Real Estate Agreements of Purchase and Sale
I am pleased to provide you with this first Newsletter which is my way to keep you informed on general topics stemming from the areas of law in which I practice. This first article deals with the agreement of purchase and sale ("agreement") in the context of a residential real estate transaction.
The agreement is a contract which brings with it all the obligations, responsibilities and procedures of contract law. The elements of a binding contract are the offer, an acceptance, an exchange of consideration and a meeting of the minds. If a provision is not included in the agreement, it will have no effect as Ontario law states that contracts pertaining to real estate must be in writing.
In Ontario, for example, real estate agents use a standard agreement which has been adopted by the Ontario Real Estate Association. However, if a person wants to sell his or her property, without the assistance of a real estate agent (and thereby save a lot of money), he or she will have to draft his or her own agreement. One has to be very careful in drafting the agreement as it must incorporate all the essential elements of a contract as well as of the property. Hence, the agreement must be drafted competently. The same goes for the supplemental clauses dealing with the financing condition, the inspection condition, the items passing with the property and those which are excluded from it. One must therefore be able to write correctly in order to modify the agreement to suit the particular exigencies of the transaction.
It may seem trivial to mention but the parties must be correctly identified. The purchaser must be correctly indicated in the agreement and his or her name must be flawlessly spelt. However, it is just as important, if not more important, to correctly identify the vendor. Is the vendor an individual who is the registered owner noted at the registry office, or is he or she an executor acting for the estate of a deceased owner? If title is still registered in the name of a deceased owner, did the deceased have a will, and does the person representing himself or herself as executor have the power to sell the property? If we are dealing with an individual, is he or she the sole owner of the property or is there a co-owner who must also sign the agreement in order to have a complete contract? If a company is the registered owner of the property, its name must be correctly indicated in the agreement, and the name must correspond to the articles of incorporation. I have seen agreements drafted by persons holding themselves out as competent in the drafting of agreements, but where the vendor was incorrectly identified in the agreement. This will inevitably cause problems! One must therefore protect oneself!
In the next newsletter
When deciding to sell your property, should you accept that the purchaser assume (take over) your existing mortgage? Read more