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)
# 4 Closing Date
Sometimes, the issue of the closing date is just unclear. Courts need this matter to be certain. So, it is either specifically mentioned in the agreement, or it is subject to a formula.
Naturally, the ones which are subject to some kind of formula are the ones which give rise to problems. If the Courts cannot figure it out, then it will be very easy simply to conclude that the parties never reached a deal on this point. That means the the contract cannot be enforced. It does not mean that the parties might not try to sue one another, it just means that the Courts once finally confronted with the issue, will not be able to figure out the closing date in accordance with any kind of formula agreed to by the parties.
The parties might say, for example, the closing shall take place 10 days after the municipality has approved the plan of subdivision. This becomes a true condition precedent. Neither party has control over the municipality, and the closing date is not capable of ascertainment.
Consequently, such a formula is unduly risky. Put in a clear and definite date, and allow the parties to move it up, or adjust it by mutual consent. The Courts will work off the clear date, until they have evidence of another date that was mutually agreed. At least, the Courts have a workable formula.
If there is no suitable formula, then, there may be no enforceable agreement.
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
www.OntarioRealEstateSource.com
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