module 14 Flashcards
An agreement for the sale of property in Ontario must be in writing and signed by the parties to be enforceable.
Examples of these terms include:
• The buyer is required to search the title at their own expense and make any objections within 30 days of when
the agreement is made
• The seller has 30 days to remove any objection. If the seller is not able or is unwilling to remove any objection
that the buyer does not agree to accept, the agreement can be terminated and the buyer’s deposit is returned
• All adjustments made to the purchase price; for example, property taxes, rents, and interest, are adjusted as of
the date of closing with the day of closing apportioned to the buyer
• The deed is prepared by the seller and registered at the expense of the buyer
Offer Versus Agreement
As a salesperson, you will be directly involved in many aspects of negotiations between a seller and a buyer. This
includes explaining and advising on terms and conditions, and drafting the required documentation. During
negotiations, the agreement of purchase and sale form is referred to as an offer. Once all of the terms are agreed to
between the parties, the offer can be referenced as one of two types:
• When the offer is conditional upon an event, such as the buyer obtaining financing, the offer is referred to as
an accepted, conditional offer
• When the offer is a legal binding contract, it is called an agreement
deposit
Although a deposit is not required to have a binding
agreement, a deposit is considered a show of good
faith to the seller that the buyer is committed to
completing the transaction.
The deposit is identified in both words and numbers
and is credited toward the purchase price when the
transaction is completed. The agreement of purchase
and sale identifies:
• Who the deposit holder is; deposits are typically
held in trust by the seller’s brokerage
• When the deposit will be provided; options
typically include: herewith or with the offer, upon
acceptance of the offer, or as otherwise
described in the agreement, which requires
additional details to be included on a schedule to
the agreement of purchase and sale
Irrevocable date
The irrevocable date on an agreement of purchase and
sale identifies the time and date the person making
the offer is obligated to the offer.
Completion date
The completion date identified in the agreement of
purchase and sale is the date set for closing. This is the
agreed upon date when the title will be legally
transferred to the buyer.
Title search date
The title search date, also known as the Requisition
Date, is the time period in which the buyer’s lawyer
completes a search at the Land Registry Office
Title search date
A chattel is personal moveable property. Unless
identified in the agreement of purchase and sale that
the item will remain, it is excluded from the sale.
Common chattels a buyer may ask for include the
appliances, such as a fridge and stove.
A fixture is attached to the property. It is deemed to be
included unless identified in the agreement of
purchase and sale as excluded. I
Define the Deposit, I
Herewith – the deposit will be provided along with the offer when initially presented to the seller.
2. Upon acceptance of the offer – the deposit will be provided once the offer is accepted. Most offers will also
identify that “upon acceptance” requires the deposit to be provided within 24 hours of acceptance.
3. As otherwise described in the agreement – the deposit will be provided at some other time which is then
identified in the agreement by including the details on a schedule added to the agreement. For example, this
could identify that the deposit will be paid within seven business days (as defined by REBBA) from acceptance
of the offer.
There is no minimum amount that must be provided as a deposit. The deposit is a sign of the level of commitment
being made by the buyer and the amount often varies relative to the purchase price or the practices of the specific
trading areas.
A deposit is typically held in trust by the listing brokerage. As the salesperson for the seller, you would ensure the
deposit is delivered according to the option identified in the agreement by maintaining contact with the buyer’s
salesperson. The deposit is placed in the brokerage’s real estate trust account which is a non-interest bearing
account unless otherwise specified in the agreement of purchase and sale
Real Estate Trust Account
The trust account imposes fiduciary and legal responsibilities on the brokerage. REBBA has specific requirements
relating to a brokerage’s real estate trust account, including:
• The trust account must be designated as a real estate trust account
• Only one trust account may be used, unless otherwise approved by the Registrar
• All disbursements must be authorized by the brokerage’s broker of record
• All trust cheques must be signed by the brokerage’s broker of record
• Brokerages must prepare a monthly reconciliation of the trust account within 30 days of the monthly bank
statement
Deposit Protection Under the RECO Insurance Program
A buyer can be assured that when a brokerage places the deposit in their real estate trust account, the funds are
protected under RECO’s Insurance Program. In the event of a brokerage becoming insolvent (i.e., the brokerage
becomes bankrupt), or there is theft, fraud, misappropriation, or wrongful conversion of the deposit by a registrant,
the buyer’s deposit is safeguarded
Interest on Deposits
REBBA requires a brokerage to fully disclose to persons depositing trust money the terms on which the money is
deposited. If the deposit is made to an interest bearing account, the brokerage must disclose the interest rate the
brokerage receives on the account. If the funds are placed in a variable interest rate account, the brokerage would
disclose the current interest rate. Interest on trust money will accrue to the beneficial owner of the trust money,
unless otherwise agreed to in the agreement of purchase and sale. In a transaction, the buyer is typically the
beneficial owner of the trust money until closing.
Conditions for Return of Deposit
A brokerage may only disburse a deposit from their real estate trust account in accordance with the terms of the
trust. The proper course of action when a transaction has failed is one of the given points:
• By mutual consent with a release or direction signed by the seller and the buyer agreeing to the disbursement
• A Court Order authorizing the disbursement if either the seller or the buyer does not sign a release or
directio
Conditions for Return of Deposit
A brokerage may only disburse a deposit from their real estate trust account in accordance with the terms of the
trust. The proper course of action when a transaction has failed is one of the given points:
• By mutual consent with a release or direction signed by the seller and the buyer agreeing to the disbursement
• A Court Order authorizing the disbursement if either the seller or the buyer does not sign a release or
direction
Date of Offer
The date of an offer is the date the document was initially signed. The date will be referenced on any schedule
attached to the agreement of purchase and sale as well as other documents relating to the agreement which are
required throughout a transaction.
Most offers are initiated by a buyer. When the offer is signed, that becomes the offer date. For example, John
Huddle wants to place an offer on a property and the salesperson drafts the offer on September 27, 2019. The
salesperson meets with John to review the offer and John signs the offer on September 28, 2019. The date of the
offer in this scenario would be identified as September 28, 2019.
