Legally Speaking - April 2018 (501)
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Legally Speaking (501, April 2018)


Number 501, April 2018


One often hears the phrase “timing is everything.” In a recent case,1 a pair of unfortunate buyers found that out the hard way.

The buyers entered into a Contract of Purchase and Sale (CPS) to acquire a residential property. The parties used the standard form residential CPS, although no REALTORS® were involved. The purchase price was $705,000 with a completion date of April 25. An innocuous clause was added requiring all documents to be lodged for registration by 4:00 pm on the completion date.

Part of the purchase price was to be paid through a mortgage arranged by the buyers. That aspect of the transaction was governed by Clause 13 of the CPS, which provides that the buyer may wait to pay the purchase price to the seller until after the transfer and mortgage documents are registered if: the buyer has made available the portion of the purchase price not secured by the mortgage; the buyer has fulfilled all the new mortgagee’s conditions for funding except lodging the mortgage for registration; and the buyer’s lawyer or notary has undertaken to pay the purchase price upon receipt of the mortgage funds. This conveyancing convention resolves the chicken and egg conundrum whereby the seller does not want the transfer of the property to occur before they are paid; the buyer can’t pay the seller until they receive the mortgage funds from the lender; and the lender won’t release the mortgage funds to the buyer unless the property has been transferred and their mortgage has been registered against title.

On the completion date, the sellers’ notary forwarded the executed transfer documents to the buyers’ notary on the usual undertakings including that the documents were not to be used except in accordance with Clause 13 of the CPS. The sellers’ notary added a further undertaking that the documents were to be returned if the transaction was not registered by 4:00 pm. At 4:00 pm the buyer’s notary had not yet received instructions from the buyers’ mortgagee nor had the buyers delivered the portion of the purchase price not secured by the mortgage. At 4:19 pm the sellers’ notary required the buyers’ notary to return the executed transfers as the buyers had not been in a position to complete the transaction at 4:00 pm. At 5:36 pm the buyers’ notary wrote back indicating they “were ready for registration” and asking that they be allowed to use the transfer documents. That request was refused.

The sellers were going to use the proceeds of sale to purchase another property. With the collapse of the first sale, they had to incur the expense of alternative financing to complete the purchase of the other property.

The buyers’ claim for specific performance of the CPS was dismissed by the court. They argued that had they used either lawyers or REALTORS® in the preparation of the CPS, the contract terms, particularly those dealing with the 4:00 pm deadline and “time is of the essence,” would have been explained to them. That argument was unpersuasive with the court determining that “persons are bound by agreements to which they have put their signature whether they have read the contents or have chosen to leave them unread.”2 In the end, the court held that the terms of the CPS were clear; the buyers were in breach of the CPS by failing to complete the transaction by 4:00 pm and the sellers were entitled to accept that repudiation. The sellers were awarded the amount of money they had expended in alternative financing.

In this case, it is likely the transaction would have completed had it not been for the 4:00 pm clause. Buyers and their REALTORS® should be wary about inserting or accepting clauses which require completion by a specific time on the completion date particularly if a portion of the purchase price is being provided by a mortgagee whose timing they do not control.

Brian Taylor
Norton Rose Fulbright LLP

  1. Gill v Bal, BCSC 2015.
  2. Gill v Bal, BCSC 2015, at para. 31 (BCSC).
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