Buyers will typically sue sellers in Small Claims Court over problems that arise after closing when the amount in dispute is $25,000 or less. The main reason is that you can make the claim without a lawyer and the costs are relatively cheap. However, you are much better off using a lawyer or paralegal to represent you.
Some of the common mistakes people make when doing this themselves are as follows:
- They forget that most lawsuits must be brought within 2 years of the action arising, or you forfeit your ability to sue.
- They do not sue the right person; for example, they sue a corporation without the word “Limited” at the end. Any judgement obtained may be worthless.
- Failing to provide sufficient evidence; ie. Invoices, receipts to justify their claim.
Michael Abrams, an experienced paralegal at www.abramslegal.com tells me that since small claims court hearings are open to the public, it is a good idea for anyone thinking about filing a claim to go watch a typical trial to learn what is being done correctly and what judges frown upon.
An experienced paralegal or lawyer will review with you right at the start whether your claim has merit, but more importantly, will ask whether you will be able to collect any money if you win?
If you win in court, sometimes after two years, the judge does not ask the loser for a cheque. You have to collect this money separately.
There is little point spending money and time to get a judgment against someone if you can’t collect. To garnish wages, you need to know where they work. To go after their bank accounts, you need to know where they bank. To go after real estate, you need to know where they may own property.
The cost to file a claim in Small Claims Court is $75. To file a defence cost $40. If you use a lawyer or paralegal and you win, the fee will vary up to $2,500 but if you do win, you can ask the judge for part of your costs, up to 15% of the actual claim; but judges have a lot of discretion to vary this amount up or down. For example, if you make an offer of settlement that is refused and you end up getting more at trial, you can ask for double the fee.
Jordan Farkas, a lawyer with www.mrsmallclaimscourt.ca tells me that some tips for people making a claim are as follows:
- Remember that your initial claim is the first document that will be read by the judge. Make sure it is not scribbled in a hurry. Make it clear and attach all receipts or documents that support what you are asking for.
- Every case will have a pre-trial settlement conference to try and settle the matter. Be prepared for this. Review your opponent’s evidence at the hearing and ask questions, so that you will not be surprised by anything at the trial.
- Make sure that any final argument you make at trial is supported by the evidence, receipts or invoices, so that it clearly sets out your position.
Also remember before making any claim that most judgements become available on the internet. If you lose, a lot of people may read about it.
Be prepared before going to Small Claims Court, so that you have your best chance to succeed.
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I have received many inquiries about my law practice, providing legal services to real estate buyers, sellers and investors. Working with Real Property Transaction Centres, I am now able to close real estate transactions throughout the GTA. If you require any assistance on a transaction that you are working on, please email me at firstname.lastname@example.org
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About Mark Weisleder
Mark is a lawyer, author, instructor, Toronto Star columnist and keynote speaker for the real estate industry.