Unit 10 - Drafting Agreements Flashcards
What is the simplest of all contracts for a piece of land?
An open contract that doesn’t use the forms and has the bare minimum of the names of the buyer and seller, description of land, sale price, and the signatures of the buyers and sellers.
This is RARE though, and licensees must use the prescribed forms for residential trading.
Where is the deposit usually held?
This is usually held at the seller’s brokerage. But could also be held at the buyer’s brokerage is the seller is unrepresented.
What are the implications to the buyers and sellers on if a non-resident buyer disposes of taxable Canadian property?
They must pay tax on their taxable capital gains.
And if the non-resident seller does not remit the applicable amount, the BUYER becomes liable. So the salesperson should always alert the buyer so that they can discuss associated tax requireemtns with their lawyer
What are the limitations with choosing a closing date?
Closing dates cannot be on a Saturday, Sunday, or legal holiday as registry offices are closed
If there is damage to the property upon closing day, what are the buyer’s option?
The buyer can choose to terminate the agreement or they can have the seller sign over the insurance proceeds so that they can complete the sale and repair the property
Is the stated acceptance period binding on the buyer?
No, the buyer can withdraw the offer at any time prior to acceptance being communicated back to them. In other words, an offer is always revocable by the buyer before acceptance.
Do you need a witness to make an offer legally binding?
Nope.
What are the three instances in which a Receipt of Funds Record is not required for FINTRAC?
Which brokerage in a transaction needs to do this?
- When funds are received from a financial entity or public body that is buying or selling
- If the funds are not deposited into the brokerage trust account (say instead going to a builder/developer)
- If a large cash transaction (over $10,000) is involved and a large cash transaction record has been prepared and reported instead
The Receipt of Funds Record must be done by buyer brokerage and retain for 5 years
What is the Balance Due on Completion?
This is the amount of money that the buyer is required to pay to complete a real estate purchase after all adjustments are made and the trust deposit has been deducted.
What is a marketable title?
This is a title that is so free from defects that even an unwilling buyer must accept it
New home residential agreements are usually created by whom?
The developer’s solicitor (lawyer)
The onus is on the buyer usually to fulfill conditions of agreement of purchase and sale.
If a condition is not met, what happens?
If a condition is not met AND the buyer submits notice that the condition is not met, either party at that point can terminate the agreement and the deposit will be returned to the buyer.
What are the 6 considerations (ingredients) to make when writing a conditional clause from scratch?
- What is to be done
- Who is to do it
- Who is to pay for it
- When is the time limit for doing it
- What happens in the event it is not done
- Whether it may be waived (optional)
So for example, a condition of, “This offer subject to Seller securing a property to purchase by May 15, 20xx” fails because it is vague and doesn’t address the above considerations. Good examples are the precedent wordings already in Form 400.
There is a small space for additional conditions in the agreement of purchase and sale. What is normally done when using it?
It’s a small space so usually it’s best to use an Addendum Schedule (form 420) instead.
What are the 5 steps when developing a special clause?
- Establish exactly what the buyer or seller requires
- Review the NSREC Clause Book to see if there already is one
- If there is already one, insert it and review with the client.
- If there isn’t already one, consult with your broker and seek expert legal advice as needed
- If the clause involves a condition, ensure it’s structured properly and plop it in!
