1773972
| Pregunta | Respuesta |
| Form of the Agreement of Purchase and Sale | 1-Parties 2- Description of Property 3- Price 4- Deposit 5- Balance of Purchase Price 6- Conditions |
| (Parties): If Owner is married | - spouse join agreement - Release interest of spouse under Family Law Act |
| (Parties): Capacity to contract | - Cannot contract until they are 18 - Mentally incompetent/incapacitated (Junkin) - Contract voidable - Substitute Decisions Act and Mental Health Act - appointment of public guardian |
| (Parties): If client making offer on behalf of someone else | - Confirm rights of assignment and escape of liabilities - Also can assign by section 53 of Conveyancing Act...but client will remain liable |
| (Parties): Corporation | - Indoor Management rule: Party executing agreement has authority to bind the corporation - Directors, officers, or agent |
| (Parties): Company TO BE incorporated | - Section 21 of OCBA: Pre-incorporation contract - person acting on behalf can be held liable, unless indicates otherwise |
| Parties: If Partnership | - Any partner may bind the partnership (Section 6 of partnership act) - |
| Parties: Limited Partnerships | - General partners must execute agreement |
| Parties: If property is an estate asset | - Person with authority is the executor named in the will - Certificate of appointment of estate trustee of a will - if no will, relative must write a letter to volunteer |
| Description of the Property | - Cannot be vague or uncertain - "More or less" can be used - Refer to any survey or legal description you have available to Schedule A - If dealing with parcel that is being purchased for a lump sum, describe it in a way that both parties are clearly aware of what they are buying and selling - If parcel bounded by streets, lanes, railways, rivers, fences or any other landmarks, reference to such sould be included in the description |
| Description of Property: Easements | 1. Obvious: Mutual driveway, a party wall or a trunk sewer easement a. Failure to mention is ground for rescission 2. Less obvious: Footpath, roadway or overhead utility line which was visible to purchaser 3. For cottage property a. If access is over a right of way, it must be described accurately b. If lakefront property, include an exception for the 66-foot reserve for road allowance along as the lakeshore as part of the description i. Failure to do so will make agreement unenforceable |
| Description: Buildings, fences and fixtures located on the property: | 1. Section 15(1) of the Conveyancing and law of Property Act : No need to mention it in the description 2. But should check if any fixtures are to be excluded |
| Price: | Price is settled by the parties. Lawyers should not be in negotiation because they will be held liable. Manner of payment: 1. Must be mentioned 2. Should be amended to provide that it is to be paid by certified cheque or bank draft rather than by cash or “negotiable instrument” as is currently reflected on the OREA form 3. Also amend if it is to be paid by wire funds |
| Deposit | - Indicate the amount - Deposit is paid to vendor's lawyer or real estate broker in trust - The agreement should deal specifically with the application of the deposit and all interest accrued therein in the event the transaction does not close. |
| Deposit: In the event transaction does not close | o If purchaser breaches agreement, vendor gets deposit. o If vendor breaches, purchaser gets deposit returned. o Where both purchaser and vendor default, purchaser entitled to deposit. o Where return of full deposit/forfeiture would represent windfall to the vendor, partial relief may be provided to purchaser. Workers trust and Merchant Bank v Dojap Investments: 25% deposit was seen to be unreasonable. Usual deposit in that context was 10%. Full deposit was returned. o In practice, some lawyers may refuse to release deposit without a court order |
| Balance of Purchase Price | - Terms of the payment - Language will be required to deal with mortgages 1- Vendor take back mortgage 2- Existing mortgage to be assumed as part of purchase price 3- New mortgage to be arranged to provide part of the Purchase Price 4- Existing Mortgages to be discharged |
| Balance of Purchase Price: vendor takeback mortgage | 1- Mortgage to be given back to vendor as part of purchase price. |
| Balance of Purchase Price: Existing Mortgage to be assumed as part of purchase price | b. Can enter into mortgage assumption agreement which has to be approved by the bank c. Ask to see mortgage document first d. If terms are not set out accurately in agreement, purchaser can rescind agreement e. If mortgage less than amount owing, the purchaser will be forced to raise additional cash on short notice f. If mortgage more and closed, agreement can be rescinded g. If mortgage more but open, agreement can still be allowed because parties can easily reduce amount h. Be sure it does not contain a “due on sale” clause |
| Balance of Purchase Price: New Mortgage to be arranged to provide part of Purchase Price | a. Will be drafting document on behalf of purchasing client b. Be aware of principle of the mortgage, term of the mortgage, the interest rate, monthly payment, amortization period |
| Balance of Purchase Price: Existing Mortgages to be discharged | a. Varies according to the mortgagee b. If mortgage held by institutional lender, the solicitor will normally close the purchase when presented with a statement from the mortgagee showing the amount required to obtain the discharge, together with a direction authorizing the purchaser to deduct from and pay out of the balance due on closing that amount directly to the mortgagee. Vendor’s solicitor will then undertake to obtain and register the discharge. i. Personal solicitor’s undertaking to discharge mortgage within a reasonable time after closing c. If mortgage held by individual or a private company, solicitors should insist upon the delivery of the executed discharge for registration on closing i. If individual who lent money, if money is paid to them on closing, they can disappear without it being discharged. ii. So require a signed, executed discharge d. Beware if the sale agreement does not contain “the typical clause” (Prof doesn’t go over this) e. If no typical clause, insert clause from page 240 |
| Conditions | Schedule A. Can add any amount of additional clauses. |
| Conditions for Rural properties | 1. Condition of a bacteriological analysis of the water 2. Warrant that septic system functions a. Or to have septic system pumped or inspected 3. Confirmation that there is no environmental contamination |
| Conditions for Rural properties | 1. Condition of a bacteriological analysis of the water 2. Warrant that septic system functions a. Or to have septic system pumped or inspected 3. Confirmation that there is no environmental contamination |
| Common conditions: | 11 in total - Financing - Inspection - Environmental assessment: When property had history of hazardous activity. Environmental liability extends through entire chain of title So if you don’t assess it, you may be liable for it in the future - Confirmation of zoning: So that intended use by purchaser is not going to be prevented Problem: Section 9 of the agreement: No warranties on future use - Purchaser has right of a final walkthrough to make sure there is no damage to the unit since last time you visited o Harkness v Coonie? - Conditional Upon sale of the buyers property - Survey - Obtaining insurance - Personal Property Security search (i.e. for any chattels, - furnace, hot water tank etc.) - Clearance certificate if vendor is a non-resident of Canada - Oil tank meets provincial standards |
| Conditions for Condos | 3. Review of condo documents – status package from condo corporation a. Most agreements of purchase and sale do have condition on review of status certificate (i.e.: who board of directors are, increase of costs, pending lawsuits, etc) |
| Common Conditions for Multi-Unit | 4. Fire retrofit 5. Electrical 6. Compliance report from the city – zoning 7. Rent rolls 8. Rent Tribunal report on any pending actions 9. Environmental reports |
| Conditions for Commercial or vacant land | 10. Environmental reports a. Phase 1 – paper reports, history of property b. Phase 2 – actual site inspection (drilling holes) and testing soil c. Phase 3 – fixing and final report |
| Chattels | chattel not affixed & does not go w/property unless specifically included (i.e. fridge, stove, etc.) |
| Fixtures | anything affixed; it goes w/property (i.e. front door, trees, fences, hedges, etc.) unless excluded |
| Rental items | hot water tanks, gas furnaces are mostly now rentals but company now puts a notice of security interest on the title (register it) - Assumed fixture (goes with property): If not excluded & then find out purchaser has to pay $ still owing – vendor may be required to pay out of purchase price |
| Irrevocability | once offer is made in its final form, you agree to leave the offer open for a fixed period of time during which it can’t be withdrawn, after time expires, so does the offer - Once an offer is accepted, it must be communicated to the other party before the contract is considered complete and binding - Any changes to offer converts the offer into a counter-offer which other party must accept |
| Closing date | date money changes hand for title and vacant possession (Registry Office open weekdays 9-5pm) |
| Notices | waiver of conditions, etc. Tells you where to fax notices that conditions have been met and therefore are waived. |
| Title search | 1. Title requisition must be given by date defined → all issues that have been raised by your title search i.e. work orders - usually between 15 to 30 days 2. The earlier of: i) 30 days from the later of: a) the requisition date (contract date); or b) the date on which the conditions are fulfilled or waived OR ii) 5 days prior to completion → this is the date you must have all the extra searches done (municipality search) - This second work period is given to investigate whether there are any work orders outstanding, whether the property’s use is lawful and whether property insurance can be obtained for the property Less significant due to title insurance Insurance will cover the title deficiencies Can spend money on insurance rather than searches - Requisitions - Dates |
| Representations, Warranties, Future use | - there are no representations, warranties or agreements other than those contained in the agreement in writing and specifically no representation or warranty as to any future intended use of the property. - if you are planning on using the property for something different, you must disclose. - If a party was induced into agreement by any representation or warranty, this should appear in the agreement. If not, by signing the standard agreement, the person is estopped form ever making any claim under that representation, condition, or warranty. - For difference between warranties, conditions and representations and their implications: Read p.250. |
| Conditions as to Good Title | - If title is not good and free from all encumbrances except those stated, there is no obligation on the purchaser to close. (This is a common law duty, even if it is not stated in the agreement) (Zender v Ball) - Vendor must show a good title that being a marketable title Marketable title: A marketable title is one that can be transferred to a new owner without the likelihood that claims will be made on it by another party - By signing the agreement, a purchaser does agree to accept title subject to certain - encumbrances and qualifications: - - Last two sentences of para 10 is the rescission clause: vendor can choose not to answer requisition, thus vendor can get agreement terminated and deposit returned to purchaser. |
| Electronic Registration | Where electronic registration is mandatory, the parties will cause their solicitors to enter into escrow agreements or document registration agreements in forms recommended by the LSUC pursuant to which all documents and moneys required to complete the transaction will be tendered. |
| Production of Documents | 18. If you as vendor, hold any documents, you must deliver them to the purchaser. a. Clause is not adequate in so far as obligations to provide surveys are concerned 19. Also deals with vendor’s obligation to discharge institutional mortgages. |
| Right of purchaser to inspect prior to closing | 20. Person named as purchaser has inspected the property and therefore the offer may estop a purchaser from alleging that no inspection was made. 21. Purchaser can always insert clause that agreement is conditional upon satisfactory inspection. BUT vendor might not like that. |
| Building at Risk of Vendor | 22. At common law, the risk of any loss or damage to property is on the purchaser as beneficial owner. 23. But paragraph 14 reverses it to put risk on vendor. 24. Provision does not deal with risks such as changes in zoning or environmental problems. 25. So should still insert clause stating the purchaser allowed to terminate if some essential matters have changed on the date of closing. |
| Insurance Proceeds | 26. In case of substantial damage to the buildings between the date of signing of the agreement of purchase and sale and the date of closing, the purchaser has the option to a. cancel the agreement and demand the return of the deposit or b. to claim the proceeds of insurance and complete the transaction. 27. Parties can amend provision so to clarify what substantial damage is. |
| Planning Act | 28. Para 15: Agreement subject to compliance with the Planning Act 29. Vendor is responsible for obtaining any consent necessary under the Planning Act 30. See chapter on Section 50 of the Planning Act. |
| Who Prepares documents | 31. The deed or transfer is to be prepared at the expense of the vendor, 32. the mortgage, if any, at the expense of the purchaser. 33. The documents must be in registerable form. 34. Also requires parties and their solicitors to complete the statements on the transfer relating to the Planning Act if the purchaser so requires. |
| Residency and Family Law Act | 36. Relating to Income Tax Act (Para 17): Requires a vendor to either obtain the requisite clearance certificate from the Canada Revenue Agency exempting the property from tax or to provide a statutory declaration on closing confirming that the vendor is not a non-resident. a. Or else, purchaser can withhold from purchase price amount to satisfy tax obligations. Non-residents have to remit up to 25% of their gain from the sale. 37. Relating to the Family Law Act (Para 22): Warranty that spousal consent is not necessary unless the vendor’s spouse has executed the agreement in the area provided for spousal consent. |
| Adjustments | Similar to Vendors and Purchasers Act s.4(d) 38. For rents, mortgage interest, realty taxes, local improvement rates, public or private utility charges & fuel 39. Adjustments are needed in order to determine the balance due on closing |
| Time of the Essence | 40. If either party defaults on the specified date for closing, the other party may pursue remedies. 41. If closing cannot take place on the specified date, it is important that an alternate date be fixed by the parties or their solicitors and that letters confirming that date be exchanged. |
| Time of the Essence | 40. If either party defaults on the specified date for closing, the other party may pursue remedies. 41. If closing cannot take place on the specified date, it is important that an alternate date be fixed by the parties or their solicitors and that letters confirming that date be exchanged. |
| Tender | Tender of documents or money can be given to parties or their lawyers. |
| Tender | Tender of documents or money can be given to parties or their lawyers. |
| Urea Formaldehyde Foam Insulation | 42. The vendor warrants that the property does not contain any urea formaldehyde foam insulation (UFFI). 43. Might also want to make sure that building has NEVER contained UFFI. |
| Conflict | 44. Any conflict or discrepancy between those additions and the pre-printed portions of the agreement will be decided by reference to the additions, which are deemed to supersede the pre-printed portions. 45. Still good practice to include schedule detailing the changes to the pre-printed provisions. |
| Commission clause | Real estate agents entitled to commission on closing date from moneys received. |
| Certificate of Pending Litigation | 46. Regardless of the nature of any subsequent dispute by the parties resulting in the termination of the purchase agreement, the purchaser will be prohibited from registering a certificate of pending litigation. 47. Such certificate would prevent any further dealings with the property pending the settling on the litigation. |
| Conflict | 44. Any conflict or discrepancy between those additions and the pre-printed portions of the agreement will be decided by reference to the additions, which are deemed to supersede the pre-printed portions. 45. Still good practice to include schedule detailing the changes to the pre-printed provisions. |
| Amendment to offer | 48. Amendments to offer by vendor are counter-offers. 49. If accepted, the clause making the offer irrevocable by the purchaser should be altered by substituting the word “vendor” for the word “purchaser” and by extending the date, if necessary, to give original offeror a chance to consider and accept the changes. |
| Interpretation of Apparent Errors | 50. Where there is difference between words and figures, the written word prevails. 51. Written word over printed word. |
| Commission clause | Real estate agents entitled to commission on closing date from moneys received. |
| Standard Form v New Home construction | -Multiple deposits - Mortgage financing - House is deemed completed when all interior work has been substantially completed so that it can be reasonably occupied - Covered under new home warranties act - HST applie |
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