages or even compel the seller to complete the sale through a court order (known as “specific performance”).

In both directions, the legal system treats real estate contracts very seriously. Once the ink is dry and conditions are waived, it’s binding.

Lessons for Buyers and Sellers

For buyers, the takeaway is simple: don’t waive conditions unless you are 100% ready, funded, and committed to closing. It’s not just a symbolic gesture—it’s a legal promise.

For sellers, keeping detailed records and consulting your lawyer immediately can make a big difference if a deal collapses. The deposit may not automatically be released, but the law generally protects sellers when the buyer is in breach.

The Bottom Line

When a buyer walks away after waiving conditions, the consequences can ripple far beyond a lost deposit. A firm deal means both parties are legally bound to complete the transaction, and failure to do so can lead to costly legal battles and emotional stress.

Real estate may feel personal, but once a deal goes firm, it’s business—and the law treats it that way.