Real estate contracts, like the homes they represent, depend on a firm foundation built on clarity and meticulous attention. When disaster strikes. A fire that turns a cherished century home to ash. Those foundations are put to the ultimate test.
That is what happened in McDonald v. Lowrie (2025 ONSC 1397).
What Happened
In May 2024, Grant McDonald set his sights on a picturesque century home on two acres near Tillsonburg, Ontario. The property was listed at $775,000, and McDonald secured the purchase with a $25,000 deposit, anticipating the work and reward of restoring a historic home.
Shortly before the deal was finalized, a devastating fire completely destroyed the residence.
The Insurance Clause
At the heart of the dispute was the standard OREA insurance clause. When substantial damage occurs before closing, that clause gives the buyer a clear, binary choice:
- Cancel the agreement and reclaim the deposit, or
- Proceed with the purchase and accept whatever insurance proceeds the seller receives.
That's it. Two options. No third path.
McDonald introduced a complication. He asked the seller to guarantee a minimum amount from the insurance settlement. A demand not stipulated in the agreement. When the seller refused and held the line on the contract as written, McDonald asserted the seller had breached and refused reasonable extensions. The dispute went to Ontario's Superior Court.
The Court's Decision
The decision was swift and unequivocal. The seller had acted within their contractual rights. Introducing additional conditions after an agreement is signed is not permitted. McDonald's insistence on new terms amounted to repudiation of the agreement. And his $25,000 deposit was forfeited.
Three Takeaways
- Deadlines matter. Courts rigorously enforce "time is of the essence" clauses. Extensions beyond original terms are a courtesy, not a requirement.
- Insurance clauses are explicit. The OREA insurance clause gives buyers specific, defined options. Buyers cannot add further conditions after the fact.
- Deposits are at stake. Attempts to revise terms mid-transaction can put a buyer's deposit on the line. Clearly defined contracts protect everyone.
McDonald v. Lowrie is a powerful reminder that precision and adherence to clearly defined contractual terms are crucial in real estate. Understanding. And respecting. The specifics of your agreement is essential to safeguarding your interests.
If you have an Agreement of Purchase and Sale and want to understand exactly what happens if something goes wrong before closing, get a free quote. We walk you through the clauses that only matter when something goes sideways. And make sure they protect you when it does.
Common questions
What happens if a house burns down before closing in Ontario?
Under the standard OREA insurance clause, substantial damage before closing gives the buyer two options: cancel the agreement and get the deposit back, or complete the purchase and take whatever insurance money the seller receives. There is no third path, and a buyer cannot demand extra guarantees on top of those choices.
Can a buyer add new conditions to a purchase agreement after signing in Ontario?
No. Once an agreement of purchase and sale is signed, neither side can force new terms on the other. In McDonald v. Lowrie, a buyer who demanded an insurance guarantee the contract never included was found to have repudiated the deal. Every case turns on its facts, but courts enforce the agreement as written.
Can I lose my deposit if I refuse to close on the agreed terms?
Yes, you can. Refusing to complete on the terms you signed, or insisting on new ones, can amount to repudiation, and that puts your deposit at stake. In McDonald v. Lowrie, the buyer forfeited his $25,000 deposit after demanding a guarantee the contract did not contain. The outcome in any dispute depends on its specific facts.
Does a seller have to agree to extend the closing date in Ontario?
No. When an agreement says time is of the essence, courts enforce deadlines strictly. An extension beyond the original terms is a courtesy a party can offer, not something the other side is entitled to demand. In McDonald v. Lowrie, the seller was entitled to hold the line on the contract as written.
About the author: Christian Janisse is a licensed Ontario real estate lawyer and the founder of Simplyclose Law Professional Corporation. He acts for buyers, sellers, and lenders on purchases, sales, refinances, and title transfers across Ontario — in person in Windsor and remotely province-wide.