Standard Agreements are written to protect the public
In NS, we are fortunate to have well written, by lawyers with input from industry members, standard agreement forms of purchase & sale for various types of residential properties, the use of which is mandatory in our industry. The use of these standard agreement forms make writing & responding to offers easier, less risky for the parties involved, & less time consuming than if each agreement was drafted from scratch. The creation of different versions of the sgreement for different types of properties streamlines the process. It is standard practice to encourage a buyer to have a formal inspection performed on a property, confirm financing approval, & ensure a property is ensuable before firming a deal. In some cases, no matter which form is chosen, you may still have to add clauses. Often, developers of new condominiums/new construction have their own agreement templates. Particuliar care must be taken to ensure the buyer's needs are met as these agreements are often written with less protection provided to the buyer than our standard NSAR ( Nova Scotia Association of Realtors ) agreements.
Clauses & Conditions
The Canadian Real Estate Encyclopedia defines a clause as : wordings inserted in agreements/contracts to accurately reflect the wishes of the parties. A condition is described as: a stipulation in a contract/agreement that provides a consequent result on either the occurence or non-occurence of a specified event. So although a condition is also a clause, a clause is not necessarily a condition. A clause, simply put, is a condition that is written in the "if this, then that" format.
Most of the conditions in the standard NSAR agreements are written as conditions precedent meaning that they call for some event or performance of some act before the offer becomes binding on the parties. The deposit, financing, building inspection, confirmation of insurance, lawyer review are all written in this format & the offer does not become firm until all of these are met. In Nova Scotia, most of our conditions precedents are written such that the "event" is a simple passage of time beyond a certain defined date. There is no need to provide a signed waiver, as is required in Ontario, to indicate that all conditions have been met. Instead, it is deemed to be met when the specified date has passed unless written notice to the contrary is received by the seller or the sellers agent within the specified time frame. So in NS, No news is good news.
Conditions subsequent are those conditions that call for an event or performance of an act, after the agreement has become firm & binding but prior to closing. It is presumed that this act will be performed & the deal becomes firm & binding before its performance.
When clauses are written, they must cover the following questions:
- WHAT is to be done & in what manner
- WHO is to do it ( be specific, use "licensed" or "qualified " )
- WHO is to pay for it
- WITHIN what time frame is it to be done
- HOW will it be determined if its done
- WHAT is to happen in the event that it is not done.
Poorly written clauses lead to misinterpretations, disappointments & sometimes law suits. Make sure your clauses are written well.
If for some reason, a condition can not be met within the specified time frame, ask for an amendment to extend the conditions time frame. The other party may refuse, & it could cause the deal to fall apart, however, if you allow the specified time/date to pass & then you find out you are unable to meet that condition of othe purchase & sale, the deposit will be lost &/or you could be sued for damages.
The 3+ pages of the standard purchase & sale agreements may seem daunting, boring, & a lot of legalize but they are written to protect you. Each clause is there because an event has occurred where a buyer or seller was not protected in the past or misunderstood what their duties in the sale were. A verbal offer on a property is only worth the paper that it is written on.
So protect yourself! Hire a professional real estate agent to work on your behalf & to protect your best interests.
Thank you for visiting our blog. We hope that you found the information helpful. If you are considering purchasing &/or selling your home, feel free to contact us at your convenience to discuss how we can help & our dedication to our clients.
Merv Edinger & Associates of Re/Max Nova