Electronic Negotiating
By Brian Madigan LL.B.
It certainly seems that everyone would like to negotiate real estate transactions by email.
The only problem is that it doesn’t appear to be allowed.
There is a current difference in approach by OREA which drafted the new standard form Agreement of Purchase and Sale effective January 2012, and RECO.
OREA is the Ontario Real Estate Association which drafts standard forms for use by the industry. RECO is the Real Estate Council of Ontario which is charged with the role of regulating and governiong the profession.
The new OREA standard form agreement of purchase and sale has incorporated emails into the “Notices” provision. They are given the same status as faxes.
The new clause permits Offers, Counter-offers, and Notices of Acceptance to be communicated by email. The provision goes on to include various notices and other documents.
The concern arises with the “negotiating of the agreement. Notices and other documents suitably can be exchanged through email. RECO accepts the latter but is concerned about the former and recommends that legal advice be obtained in a Registrar’s Bulletin.
Here’s the issue. The Statute of Frauds requires any agreement for the sale of land to be in writing. The Electronic Commerce Act enabled and permitted certain contracts to take place over the internet.
But, the problem is in the Act:
Section 31 (1) 4 of the ECA reads:
This Act does not apply to the following documents:
4. Documents, including agreements of purchase and sale, that create or transfer interest in land and require registration to be effective against third parties.
Clearly, it applies to Transfer/Deeds which are registered. Does it also apply to Agreements which are generally not registered. The wording in the Act certainly could have been better.
No changes have been made to the Act since it came into force in October 2000, so why adopt the OREA approach now. It’s risky and flies in the face of the RECO Bulletin.
I would recommend that you be cautious and follow the RECO approach until this matter is resolved. Let someone else take this to Court, or have the Legislature pass an amendment to the Act.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com
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