Contract of Purchase and Sale

Enforce Your Rights, or Lose Them #542

Anyone who has been involved in a transaction for a property under construction is likely familiar with the potential for delays of completion. While developers don’t often fail to deliver, it can happen. What happens when significant delays do occur? Can a developer be in default under the contract? What about the innocent party in

Tips for Using Clauses and Amending Contracts of Purchase and Sale #541

Standard form contracts of purchase and sale are very useful in real estate transactions. They are familiar, well-tested, and cover off all the basics and much more. However, real estate is complicated and the one-size-fits-all approach may not fit every situation. In cases where a standardized contract of purchase and sale does not entirely address the specific needs of the transaction adding terms and conditions – or

New Videos Highlight Key Areas of Contract of Purchase and Sale

By Ellen Baragon, Guest Contributor Given that the Contract of Purchase and Sale (CPS) is a foundational document to any real estate transaction, REALTORS® need to know the fine details that can make or break a Contract of Purchase and Sale. To that end, BCREA has created a new tutorial video series that reviews key aspects

Beyond Your Expertise: When to Recommend Clients Get Legal Advice #531

The Question I am asked for advice from licensees on potential claims daily. They often describe a scenario involving complex matters beyond the expertise of a licensee, such as taxes, structural issues/defects or complicated legal questions, like whether a contract alive or dead? They want to know what they should do and what they should

Suing for Unpaid Deposits #527

Generally speaking, if a buyer breaches a contract for the purchase of real estate and the seller accepts the buyer’s refusal to perform the contract (as known as “repudiation”), an innocent seller is entitled to retain the deposit paid by the buyer under a contract of purchase and sale. But what happens when a buyer

Standard Forms Reminder

Changes coming June 13 On June 13, changes to the Assignment of Contract of Purchase and Sale – New Development and Non-Developer and the Privacy Notice and Consent forms will come into effect. While none of the changes will have a significant impact on practice, it’s important for REALTORS® to familiarize themselves with the changes

Subject Removal #497

When is a party justified in refusing to remove a subject clause? A subject clause typically benefits one party or another. At common law, that party must, in good faith, make all reasonable efforts to remove their subject clause. In the standard form Contract of Purchase and Sale, the contract terminates if a party fails

Non-Refundable and Absolutely Forfeited Means Exactly That #462

Legally Speaking

Prior to April 2012, Section 12 of the standard Contract and Purchase and Sale (CPS) provided that unless the balance of the purchase price was paid by the buyer on the completion date set out in the contract, “the seller may, at the seller’s option, terminate this contract, and, in such event, the amount paid

Forfeiture of Deposit #453

Legally Speaking

Section 12 of the standard Contract of Purchase and Sale provides that unless the balance of the purchase price is paid on the completion date “the Seller may, at the Seller’s option, terminate this Contract, and, in such event, the amount paid by the Buyer will be absolutely forfeited to the Seller…on account of damages

Object Quickly! #445

Legally Speaking

Where time is of the essence, failure to perform an obligation on time is a fundamental breach. The innocent party may treat the breach as repudiation, walk away and sue for damages. Gulston v. Aldred involved the sale of a residential property.1 On March 3, 2008, the parties entered a standard form Contract of Purchase and Sale

Title Considerations: The Clause 9 Problem #444

Legally Speaking

By Jennifer Clee Clause 9 in the Contract of Purchase and Sale requires a seller to deliver title “free and clear of all encumbrances except subsisting conditions, provisos, restrictions, exceptions and reservations including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants

Enforcement of Holdover Clauses #443

Legally Speaking

Commission under listing contracts has always been payable where a legally enforceable Contract of Purchase and Sale is entered into by the seller during the term of the contract. In 1997, the Multiple Listing Contract was amended to expand the circumstances under which a commission is payable. Section 5A(ii) of the Multiple Listing Contract now

Collecting An Unpaid Deposit #437

Legally Speaking

If a buyer defaults before a deposit is fully paid, can the seller terminate the Contract of Purchase and Sale and successfully sue for the unpaid deposit money? It depends on the contract. In Agosti v. Winter1, a standard form Contract of Purchase and Sale2 required a $10,000 deposit, “upon subject removal.” No other deposit requirements were

In a Limited Dual Agency, When is Notice Received? #413

Legally Speaking

In general, when a licensee serves as agent for her principal—the client—the licensee has authority to send and receive communications for that client, unless the client directs otherwise. What about a limited dual agent? If a licensee is a limited dual agent, can the licensee receive notices from other persons for the seller and buyer,

Conditions Precedent Revisited #410

Legally Speaking

By Jennifer Clee A representative’s primary duty of care to his/her client is to draft an enforceable Contract of Purchase and Sale. This can be challenging when the representative is also trying to protect his/her client’s interests by including certain conditions in the contract for that client’s benefit. A recent decision of the Supreme Court

Property Disclosure Statement – Shield or Sword? #406

Legally Speaking

By Jennifer Clee In the early 1990s, the profession introduced the Property Disclosure Statement, or PDS (formerly, the Property Condition Disclosure Statement). From its inception, the PDS was intended to shield sellers and representatives from lawsuits by minimizing their risk of liability for negligent misrepresentation. By providing a written record of the seller’s knowledge and

One Man’s Opinion – A Conversation with the Readers (Part 2) #403

Legally Speaking

By Gerry Neely B.A. LL.B In his final issue as author of Legally Speaking, Gerry continues with his two-part discussion on legal issues in the real estate profession. When you reflect back on your authorship of Legally Speaking, was there one column that stood out and that you’re particularly proud of? Yes—column 224 (September 1994).

Broker’s Responsibility to Have Office Policies to Help Representatives Deal With Water Problems; Contract to Enter Into a Contract Is Unenforceable #382

Legally Speaking

By Gerry NeelyB.A. LL.B. An Alberta decision about a broker’s failure to establish policies for representatives to deal with known water problems in homes constructed by a developer in a given area reflects the high value of local knowledge. The broker’s problem started when a new licensee, who had never shown a house by herself,

Fixtures or Chattels and the Case of the Missing Vacuum Canister #377

Legally Speaking

By Gerry NeelyB.A. LL.B. An experienced nominee recently related an instance of a buyer’s agent trying to settle a problem for his client by paying for a built-in vacuum canister that the seller intended to take. Since stories like this are common, he suggested revisiting Legally Speaking 247 and 260, and the question of chattels and fixtures.

Legally Speaking 371 – Hardwood Flooring Bylaws Revisited; Paragraphs 8 and 14 of the Contract of Purchase and Sale #374

Legally Speaking

By Gerry NeelyB.A. LL.B. The message some licensees took from the two cases discussed in Legally Speaking 371 was that a strata corporation can’t enforce a bylaw restricting the installation of hardwood floors. In fact they can, due to s.219 of the Strata Property Act, which allows strata corporations to enact bylaws controlling the use and enjoyment

Fire Damage Before Closing – Rights and Responsibilities of Buyer and Seller; Easement With or Without Motor Vehicles – No Parking on Easement Area #350

Legally Speaking

By Gerry Neely B.A. LL.B When a fire destroyed or damaged a house before the completion date for its sale, at common law the buyer had to complete the purchase and pay the contract price, unless the contract otherwise provided. For this reason, the Contract of Purchase and Sale includes Clause 16 which allocates risk

Contract of Purchase and Sale – Clause 18 #344

Legally Speaking

By Gerry Neely B.A. LL.B I understand it is the standard practice of a licensee to explain the significance of the Contract of Purchase and Sale terms to the parties to it, before it is signed. This is particularly desirable for Clause 18, in which the parties agree there are no representations, warranties, etc. other

A Judge’s Guide to Whim and Fancy, or Best Efforts Clauses; Seller Had to Have Actual Knowledge of Default, Not Deemed Knowledge of Agent, to Be Liable Under Contract; Note Re: Legally Speaking 332 #333

Legally Speaking

By Gerry NeelyB.A. LL.B. In one case, the conditional clause in a Contract of Purchase and Sale required the buyer to satisfy himself as to the tax implications of Canadian/USA/international law upon his purchase of Canadian property. The buyer lived and worked in California, and the purchase monies from an inheritance were to be transferred

Warranty By Numbered Company – Bankruptcy – Licensee’s Liability for Failure to Advise Seller to Take Security for the Warranty; Private, Not Public Rights of Way and Paragraph 9 of the Contract Of Purchase and Sale #317

Legally Speaking

By Gerry Neely B.A. LL.B What is a licensee’s duty of care to a client who is negotiating the purchase of a commercial property from a numbered company that agreed to give an unsecured warranty? This was the issue in an Ontario case where the licensee drafted the warranty clause in the contract he prepared

Condominium Act – Loss of Owner’s Right to Vote; Contract of Purchase and Sale – Paragraph 9 Exclusions of Representations, Etc. #268

Legally Speaking

By Gerry Neely B.A. LL.B Section 125(6) of the Condominium Act states that except where a unanimous resolution is required, an owner is not entitled to vote at a general meeting, unless all contributions payable for the owner’s strata lot have been paid. An owner/developer of a newly-created strata corporation, who follows the not uncommon

Chattels or Fixtures New Test Applied #260

Legally Speaking

By Gerry NeelyB.A., LL.B. Column #247 referred to a case in which the judge laid down six rules for deciding whether or not an article is a chattel or a fixture. Since that case, another judge who said that the rules were of material assistance, has applied them to decide which of the following items are fixtures

Negligence by Licensee #256

Legally Speaking

By Gerry NeelyB.A., LL.B. Small mistakes lead to big problems, which proves yet again that eternal vigilance is the price to be paid to avoid having to check your E. & 0. insurance to see what the deductible is. Buyers under a conditional Contract of Purchase and Sale, asked the agent to obtain extensions for

Conditional Clauses #250

Legally Speaking

By Gerry NeelyB.A., LL.B. Offers to purchase property often contain a condition that the offer is subject to a party obtaining legal advice, usually concerning the title or the terms of the offer. What are the obligations of sellers or buyers for whose benefit this condition is added, and of the lawyers whose opinions are

Income Tax – Waiving Commission #249

Legally Speaking

By Gerry NeelyB.A., LL.B. The tax laws can have the unfortunate consequence of turning an act of kindness, into a taxable benefit resulting in tax to be paid upon an amount not received. A licensee wrote to suggest that a warning be given to licensees of an assessment of tax by Revenue Canada arising from

Satisfactory Financing #248

Legally Speaking

By Gerry NeelyB.A., LL.B. A seller tried to save a deal based upon a Contract of Purchase and Sale that was subject to the purchaser obtaining satisfactory financing, by offering to take back a mortgage when the purchaser was unable to obtain financing satisfactory to him. The purchaser refused this offer and successfully sued for

Chattels or Fixtures – New Test? #247

Legally Speaking

By Gerry NeelyB.A., LL.B. A number of tests have been developed by the courts to decide whether an article is a chattel or a fixture, but the difficulties in applying the tests to specific articles continues. For example, signs rented by a former tenant and embedded in concrete, which however could be removed and sold

Private Restrictive Covenants and Rights-Of-Way #245

Legally Speaking

By Gerry NeelyB.A., LL.B. Three columns 1 have discussed cases where a seller’s inability to clear the title of a private easement, allowed purchasers to repudiate contracts because of paragraph one of the Contract of Purchase and Sale. It allows restrictive covenants and rights-of-way that are in favour of only utilities and public authorities to remain on

Payment Under Protest #239

Legally Speaking

By Gerry NeelyB.A., LL.B. What do you as a buyer do when your understanding of the contract is that the seller is required to pay GST, but the seller refuses to do so. When that occurred in a recent transaction, the buyer paid the GST to avoid losing the property. The buyer’s lawyer did not state

Fraudulent Misrepresentation Made Against Sellers #238

Legally Speaking

By Gerry NeelyB.A., LL.B. The Property Condition Disclosure Statement, (PCDS), was the basis for proof of a claim of fraudulent misrepresentation made against sellers, by buyers, when the buyers had to pay approximately $4,000 to correct the septic system problems they found when they took possession of the property. The sellers stated in the PCDS

Fire Damage Before Completion Date – Doctrine of Frustration #233

Legally Speaking

By Gerry NeelyB.A., LL.B. What is the position of the parties to a Contract of Purchase and Sale when fire damages or destroys the building, which is the subject matter of the contract, between the date the contract was signed and the completiond ate? If the Doctrine of Frustration applies, the parties are not required to

Property Condition Disclosure Statement, in writing or not? #230

Legally Speaking

By Gerry NeelyB.A., LL.B. According to the Property Condition Disclosure Statement (PCDS), the questions and answers within it become part of the Contract of Purchase and Sale, “if so agreed in writing by the vendors and purchasers.” The question is whether they become part of the contract even if there is no written agreement between

Implied Warranty – Purchase of an Incomplete New Residence #226

Legally Speaking

By Gerry Neely B.A., LL.B. When a buyer contracts to purchase a residence before construction of it is complete, the law implies a warranty in favour of the buyer that the work will be done in a good and workmanlike manner, the materials will be suitable and the building will be fit for habitation. The warranty

Notice to Agent Binding Upon Seller and Buyer #222

Legally Speaking

By Gerry NeelyB.A., LL.B. A licensee, whose name I’ve misplaced, asked for a reference for a B.C. case in which a licensee was held to be an agent for the purpose of receiving a notice on behalf of a seller or buyer. In one case, an offer prepared on behalf of a buyer by a

Caveat Emptor #218

Legally Speaking

By Gerry NeelyB.A., LL.B. For those of us who felt that court decisions had relegated the doctrine of caveat emptor to an earlier era, a recent case confirms that the doctrine is still alive to protect vendors, if the facts are right. In one case, prospective purchasers noticed cracks and a sagging floor during their

Best Efforts Condition Precedent #209

Legally Speaking

By Gerry NeelyB.A., LL.B. Whether a condition precedent falls within the “whim or fancy” or “option or offer” category of conditions, or within the category that requires purchasers to use their best efforts to satisfy the conditions, is a question judges continue to be asked. Since the cases depend upon different facts, they may appear to

Purchaser's Home Subject to Sale Before a Certain Date #198

Legally Speaking

By Gerry NeelyB.A., LL.B. A common condition in an offer is that it is subject to the sale of the purchaser’s home on or before a certain date. In these circumstances it is the duty of the purchaser to use his best efforts to sell his home. Is there an additional obligation to accept the

Purchaser's Knowledge of When Approval of Financing Given; Criminal Rate of Interest; Is an Application to Discharge a Mortgage Sufficient Evidence of Clear Title? #194

Legally Speaking

By Gerry Neely B.A. LL.B What are the legal consequences for a purchaser whose Contract of Purchase and Sale was subject to raising a mortgage by October 19, 1990, when the purchasers were not made aware that the mortgage had been approved by that date. The purchasers contracted to use their best efforts and it

Clause One – Contract of Purchase and Sale; Condominium Bylaw #188

Legally Speaking

By Gerry Neely B.A. LL.B Column #160 discussed a Vancouver case where a purchaser was successful in avoiding the completion of a purchase because the vendor was unable to remove a private easement charging his property for the benefit of adjoining property easement. He was successful because clause one of the standard form Contract of

Licensees' Duty to Know Basic Municipal Bylaws #187

Legally Speaking

By Gerry Neely B.A. LL.B The decision of the city of Cranbrook to extend its boundaries led to a lawsuit against the owner of a small vacant lot and the listing and selling agents involved in its sale to a purchaser who found that the bylaws of the city prevented him from building a home

Condominium Parking by Owner/Developer #185

Legally Speaking

By Gerry NeelyB.A., LL.B. Another failed attempt by an owner/developer of a strata development to grant exclusive use to a purchaser of a strata unit of a parking stall within the common property. The contract of purchase stated that the purchase price of a unit included two parking stalls to be held on 99 year

UFFI Warranty #175

Legally Speaking

By Gerry NeelyB.A., LL.B. A recent edition of the Bulletin contained a reminder that because of the risk of liability, licensees should not complete the UFFI disclosure statement on the standard Contract of Purchase and Sale. The timeliness of this reminder of the risks run by a vendor or a licensee who completes a disclosure

Relief from Forfeiture #166

Legally Speaking

By Gerry NeelyB.A., LL.B. Another deposit returned to a purchaser who was in default, but this time it was because the vendor benefitted from the purchaser’s breach of contract. A purchaser who failed to close on the completion date because of insufficient funds, sued for the return of a $50,000 deposit paid September 1989 upon

Defaulting Purchaser Regains Deposit #164

Legally Speaking

By Gerry NeelyB.A., LL.B. The advantages to a vendor of the use of the Norfolk v. Aikens addendum to the standard form contract {Column 155) is apparent from a decision delivered October 24th, 1990, which allowed a defaulting purchaser to recover a $40,000 deposit. The purchaser’s offer was made prior to the Norfolk v. Aikens decision on the standard

Norfolk v. Aikens #155

Legally Speaking

By Gerry Neely B.A. LL.B This decision of the British Columbia Court of Appeal led to the distribution among the boards of a two-clause addendum to the Standard Contract of Purchase and Sale. This was done because the reasons for judgment highlighted the distinction between the conveyancing practice through which almost 100% of all real

Commission on a Sublease #148

Legally Speaking

By Gerry NeelyB.A., LL.B. A company held a very profitable sublease on commercial premises for a remaining term of approximately two years, with four successive rights of renewal of five years each. It wanted to sub-sublease the premises and told an agent that it would pay a commission to the agent if he found a

Reference: The “72” Hour Clause #141

Legally Speaking

By Gerry NeelyB.A. LL.B. The time clause, which may be whatever number of hours the parties agree upon, is a useful tool for negotiating conditional offers but it can create problems when notice of an acceptable offer made by a second purchaser cannot be delivered promptly to the first purchaser. The first reported case of

Garden Removal – Damages; Oral Revocation of a Counteroffer #137

Legally Speaking

By Gerry NeelyB.A. LL.B. A Victoria couple’s love of their garden led them to take it with them when they moved. Its absence was not noticed at first by the purchasers, who had taken possession on a dreary rainy January day. However when the weather cleared, as it occasionally does in Victoria, the pockmarked shrubless

Satisfactory Financing #121

Legally Speaking

By Gerry Neely B.A. LL.B Relief is in sight. This column is about a B.C. Court of Appeal decision which will make the addition of a conditional financing clause less of a hazard to the enforceability of an offer to purchase. Column 110 reported a B.C. Supreme Court decision which held that an offer to

Commission – Purchaser’s Default #90

Legally Speaking

By Gerry NeelyB.A. LL.B. You have a listing agreement with a vendor, a binding contract of sale is signed but the sale collapses because of the vendor’s refusal to complete. The Courts will enforce your claim for commission even though the listing contract does not specifically state what your rights are where the vendor is

Builders Lien Clause #69

Legally Speaking

By Gerry NeelyB.A. LL.B. I recently reviewed a proposed contract for the purchase of a lot and a home to be constructed by the owner/builder. The licensee who prepared the contract prudently included a clause to provide for a lien holdback. The percentage to be held back was fifteen per cent. However, since September 1,

Agreements for Sale #68

Legally Speaking

By Gerry NeelyB.A. LL.B. A recent amendment to the Law and Equity Act may mean that the time-honoured method of selling property by way of an agreement for sale (right to purchase) may cease. Although its use has declined over the past few decades, largely because most sales require mortgage financing, its use has been continued because

Offer or Option – Chapter 2 #63

Legally Speaking

By Gerry NeelyB.A. LL.B. Column No. 57 discussed at length the problem of deciding whether a condition in an offer to purchase is not what is commonly referred to as a true condition precedent, but rather creates an option which must either be under seal or for which consideration must be given to prevent the

Legal Advice – The Pitfalls of Giving #59

Legally Speaking

By Gerry NeelyB.A. LL.B. Adam entered his solicitor’s office with a writ in his hand and an expression on his face which his solicitor, as Adam’s old golfing partner, recognized. It was the “how did this happen to me” look that appeared on Adam’s face when, after playing faultless golf for seventeen holes, he sliced

Due Diligence Irrelevant; Time Is of the Essence #36

Legally Speaking

By Gerry NeelyB.A. LL.B. A number of decisions in the past few years have emphasized the necessity of recognizing the commercial reality which leads to the formation of the agreements entered into in the real estate industry. As one Court stated, if all interim agreements to purchase were to include all of the details that

Income Tax #25

Legally Speaking

By Gerry NeelyB.A. LL.B. One of the results of the reduction in residential sales has been an increase in the number of trades of residential properties between people who can’t find a satisfactory cash buyer. For any one entitled to deduct moving expenses under Section 62 of the Income Tax Act, the question of how the

Concessionary Financing, the Salvation of the Housing Markets #20

Legally Speaking

By Gerry NeelyB.A. LL.B. An article in the Financial Times of Canada of April 12, 1982 reviews the extent to which “concessionary financing” by vendors has been the salvation of the housing markets in the past few months. The article in question suggests that in Canada and the United States, 70% and 500710 respectively of house sales

Removal of Conditions and the Law and Equity Act #17

Legally Speaking

By Gerry NeelyB.A. LL.B. An offer to purchase the assets of a hunting and fishing lodge, was subject to a number of conditions, one of which was the following: “Subject to obtaining financing, provided that this subject clause shall be removed on November 30th, 1975.” It appears from the decision of the Supreme Court of