Failure to Clarify "Description"

Commercial Real Estate Agent with RE/MAX West Realty Inc., Brokerage (Toronto)

contract signing

Ontario Real Estate Source

By Brian Madigan LL.B.

In order to be "enforceable", real estate contracts must be "definite and clear". So, here, the Courts will look to:

1) parties, (sufficient to identify)

2) price, (capable of ascertainment)

3) description, (capable of ascertainment)

4) closing date, (capable of ascertainment)

# 3 Description

If the parties are expecting the Courts to enforce the agreement, then the description of the property must be clear. And, that does not mean "as clear as mud".

Suppose that the Courts cannot easily conclude what was properly the subject-matter of the transaction? This means "back to the drawing board- no deal".

A real estate developer draws up a plan of subdivision for 700 homes. He sells 450 lots to a builder. But, the municipality only approves 350 lots.

Does the builder get:

1) all 350 lots,

2) 450/700 of 350 lots, or 225 lots,

3) none?

And, what if there were a half lot based on the numbers. Would this be rounded up or rounded down?

Also consider, other properties under development where there will be roads dedicated to municipalities, areas dedictated to schools and other types of reservations. It would be very easy to mis-describe the property which is to be the subject-matter of the transaction.

This can easily occur if there is a Planning Act compliance issue. Here, the standard cform agreement will conclude that there is no deal. Planning Act compliance is a true condition precedent.

If the parties have failed to resove this matter, the Courts can easily conclude that they have simply left out an essential term, and the contract is not enforceable.

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 RE/MAX West Realty Inc., Brokerage 416-745-2300


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Lester Wilkins
Blue Water Home Loans NMLS# 166527 - Port Huron, MI

very informative.  thanks for sharing.  this is so crucial.

Feb 26, 2012 02:36 AM #1
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