Offer to Purchase Unenforceable Because of Uncertainty As to Who Was the Intended Purchaser #3

Mar 01, 1981

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By Gerry Neely
B.A. LL.B.

An offer to purchase made by "the undersigned Century 21 Real Estate Ltd. or nominee" was held to be unenforceable, in part because of the uncertainty as to who was the intended purchaser. The transaction was somewhat unusual because the first and second mortgage financing, which was to pay out the vendor, was to be arranged by the vendor. In addition, the purchaser agreed to "co-sign interim financing arranged by the vendor not to exceed $900,000.00". The Court had these provisions in mind when, in asking whether the purchaser was Century 21 Real Estate Ltd. or a nominee, it stated "An industrial lending institution would obviously be vitally concerned with the answers to those questions before it would be prepared to advance either permanent or interim financing, and those questions could not be answered with any certainty at all."

This case is not authority for the statement that in every instance where the purchase may be completed by someone nominated by the person making the offer, the offer to purchase is not enforceable. Here it was argued that the identification of the purchaser was important because that would affect the ability of the vendor to obtain financing. If the offer had been for cash and it was not subject to financing, it would seem reasonable to have argued that the vendor was not prejudiced by the designation of the nominee to complete the cash purchase. The case is useful because it points out the desirability of avoiding the practice of making an offer on behalf of a nominee. If subsequent to acceptance, the purchaser wishes to transfer the property to someone else, the purchaser should either try to negotiate with the vendor or complete the purchase and then re-transfer it.

This case also raises the question of the status of an offer to purchase made by a real estate agent on behalf of an undisclosed purchaser. While this is a practice of long duration and one which is supported by decisions, this case raises uncertainty as to whether this practice should be followed when an offer is subject to financing.

It may well be that subsequent decisions will limit this case to its rather peculiar facts.

  1. Samoth Financial Corporation Ltd. v. Todd,14 B.C.L.R. 266.

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