Executive Summary: Key Legal and Evidentiary Issues

• Purchaser sought rescission of a real estate deal upon discovering a restrictive covenant limiting development potential.

• The contract excluded liability for registered restrictive covenants that run with the land if they were complied with.

• The buyer had removed a due diligence condition that would have allowed time to investigate development feasibility.

• The restrictive covenant was found to be a valid restriction, not a positive obligation requiring disclosure beyond title registration.

• The seller marketed the property as suitable for a single detached home, aligning with the covenant’s limitation.

• The court upheld the doctrine of caveat emptor, finding no fraud, misrepresentation, or legal basis for rescission.

Facts and background

Parvez Peerpasha Huseni Inamdar entered into an Agreement of Purchase and Sale (APS) on May 15, 2025, to buy a vacant half-acre lot on Bayview Avenue in Toronto for $2.3 million, including a $150,000 deposit. The property was advertised as a prestigious opportunity to build a luxury single-family estate, complete with approved plans for a 6,000 square foot home.

Inamdar’s undisclosed intention was to develop the property into a multi-unit project, such as townhouses or condominiums. However, after signing the APS, he discovered a restrictive covenant registered on title in 2023 that limited construction to a single detached dwelling and prohibited rezoning or adjustment applications. The purchaser then applied to the Ontario Superior Court seeking rescission of the deal.

Legal framework and contractual context

The APS included a clause (Section 10) affirming that the buyer accepted title subject to registered restrictive covenants that run with the land, provided they had been complied with. Inamdar had previously submitted conditional offers allowing for due diligence on development feasibility, but ultimately removed these clauses, submitting an unconditional offer that was accepted.

The court reviewed the equitable remedy of rescission, typically available where contracts are entered into under circumstances such as misrepresentation, mistake, or fraud. It also reviewed the legal principle of caveat emptor (buyer beware), which requires purchasers to exercise due diligence unless the seller has withheld material facts or misled the buyer.

Court’s analysis and reasoning

Justice Leiper held that the covenant limiting the land to a single detached house was clearly a restrictive covenant within the meaning of Section 10 of the APS. It restricted what the purchaser could do with the land but imposed no affirmative obligation to build. Because it was registered and discoverable via a standard title search, the buyer had constructive knowledge of the restriction.

The court found that the seller had marketed the property in a way consistent with the covenant, emphasizing its suitability for a single-family estate. There was no representation, express or implied, that it could be developed into a multi-unit site. The use of terms like “as is, where is” further suggested that the buyer bore responsibility for investigating any limitations.

Importantly, Inamdar was not an unsophisticated buyer. He had drafted conditional offers that would have allowed him to investigate title or zoning, but removed those protections in the final, unconditional offer. The court concluded he assumed the risk and could not now rely on equitable relief to undo the deal.

Outcome

The application for rescission was dismissed. The court found no misrepresentation, fraud, or legal defect in title that would entitle the purchaser to rescind the APS. While acknowledging that the buyer may have been surprised by the covenant, the court emphasized that he had the tools and opportunity to protect himself but chose not to use them. The doctrine of caveat emptor ultimately governed the result. The matter of costs was left to be determined through written submissions.