It is trite to say, but crucial to the completion of a real estate contract is compliance with the times set out for conditions. Unless a conditional offer has been completed prior to the expiry of the date and time set out in the Agreement of Purchase and Sale, than the contract is void.
In a case resembling what transpires all too often in the hectic world of real estate, the Ontario Superior Court of Justice, in Yan v. Nadarajah, was unfortunately asked to resolve a dispute that should have been easily resolved on the basis of the evidence available to competent real estate brokerages. The condition involved was a condition precedent, which requires some kind of notice to keep a transaction alive (in contrast to a condition subsequent).
This is a not a prominent case, nor will it be cited by the courts. It is, however, a reminder to all professionals involved in the real estate world to properly attend to the fundamental tenets of the process.
The facts are straightforward: The Purchasers agreed to purchase the Vendors’ home; a conditional Agreement of Purchase and Sale (“APS”) was accepted by the Vendors. The deadline for the waiver of Conditions in the APS was December 9, 2010, 9pm.
The Purchasers signed the Waiver of Conditions at 7:45pm on December 9, 2010. The Waiver was faxed to the Vendors agent’s office within half hour of the signing. The agent acknowledged receiving the Waiver prior to 9pm, but the receipt of acknowledgment indicated 10pm. Among many other issues before the court, the Purchasers commenced a motion for specific performance: simply meaning that a party insists on the completion of the contract.
The evidence submitted to the court, ranging from affidavits, transcripts from examinations of affidavits, witness testimonies to the real estate documents (some of which were illegible), satisfied the Court that the Purchasers had successfully completed the Agreement of Purchase and Sale.
The Vendors’ receipt acknowledgment of the fax was not conclusive. The receipt could not have been completed if no staff were present at the office when the fax was received. There was insufficient evidence on the working hours of the staff for the Vendors’ agent during the disputed time. Additionally, and crucially, the Toronto Real Estate Board status report noted that the subject property had been sold on December 9, 2010.
Other evidence included one of the defendant’s admission that he had been advised by his agent that the property was sold while discussing rental arrangements for his family.
There were several issues before the Court, and the heart of the case was premised on the defendants attempting to evade their contractual obligations to complete the sale of the property.
A crucial element in this case was the Court’s deference and respect for the work of the agents: the Court accepted the agents’ testimony on the delivery and receipt of the Waiver of Conditions. Problematic for me is the messy correspondence of the documents, which the Court noted as illegible in certain instances.
The agents must utilize utmost diligence in exchanging legible documents in order to avoid similar costly disputes. Equally important, many Purchasers are deterred from enforcing properly fulfilled agreements that the Vendors or agents reject on sketchy grounds due to the time and cost involved. A healthy process for the parties in a real estate transaction begins with the ethical and legal duties properly carried out by all of the professionals involved.
For a reading of this case, here’s the CanLII Link: https://goo.gl/byNTID
Note: decision was delivered in December 2015.