Be careful with those offer to purchase agreements

My thanks to Mark Wiesleder for his very useful article published in today's Toronto Star

February 05, 2010 

Mark Weisleder

Special to the Star 

One of the side issues in the recent bidding wars in cities across Canada is that buyers and sellers are not taking the necessary time to review and understand what is included in the fine print of most real estate agreements. 

As these clauses can have dramatic impacts on the rights of buyers and sellers, it is important that they review the agreement form in detail with their real estate salesperson before signing anything. 

Here are some topics to be aware of: 

Time limits: If the buyer is late in delivering the deposit or any notice that is supposed to waive a condition, the seller can, in most cases, cancel the agreement. Buyers, be very careful to make sure that you follow all of your obligations in a timely manner. 

Closing date: The agreement states that vacant possession cannot be given any later than 6 p.m. If the seller is late leaving the home, the buyer can sue for any increase in moving costs that result. Sellers, if you know you will need more time to move, say so in the agreement. 

Easements and covenants: Buyers agree to accept any minor easement for utilities and any restrictive covenants on title that the seller is complying with. This can cause the buyer problems if they want to make any changes to the property after closing, such as building an addition, swimming pool or even something as simple as installing an antennae. Buyers should inquire in advance as to any easement or covenant that affects the property. 

No representations or warranties outside of the agreement: What this means is that if the seller told you something about the property that is important to your buying decision, then it must be included in your agreement. For example, if the seller tells you that there are hardwood floors under the carpets throughout the house, then have that included in the agreement. Otherwise, it is hard to prove or sue the seller about this after closing. 

Bank and private mortgages: Buyers agree to permit sellers time, after closing, to discharge bank mortgages because it is very difficult to obtain a discharge from a bank or trust company on the actual closing date. However, this does not apply to private mortgages, which must be discharged on, or before, closing. 

In a recent case, a buyer was able to cancel a deal on closing because the seller could not discharge a private mortgage in time. Sellers, if you know that there is a private mortgage on your property, discuss this as soon as possible with your lawyer so that arrangements can be made in time to discharge this from your title on, or before, closing. 

Understanding the fine print in advance will assist buyers and sellers in preventing issues on or after closing. 

Mark Weisleder is a lawyer, author, public speaker for the real estate industry and contributor to Real Estate News. mark@markweisleder.com.