48
[BUYING AND SELLING REAL ESTATE IN CANADA - ONTARIO]
KEY FACTS OF REAL ESTATE ACQUISITIONS UNDER CANADIAN (ONTARIO) LAW
INTRODUCTION Canada, a bijural country, utilizes both common and civil law. Except for Québec, a civil law jurisdiction, the common law operates in all remaining provinces and territories. Real estate transactions conducted in Ontario are governed by laws and rules that are specific to the province. This requires buyers and sellers to remain considerate of the Province's particularities when transacting. This guide will provide a brief overview of important considerations when buying or selling property in Ontario. I. PURCHASE AND SALE AGREEMENT All real estate sales in Ontario require a formal written contract between the buyer and seller in order to comply with the Statute of Frauds and must contain the elements of a binding contract including offer, acceptance, consideration and the meeting of the minds. The purchase agreement outlines all the obligations, responsibilities and procedures in accordance with contract law. It also must accurately identify and describe the real property being purchased and usually includes both the municipal address and the legal description. Buyers and sellers are typically bound to certain terms and conditions upon agreeing to make the purchase. For instance, a buyer who makes an offer cannot then revoke it until a specified period of time has elapsed. Within that time period the seller can accept, reject or make a counteroffer. If no counteroffer is made, and the seller accepts the buyer's offer, the offer becomes a legally binding agreement. A deposit is security for the performance of the buyer's obligations and is usually held in the seller's
brokerage's or lawyer's trust account. It is not a limitation on damages in the case of a default by the buyer unless expressly stated as so in the purchase agreement. On closing, the deposit is credited to the buyer as partial payment of the purchase price. The agreement of purchase and sale may contain conditions in favour of the buyer and/or seller. For example, a buyer may have a defined period of time in which to arrange suitable financing, conduct due diligence of the property and to be satisfied with their investigations of the property. If so satisfied, the buyer may waive their conditions, and the agreement would then be legally binding. If the conditions are not waived, the agreement may terminate, and any deposits paid returned to the buyer in accordance with the terms of the agreement. The agreement of purchase and sale may contain a clause on the right to assign the contract to a third party. If the agreement is silent on the right to assign, then under contract law, either party's "benefits" can be assigned without the other party's consent, but not their "burdens." The buyer may need flexibility for tax planning, liability reasons or compliance with the Planning Act and so if the need to assign the agreement is important, it should be included as a term to the purchase agreement. The Ontario Real Estate Association (" OREA ") is most commonly known for providing the standard forms for the purchase, sale, and leasing of residential and commercial properties. Each local real estate board within Ontario has adopted the standard OREA forms which may be used for residential and commercial real
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter