N.B. home sellers win full $50,000 deposit despite smaller resale loss

New Brunswick home sellers are entitled to keep a $50,000 deposit after their buyers wrongfully backed out of the deal, even though the sellers’ proven losses were substantially smaller.

In Lockhart v. Glidden, 2026 NBCA 66, released June 11, 2026, the New Brunswick Court of Appeal overturned a ruling that limited the sellers to $18,294.12 and required the balance of the deposit to be returned.

The unanimous court awarded the sellers the full deposit held in court, together with any interest earned in that account, and $3,000 in costs. It did not award the deposit plus the sellers’ losses: that additional claim had been abandoned on appeal.

A closing-day objection

David and Cathy Lockhart listed their Irishtown home in 2023. Curtis and Tracy Glidden initially offered $800,000 with a $25,000 deposit. The Lockharts countered at $875,000 with a $50,000 deposit, and the buyers accepted.

The standard-form agreement said the deposit would count toward the purchase price if the transaction closed. If the buyers defaulted, money paid would be forfeited to the sellers as liquidated damages. The sellers alternatively had the option to seek an order compelling completion.

On the afternoon of the scheduled closing, August 21, 2023, the buyers objected to two title encumbrances and wanted them discharged that day. They refused the sellers’ request to extend closing. The deal did not complete, and the sellers later resold at a lower price.

Both sides sought summary judgment. The buyers maintained that their unresolved title objection meant the agreement was null and void and their deposit should be returned. The motion judge instead found that they had wrongfully repudiated the contract. That finding was not appealed.

The remaining dispute was about the money. The judge found that allowing the sellers to keep the deposit and also recover damages would be double recovery. She concluded that the sellers could retain only enough of the deposit to cover their losses and had to refund the remaining $31,705.88.

Security for performance, not just a measure of loss

Writing for the appeal court, Justice Robichaud agreed that sellers cannot recover the same loss twice. But that did not mean a defaulting purchaser was entitled to reclaim the portion of a true deposit exceeding the seller’s damages.

A true deposit serves as security that encourages the buyer to complete the transaction. Unless the parties agree otherwise, a buyer who wrongfully refuses to close generally forfeits it. Proof of a corresponding financial loss is not required.

The court distinguished that security function from a payment that merely advances part of the purchase price. Calling a payment a deposit is relevant, but the label alone does not prevent a court from considering whether it is actually a penalty. The judgment also recognized that an excessive or unconscionable forfeiture can raise a separate issue. Relief from forfeiture had not been pleaded in this case.

Where sellers retain a forfeited deposit and also seek damages, the deposit must be credited against those damages. Ordinarily, only losses exceeding the deposit can support an additional recovery. The lower judge had incorrectly turned that rule against double recovery into a requirement to refund the unused balance.

Here, the payment had been found to be a true deposit. Because the Lockharts’ losses were less than $50,000, there was no additional damages claim to recover. That did not deprive them of the full deposit.

The contract did not require the sellers to force a sale

The buyers also argued that the sellers should have pursued specific performance rather than accepting the failed transaction. The court rejected that position: the agreement expressly left the choice of seeking to compel completion to the sellers.

Accepting the buyers’ wrongful refusal to complete also did not make the contract null and void under the separate clauses requiring a deposit refund in that situation. Terminating a contract after a repudiatory breach does not, by itself, erase the agreement from the outset.

The court left one contractual question open. Because the actual losses did not exceed the deposit, it did not decide whether the agreement’s particular liquidated-damages wording would permit an additional recovery if the losses had been greater.

The result applies the law of true deposits to this agreement and an unchallenged finding of wrongful repudiation. It does not mean that every payment labelled a deposit is automatically forfeited whenever a real estate transaction fails.