Vendor Keeps Deposit

  • The recent B.C. case of Tang v Zhang reaffirmed a traditional principle which allowed a seller to keep a $100,000 deposit on a residential property after the purchaser defaulted. The Court allowed the seller to keep the money after a breach of contract, despite the fact that the seller was able to sell the property for an even higher price. The Court relied entirely on an English case from 1884. This is not only problematic because of its obsolescence, but also because the Supreme Court of Canada has not clearly decided the issue. A real estate transaction is the largest contract that most Canadians will enter into and if something unforeseen interrupts the transaction, the vendor may be able to keep the deposit.  Until the Supreme Court of Canada decides the issue, Canadians should be cautious.