Executive Summary: Key Legal and Evidentiary Issues

• Interpretation of the preliminary contract (Offre d’achat) and whether later amendments created a “new” contract triggering a fresh 10-day withdrawal right under article 1785 CcQ
• Scope and timing of the purchaser’s statutory right of withdrawal (faculté de dédit) versus a simple change of mind for financial reasons
• Evidence about mortgage financing conditions, SCHL insurance requirements, and the buyers’ inability to provide an additional $14,000 to complete the transaction
• Legal effect of contractual default clause 30 of the Offre d’achat allowing the promoter to cancel and retain the buyer’s deposit in case of non-compliance
• Assessment of the developer’s conduct, including its relationship with Desjardins and alleged influence over financing decisions, and whether this attracted any civil liability
• Determination of which party bears the consequences of the failed sale and whether the deposit (acompte) must be refunded or can be forfeited

Facts of the case
Assiatou Bah and her sister agreed on 27 December 2022 to purchase a condominium unit under construction in the Les Cours Bellerive divided co-ownership project from Développements Les Cours Bellerive inc., the developer and promoter of the project. The promise to purchase (Offre d’achat) set a purchase price of $343,478.68, inclusive of a 4% mortgage insurance premium with the Canada Mortgage and Housing Corporation (SCHL), and provided for a deposit (acompte) of $16,550 on signature, with the balance to be financed through a first-rank hypothec with “BMO or others.” The deed of sale was to be signed between 15 June and 15 December 2023. Desjardins, through the Caisse Desjardins de Mercier-Est–Anjou, initially granted mortgage financing on 7 February 2023 in the amount of $339,356.92, including the mortgage insurance premium, with a deadline of 31 July 2023 to sign the loan contract and hypothec. Upon receiving confirmation of financing from Desjardins, the developer took the agreed deposit. No deed of sale was ultimately signed. The plaintiff later brought a small claims action seeking the return of the deposit, reducing her claim to $15,000 to fit within the jurisdictional limit of the Division des petites créances.

Key contractual provisions and financing context
The preliminary contract contained two central clauses at the heart of the dispute. Clause 26 granted the promising purchaser a “faculté de dédit,” allowing her to withdraw within ten days of signing the preliminary contract, subject to paying an indemnity of 0.5% of the total sale price, which the seller could set off against sums already received. Article 1785 of the Civil Code of Québec requires such a right of withdrawal in preliminary contracts for the sale of new residential units by a constructor or promoter to an individual acquiring to occupy the property personally, and the clause reflected that statutory requirement. Clause 30 addressed default: if the promising purchaser failed to meet any contractual obligation, the seller could, after seven days’ written notice to remedy the default, terminate and retain all deposits already paid, without prejudice to other recourses. The financing context became complicated when Desjardins informed the borrower on 4 October 2023 that SCHL would not insure the loan because it refused to include the sister’s foreign (non-declared in Canada) income in its ratio calculations. Without mortgage insurance, the initial financing structure collapsed. Desjardins offered three options: using a government incentive program requiring an additional $14,000 added to the deposit and removing the sister from the financing; adding a different, financially strong co-borrower and removing the sister; or providing a much larger down payment (20% total) to avoid mortgage insurance altogether. Bah and her sister effectively chose the first option, leading Desjardins on 11 October 2023 to issue new financing approval for $275,201.56 (including the 4% insurance premium) with a new deadline to sign the loan and hypothec by 2 April 2024. To accommodate this revised financing, the developer accepted post-October 17, 2023 modifications to the Offer (Modifications postérieures). These amendments removed the sister as co-promising purchaser, adjusted the builder’s rebate, and recalculated the net disbursement of the purchase price. The evidence showed that the increased builder’s rebate was granted specifically to help the plaintiff “pass” mortgage qualification. On 19 October 2023, Bah completed the final inspection of the unit and signed the certificate of completion, which was sent to the notary to permit preparation of the deed of sale.

Issues before the court
Two central questions were submitted to the Court of Québec, Small Claims Division. First, could the plaintiff still rely on the contractual and statutory right of withdrawal (faculté de dédit) to unilaterally walk away from the transaction and demand the return of her deposit, on the theory that the October 2023 modifications had triggered a new 10-day withdrawal period? Second, if the right of withdrawal was no longer available, which party—buyer or developer—had to bear the consequences of the non-signature of the deed of sale, particularly in light of clause 30 that allowed the seller to retain deposits in case of buyer default? These legal issues were interwoven with evidentiary disputes over why financing failed: whether Desjardins’ decisions and SCHL’s insurance stance were attributable to the defendant, or whether the decisive factor was the plaintiff’s inability to raise the extra $14,000 needed under the chosen financing scenario. There was also an evidentiary question about the weight to give Desjardins’ internal and external correspondence, including a later letter (February 29, 2024) addressed to the developer confirming mortgage financing, even as the plaintiff was insisting on withdrawing from the purchase.

Court’s analysis on the right to withdraw
The court first addressed the argument that the October 17, 2023 Modifications postérieures created a new preliminary contract, thereby reviving the 10-day withdrawal period under article 1785 CcQ and clause 26 of the Offer. The judge noted that a modification, even of an essential or substantive term, does not automatically produce a new contract. To amount to novation, there must be a clear (express or tacit) intention to extinguish the earlier contract and replace it, with a change in the object or cause of the obligation. In this case, the court found no such intention. The post-October amendments were instead treated as accommodations to allow the original transaction to go through. Removing the sister’s name as co-promising purchaser did not extinguish her interest: she remained involved, and her participation in communications and negotiations showed that she still had a stake in the project despite no longer being formally named in the Offer. The developer’s willingness, expressed in November 2023, to re-add the sister to the Offer and redirect the file to another accredited financial institution likewise confirmed continuity, not a fresh contractual relationship. The increased builder’s rebate was interpreted as a commercial concession to facilitate the sale, not as the basis for a new preliminary contract. On this analysis, the Offer signed in December 2022 remained the governing preliminary contract, and the statutory and contractual withdrawal period expired in January 2023. By the time Bah sent emails on 19 October and 8 November 2023 to declare that she was backing out “for financial reasons,” the withdrawal right was long gone. The court therefore held that she could not rely on clause 26 or article 1785 CcQ to rescind the agreement and reclaim her deposit.

Allocation of risk and consequences of non-signature
Turning to responsibility for the failure to close, the court accepted the developer’s position that the non-signature of the deed of sale ultimately flowed from the plaintiff’s financial incapacity to meet the extra capital requirement imposed by the revised financing scenario. The 18 January 2024 letter from Desjardins, cancelling the 11 October 2023 financing, corroborated the plaintiff’s and her sister’s own statements that they were unable to produce the additional $14,000 required on top of the original deposit. The plaintiff argued that Desjardins’ shifting positions and its nullification of prior approvals should excuse her from performance and justify refunding the deposit. However, the court found no proof that the developer had orchestrated or improperly influenced Desjardins’ decisions. The developer had a broader business relationship with approved lenders, but there was no evidence it played an “active and liability-creating” role in the credit decisions or SCHL’s insurance analysis. The court also rejected suggestions that the developer had acted negligently by contracting with someone whose co-purchaser lived in England, noting that foreign residence alone does not disqualify borrowers from SCHL-insured loans and that there are exceptions. The prior refusal of a different lender to finance a separate transaction involving the same sister had not been clearly disclosed to the developer at the time of this Offer. Given this context, the court concluded that the risk of financing failure and the inability to assemble the required additional funds lay with the purchaser, not the developer. Applying clause 30 of the Offer, the buyer’s failure to sign the deed of sale and complete the purchase constituted a default entitling the vendor to terminate and retain all deposits already received, without further proof of loss. In filing suit for the return of the deposit, the plaintiff also effectively waived the seven-day cure period referenced in clause 30 and placed herself in default by refusing to proceed.

Outcome and implications
The Court of Québec, Small Claims Division, ultimately dismissed Assiatou Bah’s claim for the return of her deposit and held that Développements Les Cours Bellerive inc. was entitled under the contract to retain the amount already paid. Each party was ordered to bear its own costs, with no additional monetary award, damages or costs ordered payable to either side beyond the contractual effect that the developer kept the existing deposit. In practical terms, the successful party in this litigation was the defendant developer, and the total judicially ordered monetary award in its favour was zero dollars, as the judgment did not order any new payment or quantified damages; it simply confirmed the defendant’s right to retain the previously paid deposit and required each side to assume its own costs, with no determinable additional amount granted.