A buyer who keeps asking for a little more time is not automatically a buyer who is stalling in bad faith. Financing can genuinely fall through and need to be rearranged; diligence can genuinely turn up something that needs a closer look. The problem is rarely the request itself — it is that most LOIs never set a real deadline in the first place, which means there is nothing on paper to measure the request against.
Key takeaways
Treadstonelaw.ca’s guidance on this exact scenario names the structural problem plainly: an LOI without a real closing deadline is a situation where “a deal can drift indefinitely, with neither side entirely clear on when — or whether — it’s reasonable to treat the process as over if things stall.” That is not a description of an unusually difficult buyer; it is a description of what happens by default when the document never said when the process was supposed to end.
The same guidance identifies a specific way this goes wrong that catches sellers who think they’ve protected themselves: “you can end up in a situation where your exclusivity obligation has a clear end date, but the underlying deal itself has none — leaving you bound not to shop elsewhere while the actual transaction has no defined point at which you’re free to say it’s over.” A seller who negotiated a hard exclusivity end date can still be stuck, in practice, because nothing forces the buyer to either close or walk away once that date passes — the seller is simply released from the specific promise not to shop elsewhere, while the buyer’s slow-moving process continues on its own schedule.
The fix treadstonelaw.ca recommends is specific: “add an outside date and a walk-away mechanism before signing, not after drift sets in.” An outside date gives either party a defined point at which the deal can be treated as dead if it hasn’t closed — distinct from the exclusivity end date, which only governs whether the seller can talk to other buyers. Separately, on how long an exclusivity period itself should run, a related treadstonelaw.ca article on exclusivity clauses confirms there is no default to fall back on: the length “varies by deal and is a negotiated term with no fixed standard length — it should be set based on how long the parties realistically expect due diligence and negotiation of the definitive agreement to take, not a generic default.”
A single extension request tied to a specific, named reason — a lender needs another two weeks, an environmental report came back late — is a normal part of most transactions and rarely worth resisting on principle. What is worth watching is a pattern: repeated requests with vague or shifting justifications, requests that arrive right as a deadline expires rather than in advance of it, or a buyer who wants an extension but resists putting a new outside date on the extension itself. The last one is the clearest tell, because it repeats the exact drafting gap the original LOI should have closed.
A worked timeline
An LOI is signed March 1 with a 60-day exclusivity period, which runs to April 30. The buyer asks for a 30-day extension five days before it expires, citing a lender delay; the seller grants it, and exclusivity now runs to May 30. A second, similar request pushes it to June 29. Granting both extensions in full doubles the original period — 120 days of exclusivity from a deal that was originally scoped for 60 — without ever forcing the underlying question of whether the buyer can actually close. An outside date fixed at signing, separate from the exclusivity clock, would have forced that question at a specific point regardless of how many extensions were requested along the way.
Where the stakes justify it, a break fee gives the drift-prevention mechanism financial teeth. Treadstonelaw.ca’s guidance on break fees describes buyer-triggered fees as “payable if the buyer walks away without a permitted reason,” more common where “the seller granted meaningful exclusivity” or “significant deal-specific costs were expected.” It is explicit, though, that “there is no standard or typical amount — this is a negotiated deal term that varies enormously with deal size, industry, and the specific risks,” and that “most straightforward, smaller Ontario business sales rely on exclusivity and confidentiality clauses without a separate break fee.” A break fee is a tool for a specific kind of leverage problem, not a default clause every LOI needs.
The underlying diagnosis matters more than the tool chosen to fix it. See managing multiple interested parties at once for how keeping a second conversation alive changes the calculus on whether to grant an extension at all, and managing confidentiality during a live process for how a longer exclusivity period extends the window the seller’s sensitive information sits with one buyer.
It depends entirely on what the LOI actually says. Where an outside date and walk-away mechanism were built in at signing, refusing an extension is simply enforcing the document as written. Where no outside date exists, refusing an extension is harder to justify on paper because nothing defined when the process was supposed to end in the first place — which is precisely the drafting gap worth closing before it becomes an argument.
A break fee negotiated mid-process, after stalling has already started, has much less leverage behind it than one negotiated at signing — the buyer has little incentive to agree to a financial penalty for behaviour they are already engaged in. An outside date and walk-away mechanism are usually the more realistic fix once a deal is already underway.
It explains why a delay happened, but it does not by itself justify an open-ended extension. Deavo’s own account of Canadian sale timelines notes that a buyer’s financing falling through is “one of the more common reasons a deal that seemed close to closing has to restart” — which argues for building financing contingencies and a real outside date into the LOI from the start, not for treating financing delay as a reason to leave the timeline undefined indefinitely.
A short call can help identify whether your exclusivity clause and outside date are actually doing the job they’re supposed to.
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