By: Jayson Schwarz LLM
I hope the information and checklist provided hereafter will help you when you review your Agreement of Purchase and Sale and provide some general information. I hope it will assist in your negotiations with the on-site sales agents or builders. It is not intended to be comprehensive and you should always see a lawyer before signing an Agreement of Purchase and Sale.
If it is not in writing and signed for or initialed by you and the Vendor it will probably not be binding and for our purposes assume generally this is the rule in every case. (note – in some situations lawyers can find a way around this rule). Therefore don’t accept promises unless in writing and signed for!!!!! I am going to tell you a story that illustrates how important this is from every perspective.
Mary went into a sales office and executed an Agreement of Purchase and Sale. The Agreement provided that she could terminate based on her lawyer’s review within 3 days of execution provided the notice was provided to the builder in writing in the time provided. Mary messed about and on the third day called the sales agent and said she wanted out of the deal. All Mary had to do was deliver a notice in writing on that day and the deal would have been over. The sales agent did not tell her that and she didn’t see a lawyer in time. She thought she had read the Agreement carefully enough herself and didn’t realise what she had to do. The Sales agent told her he would have to check with head office to see if she could be let out. Either the agent deliberately mislead her or just didn’t know what the agreement said. He never called her back and when she attended at the office another agent told her she would have to have her lawyer call head office. Mary is facing potentially large legal fees and a lot of aggravation and anxiety before this will sort out. The Builder may be nice and let Mary out, but there is no guarantee.
OK, moral of the story, there are 2:
- Make sure if you have a clause that allows you a chance to have your lawyer review the agreement, do it right away!
- If it affects real estate make sure it is in writing – whether it is a promise from an agent as to what you are getting or what you are not paying for or a notice to the builder.
Levies and development charges – you will find them in the offer, usually in tiny print that says, that if the Vendor gets charged later, he can pass the charges onto you. Make sure these clauses are deleted or a monetary maximum is written into the offer.
Extensions – Make sure that the offer restricts extensions to the provisions of Tarion and you don’t have any clauses where the Vendor can try and get around Tarion and you understand the extension terms and rights. Read the new Tarion Addendums attached to your Agreement of Purchase and Sale and ask questions.
Driveways – Quite often the offer will indicate that the Vendor is including the driveway in the price and on closing there appears a charge for the driveway. AHA!!! this is for the second or finishing coat. Be careful.
General Stuff – Make sure you understand that in most offers the Vendor may not yet have municipal approval and anything can happen. As an example your lot could be eliminated and you might be required to accept a different and in your opinion not as desirable new lot; your elevation could be reversed; you may lose your walk out in the back or be required to pay for a walk out if you are required to have one due to engineering changes; colours and materials might change and substitute materials of the same or better quality may be used. There may be things like a 5% clause; that if it turns out your lot is up to 5% bigger or up to 5% smaller, you have to be satisfied with it.
Extra Costs -Get precise dollar amounts put into your offer or maximums for the following: water and hydro installation and meters; subdivision costs – fences, walls, bushes, trees, etc.; grading and damage deposit – some builders agree to give it back and some don’t; hydro trenching and gas hookup, survey cost.
Legal Fees and Disbursements – First of all you are going to pay the fee, whatever the amount the two of you agreed to. You did of course have a pre-agreed fee didn’t you? Then there is a list of disbursements. Disbursement are those monies expended by your lawyer on your behalf necessary to properly search and close the transaction. Be careful, it is here that someone may try to take advantage by charging large fax, mail and photocopy fees. Make your lawyer justify all expenditures that don’t make sense. Remember you are paying your lawyer’s Law Society Levy, many builders include a clause asking that you pay their lawyers $50 plus HST. Get this clause deleted.
Mortgage clauses – Are you stuck with the builder’s mortgage and terms or do you have the right to arrange for your own mortgage with the institution of your choice? Is there a clause requiring you to accept the builder’s lawyers undertaking to discharge the mortgage without a discharge statement or direction to pay funds to the lender? Is the builder trying to make you pay to obtain partial discharges of a blanket mortgage?
Condos – If you are purchasing a condominium make sure you check to see if you own your parking and storage locker or are your rights restricted to only exclusive use?
Title – This is one of those areas where your lawyer is integral. You need to look out for clauses that say you have to accept the builders undertaking to give you a deed if one is not available on Closing. You have to check to see what restrictions will run with the deed and how they will affect you. This means things like access to your property and rights of re-entry, schools, burms, drainage, noise and environmental issues etc.
There are many other things to consider and hopefully, the information I have provided is helpful, but remember it is only the beginning, make sure you get good, solid legal advice and listen to your lawyer as he or she has your best interests at heart.