What Buyers and Sellers Can Learn from a Recent Real Estate Case: Singh and Kaur v. Feneich

In today’s volatile real estate market, failed transactions can lead to significant financial consequences, particularly for buyers who breach agreements. The case of Singh and Kaur v. Feneich offers valuable lessons for both buyers and sellers navigating a declining market.

The Case at a Glance

In August 2022, the sellers agreed to sell their property for $1.25 million. However, the buyer was unable to secure financing, and the deal fell through. The sellers re-listed the property and eventually sold it for $965,000, a significant loss. The sellers sued for damages, citing the price difference, carrying costs, and additional expenses tied to their new home.

The buyer conceded to breaching the agreement but argued that the sellers failed to mitigate their losses by not considering other options—such as her subsequent offer made in January 2023.

 Reasonable but Not Exhaustive: Mitigation Efforts Matter

A key point in this case is the court’s emphasis that sellers are required to take reasonable—but not exhaustive—steps to mitigate losses.

The sellers relied on professional advice from their real estate broker and accepted what was deemed a reasonable offer given the market conditions. They also faced the financial burden of carrying two properties. The buyer, on the other hand, failed to provide any evidence—such as real estate data or expert opinions—that the sellers had acted unreasonably or that better options were available.

The court ultimately rejected the buyer’s arguments as speculative.

Damages in a Falling Market

In assessing damages, the court considered several factors:

• The duty of the sellers to act reasonably to minimize losses.

• The nature of the property and the market conditions at the time of re-listing.

• The context of a declining market, where sellers are less likely to recover their original sale price.

Damages were set at $366,513, which included:

• A $287,500 price difference between the original and resale values.

• $31,906 in carrying costs (utilities, taxes, and mortgage interest).

• $47,107 in interest related to financing the sellers’ new build.

The buyer’s claim that her January 2023 offer should have been accepted was dismissed, as there was no evidence she could complete the purchase at that time.

Key Takeaways for Buyers and Sellers

This decision underscores critical lessons for both parties in real estate transactions:

1. For Buyers:

• Ensure you have reliable financing in place before entering into a purchase agreement.

• A failure to close on the agreed date can lead to substantial financial liability, including the difference between the original and resale values and additional costs incurred by the seller.

2. For Sellers:

• You are obligated to take reasonable—not exhaustive—steps to mitigate losses in a failed transaction.

• Acting on professional advice and adapting to market conditions can protect you legally and financially.

The Importance of Market Context

In a rising market, a failed transaction might result in minimal losses—or even a gain—although that does not prevent litigation or damages from being awarded as a result of a breach. However, in a falling market, sellers face significant risks, and buyers who default can be held accountable for damages amounting to hundreds of thousands of dollars.

As real estate markets continue to fluctuate, this case is a reminder of the importance of financial readiness, clear legal obligations, and reasonable conduct for both buyers and sellers.

Have you encountered challenges in a real estate transaction? Share your insights below!