Residential Market Commentary - Seller Defaults
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- Mar 9, 2026
- First National Financial LP
Concerns about growing delinquencies and defaults have been nagging Canada’s mortgage and real estate markets since interest rates began rising nearly four years ago. So far though, the dreaded “mortgage cliff” has not materialized for most homeowners who are renewing their loans. But a problem appears to be arising on the seller’s side of the transaction.
It is not just those who are trying to hold-on to their homes who have fallen into financial trouble and gotten behind in their payments. Some of those who “need to sell” are finding themselves so deeply indebted that the value of their property is not high enough to cover the costs of the sale. They actually cannot afford to sell.
It is a problem that can add considerable complications and expense to a real estate transaction or scuttle a deal entirely, and it is growing.
Well known mortgage broker Ron Butler told the Globe and Mail his firm has seen these sorts of “seller defaults” increase from one-a-year to one-a-month.
Penalties, unpaid taxes, closing costs and other fees can add thousands to what sellers are required to pay, over and above the outstanding balance on the mortgage.
A high level of due diligence is required to uncover all of the debts that may be attached to a property. Otherwise, hopeful buyers could get stuck paying extra or be forced to walk away from the deal altogether.
While there are legal remedies in cases of seller defaults they may well cost more and take more time than a buyer is willing to spend.
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