"Agreement of Purchase and Sale" (Execution by Buyers)
By Brian Madigan LL.B.
(Ontario Real Estate Source)
The execution of the agreement of purchase and sale by the buyers, contains two separate statements
Let's have a look at the standard form agreement of purchase and sale and see what it says in that regard:
"SIGNED, SEALED AND DELIVERED in the presence of:"
(AND)
"IN WITNESS whereof I have hereunto set my hand and seal:"
These two statements are followed by a line to permit the buyers to sign, seal and date the agreement. There is a line to permit the witness to sign.
Let's have a look at each line, thought, or partial sentence by a letter of the alphabet for later review:
A) SIGNED,
B) SEALED AND
C) DELIVERED
D) in the presence of
E) IN WITNESS whereof
F) I have hereunto
G) set my hand
H) and seal
So, now let's have a look at each of the sentences or partial sentences and see what we come up with.
A) SIGNED,
This is a statement to the effect that the document is signed or affixed with the signature of the buyer. Today, most parties are literate, so a full signature is expected. Initials can be sufficient, but in this location are somewhat "irregular".
Parties with special needs, ie. the blind execute documents in a certain way, as do those who "make their mark", which has the same force and effect as a signature. However, you will appreciate that this increases the role of the witness in the circumstances.
There are other formalities with respect to those signing by power of attorney, and there are requirements for corporations and partnerships.
The purpose of the signature is to indicate "consent". In all cases, a person should execute the document using their usual signature. This is easy to recognize and validate later. Writing the name in full with the complete first and middle names are far less recognizable.
B) SEALED AND
Documents which require a greater degree of formality which traditionally has included the sale of real property are often executed under seal.
Contracts require evidence of consideration. An exception to the consideration rule, are contracts under seal. In that regard, there is sufficient formality to the execution of the document that the element of consideration is not necessary.
In some cases, there are increased limitation periods that apply to contracts executed under seal.
There is a black dot on the document. Below that black dot is the word "seal". In law, that is sufficient to be a seal. In many offices, red wafers of that size are affixed to the document. That is also a seal, in fact, it is one with greater impact in terms of appearance, but not with greater validity.
A circle drawn on a document marked as a "seal", or "initialled" has also been accepted as a document executed under seal.
If the seal were obliterated or scratched out, the document would not be under seal, but it would still likely be enforceable if consideration could be shown.
C) DELIVERED
This is the final step in the process. There is no contract until it has been "delivered". A party may sign a document, keep it to themselves, and destroy it the next day. There is no binding contract or enforceable agreement.
It only becomes enforceable upon "delivery". That is the point in time where the other party can rely upon it.
Delivery in this sense is "communication", rather than actual physical delivery of the document.
In the case of an Offer by a buyer, the seller probably needs the physical document first. In the case of acceptance or signbacks, "delivery" may take place in the form of a telephone conversation indicating "acceptance". Physical delivery of the document could take place the following day.
D) in the presence of
This statement appears above the signature of the witness. It is important to note that in many cases the role of the witness becomes quite important. This would be particularly the case where there was some disability, incapacity or other matter which effected the signing of the document. A person who signs as a witness is compellable to give testimony in Court concerning the execution of the document.
The witness must be present and see the document signed by the party. The witness need not be in a position to attest to the party's understanding of the document, but the witness does need to state that the party intended to sign a legal document. Testimony might also concern coercion, compulsion or incapacity due to alcohol, drugs, medication or illness.
This further step in terms of "understanding" is best handled where the witness is someone "professional", a lawyer, or a real estate broker or sales representative, where that witness may properly attest to the party's understanding.
E) IN WITNESS whereof
This is now the preamble to the actual execution of the document by the party. This is an acknowledgement that there is a witness present.
F) I have hereunto
This is the acknowledgement by the signing party that set out below is the signature and the seal.
G) set my hand
This is the signing or affixing of the signature, the mark or initials of the party to indicate "consent". This should take place before the witness signs the document.
H) and seal
In most cases, this document will be left "as is" with the pre-printed seal intact. This reference is the specific acknowledgment that the document is executed under seal. So, no changes to the pre-printed document; and it's considered "under seal". Affixing a red wafer; it's also "under seal".
Comment
These two phrases are of long standing in common law contractual documents.
It should also be indicated that following the signature and seal is a line to permit the buyer to insert the date. The correct date must be inserted, not an earlier or later date.
Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage
905-796-8888
www.OntarioRealEstateSource.com
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