Virtually all agreements of purchase and sale for homes or
condominiums in Ontario are prepared on standard forms published by the
Ontario Real Estate Association (OREA). Unfortunately, those forms have a
great number of shortcomings which do not promote the interests of the
public who rely on real estate agents for protection.
Both form 100 for freehold land and form 101 for condominiums set a deadline of 6 p.m. on the day of closing.
OREA is no doubt aware that web access to the Teranet land
registration system, through which title documents are registered,
closes at 5 p.m. Since no transactions can be closed between 5 and 6
p.m., setting a 6 p.m. closing deadline is problematic.
The forms themselves allow notices to be given to the opposite
party by fax transmission, but not by email. In this respect, OREA is
right up to date with 1980s technology.
In the same vein, most agents deliver signed offers to each other
by fax, and by the time a fourth or fifth signback is exchanged, the
final document is totally illegible.
With the widespread use of computer scanners, surely OREA could
come up with some technology for agents to attach a scanned signature to
their purchase agreements and exchange legible versions until a deal is
finalized.
The title search paragraph also creates problems. Each agreement
contains a blank for inserting a deadline date for the buyer’s lawyer to
search title and raise any objections. This is called the “requisition
date.”
Whatever date is filled in, however, is rendered meaningless by the
subsequent text which extends the requisition date until five days
before closing.
The paragraph defining the requirement for the seller to provide
good title is a masterpiece of incomprehensible drafting. A 135-word
sentence is followed by a 149-word sentence. Advocates of plain-language
wording would have a field day with this section.
The forms have some notable omissions. Although there are other
warnings in the freehold form, nowhere is there a caution warning a
purchaser of the consequences of not obtaining a land surveyor’s report,
which I have repeatedly stated in this column is the single most
important document in the entire purchase transaction.
Nor is there any acknowledgment in the condominium form that the
purchaser has been shown the location of the parking space and locker.
The vast majority of my condominium purchaser clients tell me on the day
before closing that they have never been shown the locations of those
units.
Another clause details the seller’s warranty that he or she has no
knowledge of urea formaldehyde insulation (UFFI) in the property. OREA,
however, has never bothered to insert a paragraph dealing with whether
the property has ever been used as a marijuana grow op or meth lab,
which are much more common present problems far more serious than UFFI
ever was.
Perhaps the worst section of the agreements is the property
assessment clause. This one states that the Province of Ontario “has
implemented” market value assessment (it actually happened in 1998) and
that properties may be re-assessed annually. The reassessment of
properties has not been undertaken annually since the end of 2003, so
the statement in the OREA offer is factually incorrect. (Assessments now
take place only every four years, with phased-in increases every year.)
The objectionable part of the paragraph is an agreement that the
buyer and seller will not sue each other, or the broker or salesperson,
for any change in property tax as a result of a re-assessment of the
property.
In my opinion, a client’s waiver of liability for an act or
omission of his or her real estate agent is highly improper when it’s
contained in an agreement supposedly between buyer and seller alone.
It’s probably unenforceable in any event.
This raises the question of who OREA is trying to protect with its
agreements — its agent members and brokers, or the public whom they
serve. It’s a question worth considering.
Bob Aaron is a sole practitioner at the law firm of Aaron &
Aaron in Toronto and a board member of the Tarion Warranty Corp. Bob
specializes in the areas of real estate, corporate and commercial law,
estates and wills and landlord/tenant law. His Title Page column appears weekly in The Toronto Star and on Move Smartly blog. E-mail bob@aaron.ca
October 4, 2010
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