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Homebuyers should be very careful when reading property purchase agreements

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What happens when there is a significant discrepancy between the way a home is described on an MLS listing, and the details in the Agreement of Purchase and Sale?

That was the issue in a court case decided earlier this year regarding a March 2015 home purchase. The buyer, Shripragas Sivasubramaniam, signed an agreement to purchase a home on Cragg Cres., in Ajax, from Yar Mohammad and Jamila Khudabakhsh for $525,000.

A recent judgment found that details in an Agreement of Purchase and Sale are those that a buyer and seller must adhere to.
A recent judgment found that details in an Agreement of Purchase and Sale are those that a buyer and seller must adhere to.  (Dreamstime)

The Agreement of Purchase and Sale contained the standard printed clause which reads: “Upon completion, vacant possession of the property shall be given to the buyer unless otherwise provided for in this agreement.”

There were no other terms in the agreement relevant to the issue of vacant possession.

Paragraph 26 of the agreement contained the standard “entire agreement clause” which is used in virtually every purchase contract in Ontario. It reads, “This agreement … shall constitute the entire agreement between the buyer and the seller. There is no representation, warranty, collateral agreement or condition, which affects this agreement other than as expressed herein.”

Sivasubramaniam was buying the home to live in with his wife, two children and his mother. Since he was vacating his condominium, it was an important term of the contract that he would receive vacant possession.

The MLS listing for the property, however, stated: “AAA tenant.”

When the buyer’s agent presented the contract to the sellers’ agent, he was told that the tenant would be vacating on or before closing. But, during an inspection of the property by the buyer, the tenant was surprised to find out that vacant possession would be required.

At this point, the lawyers for buyer and sellers began a heated and threatening exchange of correspondence — the buyer’s lawyer insisting that the property be vacant on closing, and the sellers’ lawyer responding that the tenant would remain in possession and the buyer had to accept the tenant because of the notation in the MLS listing.

The sale did not close as scheduled on April 29, 2015, with each side accusing the other of breaching the contract. When the tenant ultimately moved out in December, the seller moved into the house with his family. On May 10, 2016, the property was re-listed for sale at $649,900, but the listing was cancelled after Sivasubramaniam registered a caution on title to prevent the resale.

Eventually Sivasubramaniam brought an application in Superior Court to determine which party breached the contract, and to force the sellers to close the transaction.

The matter came before Justice Robert Charney this past April. In his judgment, Charney noted that the fact the MLS listing stated that there was a tenant in possession was “entirely irrelevant.

“The terms with respect to vacant possession,” he wrote, “are clear and unequivocal … I have concluded that the vendors were in breach” of the contract.

The judge ordered specific performance of the agreement and that the buyers were entitled to a conveyance of the property within 60 days — or the buyer could register his own deed without the consent of the sellers.

When I did a title search last week, the sellers were still shown as the registered owners.

This case provides two valuable lessons to buyers, sellers and agents:

  • If a provision is not specifically written into the contract, it doesn’t exist.
  • The wording of the purchase agreement overrides the MLS listing or any oral promises.

Bob Aaron is a Toronto real estate lawyer. He can be reached at bob@aaron.ca or on Twitter: @bobaaron2

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Victoria real estate agent disciplined for false advertising, encouraging cash deal to avoid taxes

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A Victoria real estate agent is facing $9,000 in fines and a 60-day licence suspension after breaking several professional rules during the sale of her father’s half-million-dollar property, according to a decision by the Real Estate Council of B.C. 

Whitney Garside’s missteps — outlined this week in a disciplinary decision posted on the council’s website — included falsely advertising the property as being almost twice its actual size and advising the buyer they could avoid the property transfer tax if they paid cash directly to the seller.

The property on Burnett Road in Victoria was being sold in 2016 by the real estate agent’s father. That relationship was disclosed and isn’t among the reasons she has been disciplined.

According to the disciplinary consent order, Garside told the buyer — whose name is redacted — that by paying $42,000 cash on the side, the value of the property could be reduced to avoid paying the property transfer tax.

That cash arrangement was not shared with Garside’s brokerage, Re/Max Camosun, a failure that contravened the Real Estate Services Act.

The council also ruled that she “failed to act honestly and with reasonable care and skill” when she advised the buyer the property transfer tax could be avoided by paying cash directly to the seller. 

The council’s discipline committee also found that Garside committed professional misconduct when she failed to recommend the seller and buyer seek independent legal advice, specifically regarding the property transfer tax and the cash agreement.

Another issue the council considered professional misconduct involved the size of the property in question.

The council ruled that Garside published false and misleading advertising and failed to act with reasonable care and skill when the property was advertised as 8,712 square feet, when in fact a portion of the lot belonged to the Ministry of Transportation, and the actual size was just 4,711 square feet.

The discipline committee ordered Garside’s licence be suspended for 60 days, which will be completed Jan. 3, 2021.

She has also been ordered to complete real estate ethics and remedial classes at her own expense.

Garside was also fined $7,500 as a disciplinary penalty and $1,500 in enforcement expenses.

She agreed to waive her right to appeal the council’s discipline committee’s decision in September.

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Frisco apartment community sells to Canadian investor

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A Canada-based investor has purchased a Frisco apartment community as part of a larger Texas deal.

The 330-unit Satori Frisco apartments opened last year on Research Road in Frisco.

BSR Real Estate Investment Trust bought the four-story rental community that was built by Atlanta-based Davis Development.

Satori Frisco was more than 90% leased at the time of sale. The property includes a two-story fitness center, a car care center, a dog park and a resort-style swimming pool.

The Frisco property sold along with Houston’s Vale luxury apartments in a deal valued at $129 million.

“BSR recently exited the smaller Beaumont and Longview, Texas, markets and also sold noncore properties in other markets,” John Bailey, BSR’s chief executive officer, said in a statement. “We are now using our strong liquidity position to invest in Vale and Satori Frisco, modern communities in core growth markets with the amenities our residents desire.”

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House prices on Prince Edward Island continue steady climb

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Residential real estate prices on Prince Edward Island continue to climb at a rate higher than the national average, according to the latest report from a national organization. 

The Canadian Real Estate Association released monthly figures for November 2020 on Tuesday.

They show that the average price for a resale home on P.E.I. is about 21 per cent higher than it was a year earlier. 

Only Quebec had a bigger year-over-year increase, at about 23 per cent. Overall across Canada, prices were up 13.8 per cent year over year in the ninth month of the COVID-19 pandemic.

“For the fifth straight month, year-over-year sales activity was up in almost all Canadian housing markets compared to the same month in 2019,” the report noted.

“Meanwhile, an ongoing shortage of supply of homes available for purchase across most of Ontario, Quebec and the Maritime provinces means sellers there hold the upper hand in sales negotiations.”

That lack of houses coming onto the market compared to the demand means that in those provinces, there is “increased competition among buyers for listings and … fertile ground for price gains.”

There have been anecdotal reports for months that Prince Edward Island’s low rate of COVID-19 infection and looser rules around social activities have been encouraging people to buy homes on the Island. 

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