The Mortgage Condition and the Roof That Wasn't New

The clause is a condition precedent: the contract is conditional on Nadia obtaining satisfactory mortgage approval within 21 days. The word satisfactory does not mean that any approval, on any terms, must be accepted. But it also does not give the buyer an unlimited right to walk away because she has changed her mind. The test is likely to turn on whether the approval was materially outside what a reasonable buyer in her position could be expected to accept, and on the evidence of her budget and the loan terms.

Here the approved rate is 9.5% rather than the budgeted 7.5%, and the payment is $18,000 a month more than she can comfortably afford. That is a significant change, not a minor variation. Nadia should document her budget, the bank's offer, and why the terms are not satisfactory. If the condition is not satisfied within the 21 days, the contract comes to an end and the deposit should be returned by the stakeholder. If the condition is treated as satisfied because she could have accepted the loan, then her failure to complete would be a breach, and the seller might be entitled to forfeit the deposit, subject to the seller's actual loss and the court's power to relieve against a penalty. The outcome therefore depends on the condition's interpretation and the evidence, not simply on the seller's assertion.

The statement that the roof was completely replaced in 2022 is a statement of fact, not a sales puff. If it is false and it induced Nadia to enter the contract, it is a misrepresentation. The seller's knowledge and intent matter to the remedy: a fraudulent misrepresentation can support rescission and damages, while a negligent or innocent misrepresentation may support rescission or other relief depending on the circumstances. Caveat emptor does not protect a seller who actively misrepresents the condition of the property.

Nadia should preserve the contractor's report, photographs, correspondence, and evidence of when and how the statement was made. She should not complete the purchase as if the roof were new, because completion can complicate rescission. Her attorney should notify the seller promptly, state that she is relying on the misrepresentation, and seek rescission and return of the deposit, or damages if rescission is no longer possible. The two issues should be kept distinct: the mortgage condition may end the contract independently, but the roof misrepresentation gives her an additional ground for relief and may affect any negotiation over the deposit. The strength of her case increases if the false statement was repeated in the listing or in written communications.

Ryan cannot avoid responsibility simply by saying he was repeating what the seller told him. A salesman must not make statements that he knows or ought to know are false or misleading. If he passes on a material statement as if it were true, without qualification, he may adopt it and mislead the buyer. He should have said what he knew, identified the source, and advised Nadia to verify the roof through her own inspection rather than presenting the seller's claim as fact.

Once Ryan learned that the roof was not replaced as stated, he had a duty to correct the record promptly. Staying silent after discovering the falsehood would aggravate the misconduct. The REB can discipline a salesman for misrepresentation or dishonest conduct, and the dealer may face civil and regulatory exposure. Ryan should report the matter to his broker, cooperate with the buyer's attorney, provide his file and correspondence, and stop communicating with Nadia except through the proper channels. He should not give legal advice about rescission. The practical lesson is that a salesman should verify material statements where possible, attribute them accurately, and never treat a seller's assurance as a substitute for the buyer's own inspections and legal advice.