A recent Ontario court ruling sent builders a clear message: they can’t pad closing costs with unproven or unauthorized extras and expect to keep the deal — and the deposit. Buyers, however, were given their own warning: once a deal dies, they can’t treat the home as free storage.
In March 2020, Mohammadali Taheripouresfahani and Mahnaz Dehghani Sanji agreed to purchase a stacked condominium townhome on Phelps Lane in Richmond Hill from Dormer Homes. The contract price was $773,030.69 including upgrades. Over time the buyers paid deposits totalling $125,765.19.
At the end of April 2023, the buyers moved in as interim occupants at $3,782 a month until the builder could provide clear title and close the deal.
Just before final closing in September 2023, Dormer Homes prepared a statement of adjustments that included almost $60,000 in extra charges. They consisted of $9,040 for increased levies and development charges, $9,224.45 for utility meters, legal and administrative fees of $9,723.65, and “alternative materials” at a cost of $30,533.82.
On closing, the lawyer for the buyers demanded clarification of the extras, and said his clients would not close unless the charges were deleted.
The builder refused to back down, but later offered partial credits if the buyers would sign a mutual release.
After the buyers declined the offer, Dormer Homes terminated the agreement, demanded the buyers vacate the unit, and kept the deposit.
Taheripouresfahani and Sanji then sued to get their deposit back, and Dormer Homes claimed vacant possession and ongoing occupancy payments.
The case reached the Ontario Superior Court in September 2025.
Since the facts were not in dispute, Justice Robert E. Charney was able to reach a decision based on the arguments of the lawyers. He ruled that the legal and administrative fees were not authorized by the agreement and that Dormer was only allowed to impose extra charges for levies, utility meters and alternative materials if it provided proof of those amounts. It had failed to do so.
Justice Charney wrote that Dormer Homes’ demand for an additional payment of almost $60,000 was a breach of contract. The buyers were entitled to $125,765.19 for the return of their deposit and payment for upgrades.
But the story doesn’t end there. One unusual feature of the case is that the buyers remained in possession of the home while the lawsuit dragged on. The judge ordered them to vacate the unit and to pay the builder $78,544.56 for occupancy fees, condominium fees and property taxes for the period they were in possession of the home. This amount will be deducted from the amount the builder owes them.
The takeaways from this case are:
• Builders can’t hide behind vague clauses. If they want to add closing adjustments to the purchase price, they must provide proof of their entitlement. The courts will not allow creative interpretation of purchase agreements.
• Making a mutual release as a condition of closing is improper.
• Buyers don’t get free occupancy after a deal dies. If they fail to vacate the unit, they will have to pay ongoing charges.
An important factor that allowed a case like this to go as far as it did was the mandatory Tarion addendum, which allows builders to add a long list of potential additional charges to purchase agreements. In a 2020 Court of Appeal ruling in another case, Justice Peter Lauwers called the addendum a “convoluted and confusingly long and obscure document” and “a trap for the unwary.”
Clearly, some meaningful reform of the addendum is long overdue.
