Regulations Concerning Offer Retention
The balance of requirements concerning tracking Offers and eliminating phantom offers is set out in the Regulations under REBBA, 2002.
Following the recitation of the provisions, I will set out a Commentary and Review. My notes will be in “italics”. Here they are:
“Records — Offers to Purchase
Retention of offers that are not accepted
19.1 (1) Despite section 18, for the purposes of subsection 35.1 (2) of the Act, this section applies when a brokerage acting on behalf of a seller received a written offer to purchase real estate for the purposes of presenting it to the seller, but the offer did not result in the purchase of the real estate.
(2) If the written offer was made by a person who was a client or customer of a registrant, then the brokerage acting on behalf of the seller shall keep, for at least one year after the date the brokerage received the written offer for the purposes of presenting it to the seller, either a copy of the written offer or a copy of a document that includes the following information:
1. The name and signature of the person who made the offer to purchase the real estate.
2. The name and contact information of the seller of the real estate.
3. The name of the brokerage and of the broker or salesperson who acted for the seller.
4. The name of the brokerage and of the broker or salesperson who acted for the person who made the offer.
5. The address, legal description or other identifier of the real estate on which the offer was made.
6. The date and time the offer was made.
7. The date and time the offer was received by the brokerage for the purposes of presenting it to the seller, and the means by which the offer was received, such as in person or by fax.
8. If the brokerage presented the offer to the seller, the date of presentation.
9. The date and time, if any, until which the offer was irrevocable.
(3) If the written offer was made by a person who was not a client or customer of a registrant, then the brokerage acting on behalf of the seller shall keep a copy of the written offer for at least one year after the date the brokerage received the written offer for the purposes of presenting it to the seller.”
COMMENTARY and REVIEW
Records — Offers to Purchase
Retention of offers that are not accepted
19.1 (1) Despite section 18, for the purposes of subsection 35.1 (2) of the Act, this section applies when a brokerage acting on behalf of a seller received a written offer to purchase real estate for the purposes of presenting it to the seller, but the offer did not result in the purchase of the real estate.
Accepted Offers already have to be retained. This is an additional requirement dealing with unaccepted Offers. This applies to the Brokerage with the Seller as a Client or Customer.
The keyword here is “received”. This would be prior to “presenting” it to the Seller.
(2) If the written offer was made by a person who was a client or customer of a registrant, then the brokerage acting on behalf of the seller shall keep, for at least one year after the date the brokerage received the written offer for the purposes of presenting it to the seller, either a copy of the written offer or a copy of a document that includes the following information:
This section applies to registrants only. The Seller’s Brokerage keeps a copy either of the Offer itself, or the prescribed document. The trigger is “received” in this case. The retention time is one (1) year for these non-accepted Offers. It is six (6) years in the case of the Offer which was accepted and became the Agreement of Purchase and Sale.
The following is the alternative document for registrants. You will appreciate that many prospective Buyers do not wish to leave their documents behind, particularly if they didn’t buy anything.
- The name and signature of the person who made the offer to purchase the real estate.
It is interesting that the signature MUST appear.
- The name and contact information of the seller of the real estate.
This part should be easy.
- The name of the brokerage and of the broker or salesperson who acted for the seller.
Again, this is known.
- The name of the brokerage and of the broker or salesperson who acted for the person who made the offer.
This is usual information which is not confidential in any way.
- The address, legal description or other identifier of the real estate on which the offer was made.
This should be clear.
- The date and time the offer was made.
There are a few possible interpretations here. What does “made” mean? Does it mean prepared and drafted? That would be an unlikely interpretation since it still stays on the buyer side.
Later on, we will see that OREA interprets this to mean “submitted”.
While the document once signed remains in the possession of either the prospective Buyer or his agent, and thereby still “under his control”, such an Offer truly would not meet any threshold of having be made. Such a document is held “in escrow” by the agent until such time as it is authorized to be released and delivered into the possession of the other party.
Execution is one matter, and delivery is another. Both steps need to be taken in order to have a proper Offer which has been “made”.
- The date and time the offer was received by the brokerage for the purposes of presenting it to the seller, and the means by which the offer was received, such as in person or by fax.
The expectation is naturally that this will be a different date and time from that date and time applicable to the “made” requirement in item 6.
However, you will appreciate that it may be sent by fax at 6:02 pm and then received by the Seller’s representative at 6:04 pm.
Pinning down the precise time of delivery “in person” will be somewhat more difficult. I suppose we will all need to coordinate our watches.
Email will soon be permitted. At the moment it is not allowed, but it will be effective 1 July 2015. Those two times will also be required.
Further, a text could include an attachment which contains an Offer, and those times, namely the sending and receiving would be important.
Another side issue which will arise is the concept of “registering” an Offer. It is noteworthy that this is a practice of local custom. It does not take place generally throughout Ontario. And, it is NOT mentioned here.
- If the brokerage presented the offer to the seller, the date of presentation.
This is a little vague. You have to go back to #7 to understand that they are talking about the Seller’s Brokerage. In this regard, we are looking at the local practice. Was the Buyer’s representative there? Did that person actually present the Offer in the presence of the Seller’s representative?
It’s also possible, the Seller’s Representative simply handled the matter alone with the Seller directly.
So, who presented the Offer and what was the DATE?
Just the date! Not the date and TIME!
That is rather interesting because there could be Offers which were received, but have now expired. Without the time of presentation, it will be difficult to assess how many Offers were still “out there” and “open for acceptance”.
This seems a little irregular, since the whole reason in the first place was to avoid phantom Offers and catch to culprits. This provision would seem to allow the prisoners to escape!
Nevertheless, what it does do is track the Offers over a time period under review and investigation. It does not unfortunately raise the bar one step further to ensure fairness.
- The date and time, if any, until which the offer was irrevocable.
I would expect the grammar police to be out in full force here. What was the irrevocable time? By what time must the Offer have been accepted?
If the Offer is open until 10:00 pm, that means it must be accepted before the time period expires, namely 9:59 pm. Leaving it until 10:00 pm would be one minute too late.
This information would be helpful since it would enable RECO to determine how many Offers were open for acceptance at any given time.
However, you would also need to know what happened to other Offers. Were they rejected? Were any countered? Were they set aside, and still open? Undertaking such an analysis would be required to have an ongoing and legitimate process for conducting and reviewing a multiple Offer situation.
(3) If the written offer was made by a person who was not a client or customer of a registrant, then the brokerage acting on behalf of the seller shall keep a copy of the written offer for at least one year after the date the brokerage received the written offer for the purposes of presenting it to the seller.
This step is directed to the unrepresented Buyer. Here, the entire document must be left behind. There is no provision for a summary document in this case. But, there is no way to enforce this obligation. This Buyer can simply say “no”, and “you can look at my Offer, but you can’t copy it”. That is quite reasonable, and as you probably expect, it will be the “FSBO (fpbb) Buyer who will be knowledgeable of their rights and refuse.
Brian Madigan LL.B., Broker
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