In Peters v Warlow, 2026 BCSC 1741, the buyers allowed a financing condition to expire and returned the next day with an offer $30,000 lower. The Supreme Court of British Columbia found no breach of contract.
The decision explains why condition deadlines can allocate risk between parties, when purchasers must act honestly in seeking financing, and why good faith does not require either side to renegotiate an expiring agreement.
The Two Contracts
The sellers agreed to sell their North Saanich property for $1,530,000. The contract was subject to the buyers obtaining satisfactory mortgage financing. The financing deadline was initially November 2, 2017 and was later extended to November 6.
The buyers planned to finance the purchase using credit facilities secured against both the property being purchased and their existing Metchosin home. On November 6, the bank approved the proposed financing subject to full appraisals of both properties. The financing therefore remained conditional.
That evening, the sellers offered to extend the financing deadline to November 9. The buyers did not accept the extension or waive the condition, and the first contract expired. The following day, they offered $1,500,000 for the same property, again subject to financing. The sellers accepted, the appraisals were completed, and the transaction later closed.
The sellers sued for the $30,000 difference between the two purchase prices. Their claim raised the central question in the case: did the buyers breach their contractual obligations, including the duty of good faith, by declining the extension and allowing the first contract to expire before making a lower offer?
Financing Conditions and Good Faith
Justice Saunders found that the buyers had made honest efforts to obtain financing. However, the financing clause also gave them discretion because the purchase remained subject to financing on terms satisfactory to them. That discretion was not unlimited.
The Court applied Griffin v Martens, 1988 CanLII 2852 (BCCA), which addresses the meaning of satisfactory financing. The assessment takes into account the reasonable subjective standards of the particular purchaser rather than allowing a purchaser to rely on any personal preference or concern.
The Court also considered Dhanesar v Pandher, 2026 BCCA 63, which addresses how good faith applies to contractual discretion, a case in which ATAC LAW represented the purchaser, Ms. Dhanesar. The two authorities serve different purposes. Griffin helps determine what satisfactory financing means under the clause, while Dhanesar addresses how contractual discretion must be exercised after the contract and the purpose of that discretion have been identified.
The sequence matters. A court first interprets the agreement and identifies the rights and discretion it creates. Good faith then constrains how that discretion is exercised. It does not create a different bargain between the parties.
Why the Deadline Mattered
The sellers conceded that the buyers were entitled to decline to complete without unconditional financing. Their argument instead focused on the extension. They maintained that the financing condition gave the buyers time to obtain financing, not an opportunity to let the contract expire and then purchase the property for less.
Justice Saunders rejected that argument. The November 6 deadline gave both parties certainty and allocated the risk that financing might remain unresolved. The buyers had to make honest efforts and exercise their discretion consistently with the purpose of the financing condition while it remained operative. Good faith, however, did not require either party to renegotiate the agreement or grant a further extension.
The Court illustrated the point by reversing the parties’ positions. If the buyers had requested another extension while the sellers held a better offer, the sellers would not have been required to preserve the existing transaction. They could have refused the extension or proposed different terms. The same principle allowed the buyers to decline the sellers’ proposed extension.
The financing condition remained unsatisfied when the November 6 deadline passed without another extension. The first agreement therefore expired, leaving the buyers free to make a new offer. Their decision to offer a lower price the following day did not turn the expiry of the earlier agreement into a breach.
Did the Sellers’ Financial Pressure Change the Result?
The buyers knew the sellers were under significant pressure to complete the sale. The sellers had already committed to purchase another property, and their agent had disclosed information about the consequences they could face if their existing home did not sell.
The Court found that this knowledge did not create an additional contractual obligation. Once the first agreement expired, good faith could not be used to create a new requirement that the buyers preserve or extend it.
That conclusion was consistent with Dhanesar. Good faith constrains rights and discretion already created by the agreement. It does not add a contractual term the parties never negotiated.
What Peters v Warlow Does Not Decide
The decision does not give purchasers unrestricted discretion under financing conditions. The Court found that these buyers had made honest efforts to obtain financing, which remained important to the result. A purchaser who makes little or no effort to secure financing could face a different analysis.
The Court also did not decide what happens if a purchaser already has satisfactory unconditional financing but still allows the condition to expire. In Peters, the financing available on November 6 remained subject to appraisals, and the sellers conceded that the buyers could decline to complete without unconditional financing.
The result therefore remains tied to the wording of the agreement and the evidence before the Court. Different contractual terms, financing circumstances or conduct could produce a different outcome.
The Sellers’ Claimed Loss
Although the sellers did not establish liability, the Court considered the damages that would have followed if they had. The difference between the purchase prices was $30,000, but the sellers’ net loss would have been $25,000 because the buyers’ agent waived an additional $5,000 in commission under the second transaction.
The sellers also claimed lost investment returns after withdrawing funds from their portfolio to finance the deposit on another property. Justice Saunders found that claim would have been too remote and insufficiently proven because the buyers did not know how the deposit had been funded or how those funds otherwise would have been invested.
The damages analysis therefore looked beyond the headline difference between the two contract prices and considered the sellers’ actual financial position.
Practical Lessons From Peters v Warlow
The decision highlights three connected points. The wording and purpose of a financing condition determine the protection it provides. The agreed deadline can determine when contractual obligations come to an end. A purchaser relying on the condition must also make honest efforts and exercise contractual discretion consistently with its purpose.
Parties who need protection against financing delays should address that risk in the agreement itself, including through a longer condition period or an express extension mechanism. Good faith governs how contractual rights and discretion are exercised, but it does not require either party to renegotiate an expiring agreement or grant an extension that was never promised.
ATAC LAW advises buyers, sellers, developers and other parties on disputes involving failed real estate transactions, financing conditions, deposits and contractual obligations. Our real estate litigation lawyers can assess your agreement, protect your position and represent you through negotiation, mediation or court proceedings across British Columbia.
