module 15

Question 1

Date of Offer

Answer 1

The date of an offer is the date the document was initially signed.

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

Question 2

Legal Seller and Buyer Names

Answer 2

Tip: Under the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), as a salesperson, you are required to verify the identity of a seller and a buyer. Prior to drafting an offer, obtain the buyer’s identification and
document their full legal name to be used when preparing an offer. In a previous module, the requirements under
FINTRAC were detailed. You will learn more about identification verification later.

Question 3

Seller Verification

Answer 3

As a listing salesperson, you are required to confirm the seller’s information and must also verify the identity of the
individual(s) acting as the seller. You can verify the ownership of the property using various methods, such as the
transfer/deed the owners received when the property was purchased, information from the Land Registry Office,
Municipal Property Assessment Corporation (MPAC) assessment information, or from the municipality. When
drafting an offer, the seller(s) full legal name can be obtained from the listing information.

Question 4

Spouses as Sellers and Buyers

Answer 4

When a married couple is buying a property to be registered in both their names, typically both buyer spouses’ names are shown as a buyer and both will sign the agreement of purchase and sale.

Question 5

Implications of Missing or Incorrect Seller and Buyer Names

Answer 5

As a salesperson, it is important you ensure the names of the sellers and buyers inserted in the agreement of
purchase and sale are accurate. The parties named will be legally bound to the agreement and this will be important
in the event the agreement is breached.

Question 6

Legal Description Examples

Answer 6

In this sample survey, the legal description for the property is located in the top left-hand corner: Lot 30, Plan 434 –
Township of Silver, County of Gold.

Question 7

Corporations as

Seller or Buyer

Answer 7

A corporation is a separate entity and ownership is by way of shares in the corporation. A
corporation can include one or more individuals and will have officers and directors named
for the corporation.
Use the full legal name to identify the corporation and ensure the appropriate officer(s) are
identified, and the corporate seal is used with their signature.

Question 8

Partnership as

Seller or Buyer

Answer 8

A partnership is where one or more individuals enter into an agreement to carry on a
business. In some instances, the partnership could be identified as a limited partnership
where one or more persons are general partners and one or more persons are limited
partners. A limited partner does not provide any services for the business, but rather may
contribute money and other property to the limited partnership.

Question 9

A partnership is where one or more individuals enter into an agreement to carry on a
business. In some instances, the partnership could be identified as a limited partnership
where one or more persons are general partners and one or more persons are limited
partners. A limited partner does not provide any services for the business, but rather may
contribute money and other property to the limited partnership.

Answer 9

An estate trustee is the only person with the legal authority to manage or distribute an
estate and is named in the deceased’s will. When there is no will, an application for probate
in the Ontario Superior Court of Justice is required to give a person the authority to act as
the estate trustee of an estate

Question 10

A partnership is where one or more individuals enter into an agreement to carry on a
business. In some instances, the partnership could be identified as a limited partnership
where one or more persons are general partners and one or more persons are limited
partners. A limited partner does not provide any services for the business, but rather may
contribute money and other property to the limited partnership.

Answer 10

An estate trustee is the only person with the legal authority to manage or distribute an
estate and is named in the deceased’s will. When there is no will, an application for probate
in the Ontario Superior Court of Justice is required to give a person the authority to act as
the estate trustee of an estate

With proper legal authority, an estate trustee may sign the agreement of purchase and sale
as a non-owner.

Question 11

Estates and

Estate Trustees

Answer 11

An estate trustee is the only person with the legal authority to manage or distribute an
estate and is named in the deceased’s will. When there is no will, an application for probate
in the Ontario Superior Court of Justice is required to give a person the authority to act as
the estate trustee of an estate

With proper legal authority, an estate trustee may sign the agreement of purchase and sale
as a non-owner.

Question 12

Power of

Attorney

Answer 12

A Power of Attorney (POA) is a legal document giving authority for someone to act on behalf
of another person. A POA may involve a general power to act on behalf of another or it
might be limited in scope and contain precise details.
As a salesperson, you may encounter a POA in the given scenarios:
 A daughter might have a POA for an elderly mother suffering from dementia
 A spouse might have a POA for their spouse who is in the military and assigned
overseas
 A seller grants their lawyer a POA to negotiate and sell a property because the seller is
out of the country

Question 13

In Trust

Arrangement

Answer 13

An “In Trust” arrangement occurs when a person known as a trustee signs the agreement of
purchase and sale on behalf of one or more other parties, known as beneficiaries

Question 14

Address

Answer 14

Include the full civic address of the property.

Question 15

How Can the
Buyer Pay the
Deposit?

Answer 15

The buyer can provide a cheque, bank draft, money order, or submit a deposit using an
Electronic Funds Transfer (EFT).
In some instances, a buyer may be required to submit a deposit by certified cheque. In this
case, consider the timing of the deposit and whether the bank will be open for the buyer to
obtain a certified cheque. For example, if the deposit is identified as “upon acceptance” the
buyer is required to provide the certified cheque to the deposit holder within 24 hours of
the offer’s acceptance.

Question 16

Who Holds the

Deposit?

Answer 16

In a typical transaction, the buyer makes the deposit cheque payable to the listing
brokerage;

In a typical transaction, the buyer makes the deposit cheque payable to the listing
brokerage;

Some circumstances may vary from the listing brokerage being the deposit holder. For
example, the buyer might request their brokerage or lawyer hold the deposit. In those
situations, seek guidance from your broker of record or manager

Question 17

When Are the
Funds
Deposited?

Answer 17

The Real Estate and Business Brokers Act (REBBA) requires that monies received by a
brokerage be deposited into the brokerage’s statutory trust account within five business
days of receipt

Receipt of the deposit by anyone employed by the brokerage is deemed to
be receipt of the deposit. This includes a salesperson or any non-registered employee of
the brokerage, such as an administrative person.

Question 18

Does the
Deposit Earn
Interest?

Answer 18

Most agreements of purchase and sale stipulate that no interest shall be earned, received,
or paid on the deposit. If the buyer makes another arrangement concerning interest, insert
an appropriate clause on Schedule A.
A brokerage is permitted to have an interest bearing trust account. If the buyer’s deposit is
to be placed into an interest bearing trust account, a brokerage is required to disclose in
writing the interest rate that the brokerage receives on the money.

Question 19

Most agreements of purchase and sale stipulate that no interest shall be earned, received,
or paid on the deposit. If the buyer makes another arrangement concerning interest, insert
an appropriate clause on Schedule A.
A brokerage is permitted to have an interest bearing trust account. If the buyer’s deposit is
to be placed into an interest bearing trust account, a brokerage is required to disclose in
writing the interest rate that the brokerage receives on the money.

Answer 19

Once a deposit has been placed in the brokerage’s real estate trust account, there are
regulations regarding the disbursement of the deposit

For example, if a deposit is identified as “herewith” and the deposit was placed into the
brokerage’s trust account, but the offer was never accepted, the brokerage can refund the
deposit to the buyer without any documentation signed by the seller and buyer. In this
instance, a brokerage would retain a copy of the unaccepted offer to show why the funds
were deposited and disbursed.

For example, if an accepted agreement of purchase and sale contains a condition for the
benefit of the seller or buyer, and the condition cannot be fulfilled or waived, this results in
the offer becoming null and void. The brokerage must receive written, signed direction
from the seller and buyer relating to the return of the deposit, prior to disbursing the
deposit from the trust account.

Question 20

Irrevocability

Answer 20

The irrevocability must address three items:
 Party making the offer
 Time limit
 Consequences of failure to achieve an accepted offer

Question 21

Specifying Irrevocability

Answer 21

1-Party Making
the Offer
2-Time Limit :The time limit is the specific time and date the party making the offer is bound to the offer.
The other party has only until this time to accept the offer and communicate that
acceptance back to the other party. For example, until 8:00 p.m. on the 22nd day of June
2019.
After this time, the offer may no longer be accepted. The offer has expired and the party
making the offer is free to transact with another party.

Question 22

Completion Date

Answer 22

The completion date, also known as the closing date, is the date set for the transfer of title from the seller to the
buyer. The date selected is important for a seller and a buyer as this could become part of the negotiations

Question 23

Title Search

Answer 23

A title search is completed by the buyer’s lawyer within a specified time period prior to the completion of the
transaction. The lawyer will examine the title to the property to ensure the seller’s interest in the property can be
transferred, identify any easements affecting the property, and search for any mortgages or other encumbrances,
such as a lien for property taxes not paid. A title search will also confirm the property’s legal description and the
name(s) of the registered owner(s).

As a salesperson, the agreement of purchase and sale will require you to insert a date for completion of the title
search. This date is referred to as the Requisition Date and should not be a Saturday, Sunday, or statutory holiday.

Question 24

The non-title searches

Answer 24

An offer has been prepared which indicates a closing date of August 30. Today is June 1 and conditions in the
agreement of purchase and sale are to be fulfilled or waived by June 10. The offer specifies a Requisition Date of
August 15, about two weeks before closing.
Question: Until what date does the buyer’s lawyer have to do the non-title searches?
Recap
The date required for the non-title searches is the earlier of 1 or 2:
1. Thirty days from whichever one of these two dates is later:
 Requisition Date, or
 Date conditions are fulfilled/waived
2. Five days before closing
For this scenario which is the earliest date between 1 and 2?
1. Thirty days from whichever one of these two dates is later:
Lesson 2 | Page 20 of 36
Scenario – Identifying the Date for Non-title Searches
©2019 Real Estate Council of Ontario
 Requisition date: August 15 + 30 days = September 14
 Date conditions are fulfilled/waived: June 10 + 30 days = July 10
The later date for this option is September 14
2. Five days before closing: August 30 – 5 days = August 25
Answer: The non-title searches must be complete by August 25.

Question 25

The non-title searches date

Answer 25

An offer has been prepared which indicates a closing date of August 30. Today is June 1 and conditions in the
agreement of purchase and sale are to be fulfilled or waived by June 10. The offer specifies a Requisition Date of
August 15, about two weeks before closing.
Question: Until what date does the buyer’s lawyer have to do the non-title searches?
Recap
The date required for the non-title searches is the earlier of 1 or 2:
1. Thirty days from whichever one of these two dates is later:
 Requisition Date, or
 Date conditions are fulfilled/waived
2. Five days before closing
For this scenario which is the earliest date between 1 and 2?
1. Thirty days from whichever one of these two dates is later:
Lesson 2 | Page 20 of 36
Scenario – Identifying the Date for Non-title Searches
©2019 Real Estate Council of Ontario
 Requisition date: August 15 + 30 days = September 14
 Date conditions are fulfilled/waived: June 10 + 30 days = July 10
The later date for this option is September 14
2. Five days before closing: August 30 – 5 days = August 25
Answer: The non-title searches must be complete by August 25.

Question 26

Planning Act

Answer 26

. In instances where the property does not comply with the Planning Act, one of
three considerations will impact the agreement:
 Invalid if Not Compliant – the agreement is deemed invalid if by completion, any necessary consents are not
obtained
 Required Prior to Completion – the seller must comply with the provisions under the Planning Act by
completion
 Seller Involvement – if a condition in the offer requires the seller to obtain the necessary consent, the seller
must proceed diligently at their expense to obtain such consent. Be aware that a consent can take three to
six months, but much longer periods may be necessary if difficulties arise. An earlier module detailed the
requirements for obtaining a consent to sever

Question 27

Residency

Answer 27

The seller will provide a Statutory Declaration to the buyer that they are not, and will not on completion, be a
non-resident of Canada. If received, the buyer has no liability under the Income Tax Act
 If the seller is a non-resident, the seller can provide a certificate showing that the seller has filed the necessary
documents and paid the required taxes
 If the seller is a non-resident and the certificate has not been provided, the buyer may claim a credit towards
the purchase price with the amount necessary to pay to the Minister of National Revenue in respect of the tax
payable by the seller

Question 28

Tender

Answer 28

Tendering means an unconditional offer to perform their part of a contract. Tendering involves one of the contract
parties showing the intent to perform as agreed upon, even if the other party will not close on the sale.

Tendering means an unconditional offer to perform their part of a contract. Tendering involves one of the contract
parties showing the intent to perform as agreed upon, even if the other party will not close on the sale.

Question 29

Urea Formaldehyde Foam Insulation (UFFI)

Answer 29

Urea Formaldehyde Foam Insulation (UFFI) is a type of insulation used in the 1970’s. UFFI is a
low density foam and was injected into walls and other areas of an older home to increase energy efficiency. In
1980, there was a product ban due to potential health concerns. Although the general consensus now minimizes
UFFI as a health concern, disclosure regarding a property containing, or previously containing UFFI is included on an
agreement of purchase and sale.

Question 30

The appropriate clause should contain these six key elements to describe the amount due to the seller on
completion of the transaction:
1. By whom
2. The amount
3. Adjustments
4. To whom
5. When it will be paid
6. How it will be paid

Answer 30

Purchase price less:
 S (Seller take back mortgage)
 A (Assumed mortgage)
 D (Deposit(s))