Clauses

Looking for a clause to include in a Contract of Purchase and Sale?

We organized all clauses in categories and listed them all on the table of contents to make it easier for you to locate the clause you need. 

Accountant Approval

  • Approval by Seller's/Buyer's Accountant Clause

    Excerpt from Trading Services | Section 10. Sale of a business

    Go to

    (f) Form of Contract — View Entire Section

    The standard residential Contract of Purchase and Sale is to be used for residential sales only, not for sales of businesses. Licensees should obtain professional advice from lawyers and accountants regarding the form of a contract. Suitable forms may be available for commercial transactions from board/association offices.

    The standard residential Contract of Purchase and Sale addressed the matter of subjective clauses by including a provision that the seller’s acceptance was irrevocable and providing that the contract was signed under seal. Because the standard residential Contract will not be used for a commercial transaction, licensees should consider whether the subject clauses used in the contract are overly subjective. Licensees should review the section regarding ‘‘ Contracts under Seal’’.

    It is recommended that all offers be written subject to the approval of the seller’s lawyer and the buyer’s lawyer and accountant within a specific time limit.

    Approval by Seller’s/Buyer’s Lawyer Clause

    Subject to (select either Seller’s or Buyer’s) lawyer approving the terms and conditions of the contract on or before (date).

    This condition is for the sole benefit of the Seller/Buyer.

    Approval by Seller’s/Buyer’s Accountant Clause

    Subject to the Buyer’s accountant approving the financial statements on or before (date).

    This condition is for the sole benefit of the Buyer.

  • Approval of Documentation Clause

    Excerpt from Trading Services | Section 2. Acting for Sellers

    Go To

    (i) Obtaining Title Searches

    Licensees acting on behalf of buyers often rely on title search documents provided by the seller or, alternatively, request that the seller make such documents available for the buyer’s review.

    Buyers should be advised that it is possible for an unscrupulous individual to manipulate the title information obtained from the Land Title and Survey Authority (LTSA  — will open in a new tab). Licensees should therefore be very cautious when relying on title information provided by a party that the licensee does not know or trust and should advise buyers to rely only on documents from a reliable source such as the buyer’s agent or lawyer.

    The licensee should not provide incomplete copies of the encumbrances to the buyer because of the legal liability of doing so. Any error or omission or attempted interpretation of the documentation which misled the buyer could lead to serious consequences for the licensee. It is, therefore, best to have the buyer’s lawyer or the buyer himself or herself obtain and analyze these documents.

    Approval of Documentation Clause

    Subject to the Buyer’s(select either lawyer or accountant) approving the form of the documentation on or before (date).

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Licensees should be aware that there may be restrictions on the property that may affect its use or value that are not registered against the title. For example, restrictions relating to Riparian Areas Regulation  — will open in a new tab under the Fish Protection Act  — will open in a new tabor archaeological sites under the Heritage Conservation Act   — will open in a new taband others that are not currently registered on title may have substantial impact on use or value.

    The title search clause, as set out above, should be used to enable the buyer to search for any charges or other features that may affect the property’s use or value.

Assignment

  • Assignment Option Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xi) Assignments

    [05/16/2016 the following section updated]

    A contract assignment occurs when a buyer transfers the contract to buy property to someone else before the completion date. The buyer can transfer the contract for any price, even for a higher price than they paid for the property. The buyer does not have to pay the seller any additional money if they make money from selling the contract.

    Real estate contracts are assignable under the law unless the contract expressly forbids it. Section 36 of the Law and Equity Act   — will open in a new tabprovides that the seller’s consent to the assignment is not required, provided that notice in writing of the assignment is given to the seller.

    b) Provincial Requirements for Licensees Relating to Real Estate Contract Assignments
    On May 16, 2016, requirements relating to the assignment of real estate contracts came into force in BC. These requirements apply in all transactions where a licensee is acting for the seller and/or the prospective buyer of real estate (except where the contract is for the sale of a development unit by a developer, as those terms are defined in section 1 of the Real Estate Development Marketing Act  — will open in a new tab).

    All licensees providing trading services should carefully review the amendments to the Regulation  — will open in a new tab.

    The amendments provide that a licensee preparing a proposed contract for the purchase and sale of real estate (an “offer”) must include the following terms (the “Standard Assignment Terms”) unless otherwise instructed in writing by the person to whom they are providing trading services:

    1. this contract must not be assigned without the written consent of the seller; and
    2. the seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.

    The amendments further provide that licensees must take certain steps if they are involved in a potential real estate transaction where an offer to be presented to the seller does not include the Standard Assignment Terms. These requirements are further discussed below.

    c) Licensees Acting for Buyers

    Notice to Seller Regarding Assignment Terms
    If you are acting for a buyer and you are aware that an offer to be presented to the seller:

    • does not include one or both of the Standard Assignment Terms;
    • alters either of the Standard Assignment Terms;
    • or creates a new assignment term that is in any way different from the Standard Assignment Terms;

    you must notify the seller’s licensee (or the seller, if the seller is unrepresented) using the Notice to Seller Regarding Assignment Terms form, available on RECBC’s Forms page under the subheading “Disclosure Forms”.

    Provide the form to the seller’s licensee at the same time the offer is presented.

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Buyers

    You must use RECBC’s form entitled Notice to Seller Regarding Assignment Terms, which is available on RECBC’s website under the heading “Forms and Fees” and the subheading “Disclosure Forms”. You must provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented.

    The same obligations apply to you if you are acting on your own behalf or on behalf of an associate as a buyer (directly or indirectly) in a real estate transaction. If you are aware that an offer to be presented to a seller does not include one or both of the Standard Assignment Terms, alters either of the Standard Assignment Terms, or creates a new assignment term that is in any way different from the Standard Assignment Terms you must provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented. These notice obligations are in addition to your obligation to disclose your interest in trade to the seller.

    Advice to Buyers Regarding Assignment Terms and Conditions in Offers
    When you are acting for a buyer and advising the buyer on whether to include the Standard Assignment Terms (or other terms and conditions relating to the assignment of the contract) in an offer, you should carefully consider and discuss with the buyer what may be best for them. For example:

    In every case, when acting for a buyer you must be guided by your duties to your client. This includes your duties to act in the best interests of the client and in accordance with the client’s lawful instructions, and to advise the client to seek independent professional advice on matters outside of your expertise.

    Assignment Option Clause 
    Where the buyer wishes to have an express right to assign the contract to any third party, you should ensure they strike the default clauses from the Contract of Purchase and Sale (if the standard contract form is used) and consider using the following clause in the contract:

    Assignment Option Clause

    The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should the assignee default.

    In preparing an offer where the assignment of the contract of purchase and sale is contemplated, you should not use clauses such as ‘‘and/or nominee’’ or ‘‘and/or assignee’’ to describe the buyer. Arguments could be made that contracts containing such phrases in the description of the buyer are unenforceable due to uncertainty in the identity of the buyer.

    Additional Buyer Assignment Clause 
    Where the buyer wishes to have an express right to assign the contract by adding a specific buyer prior to closing (e.g. a spouse or family member), consider using the Additional Buyer Assignment clause in the contract, and provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented:

    Additional Buyer Assignment Clause

    Notwithstanding Section 20A of the Contract, the Parties agree that the Buyer may, without the consent of the Seller, add (insert name of specific party/parties) as an additional buyer to the contract prior to closing. The Seller’s consent does not release the Buyer from liability under this Contract.

    In preparing an offer where the assignment of the contract of purchase and sale is contemplated, you should not use clauses such as ‘‘and/or nominee’’ or ‘‘and/or assignee’’ to describe the buyer. Arguments could be made that contracts containing such phrases in the description of the buyer are unenforceable due to uncertainty in the identity of the buyer.

    Licensees Acting for the Assignor or Assignee of a Contract
    If you are asked to represent an assignor (original buyer) or assignee (ultimate buyer) pursuant to a Contract of Purchase and Sale, you should, as a minimum, ensure that:

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Buyers

    Contract Assignments: What to Do When You Need to Add or Change a Buyer

    1. the assignor has the right to assign and the assignee has the right to receive a valid assignment by referring to the original contract;
    2. a proper assignment is drafted and validly executed (BCREA has created two forms entitled ‘‘Assignment of Contract of Purchase and Sale — New Development’’ and ‘‘Assignment of Contract of Purchase and Sale — Non-Development’’, both available on Webforms);
    3. the assignor is aware of their obligation to provide the seller with notice in writing of the assignment (unless the clause in the Assignment Option Clause has been used);
    4. the identities of the parties are clear and verified (e.g., proper photo identification, passport, etc., especially when the assignment involves parties with whom the seller may not be familiar); licensees acting for assignors should be particularly careful to establish the identity of the assignor. Licensees should confirm through acceptable identification that the person asking that the contract be assigned is the purchaser on the contract;
    5. the assignor’s and the assignee’s rights to the initial deposit under the original contract, if any, are dealt with; and
    6. in the event that an assignor or assignee is a corporate party, the individual signing on behalf of the corporate entity has the authority to bind the corporation (this may involve conducting a company search and obtaining a copy of the corporate resolution allowing that individual to execute the assignment on the company’s behalf).

    Assignors should determine whether GST applies as a result of the assignment. As a licensee, you should advise your clients to seek independent professional advice on that issue.

    Because the procedure and documentation for assignment can be complex and fraught with difficulties, it is in everyone’s best interest to advise all parties to seek legal advice in the drafting of effective and enforceable assignments of any Contract of Purchase and Sale. You should document having provided this advice. Members of real estate boards/associations may also wish to refer to the additional information about assignments of contracts (e.g., BCREA Assignment of Contract of Purchase and Sale — Q&A Guide and ‘‘A REALTOR’s Guide to the BCREA-CBA Assignment Agreement’’) found on the REALTORLink website.

    d) Licensees Acting for Sellers
    If an offer presented to a seller does not include one or both of the Standard Assignment Terms, as the seller’s licensee you must do the following, before the seller accepts the offer:

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Sellers

    Contract Assignment FAQ: Using the New Notice to Seller Regarding Assignment Terms form

    a) Provide the seller with the Notice to Seller Regarding Assignment Terms form presented by the buyer’s licensee;

    b) Inform the seller that the offer before them is missing the Standard Assignment Term(s);

    c) Advise the seller whether the offer provides that the contract may be assigned;

    d) If the offer provides that the contract may be assigned, advise the seller:
    i. about any conditions on the right of assignment of the contract, and
    ii. about the seller’s entitlement under the contract to any profit resulting from an assignment of the contract, if applicable.

    The goal of the these requirements is to ensure that before they enter into a contract for the purchase and sale of their property, the seller understands and accepts the terms and conditions that will govern any assignment of the contract by the buyer, regardless of whether:

    • the offer contains the Standard Assignment Terms;
    • the offer is silent with respect to assignments; or
    • the offer contains assignment terms that differ from the Standard Assignment Terms.

    When you are advising the seller on whether or not to insist that an offer include the Standard Assignment Terms (or other terms and conditions relating to the assignment of the contract), you should carefully consider and discuss with the seller what may be in their best interests. For example:

    • Consider the market conditions: is it a buyers market? A seller’s market?
    • Consider the seller’s circumstances.
    • Discuss your obligations under the regulations and the Notice to Seller Regarding Assignment Terms form, when appropriate.
    • If there are any issues outside of your expertise, advise your client to seek independent legal advice.

    As a licensee, you have an obligation to discuss everything material to the transaction with your client, including the subject of assignments. If the seller is uncertain about any of the terms in the contract they should be advised to seek legal advice.

    In every case, as a licensee acting for a seller you should be guided by your duties to your client. This includes the duty to act in the best interests of the client and in accordance with the client’s lawful instructions, and to advise the client to seek independent professional advice on matters outside of your expertise.

    e) Requirements for Brokerages

    For More Information

    Contract Assignment FAQ: Guidance in other situations

    Brokerages are required by section 8-4(1) of the Rules to keep copies of Notice to Seller Regarding Assignment Terms forms.

    These copies must be provided to the brokerage by licensees who:

    • act for a buyer,
    • act for themselves as a buyer, or
    • act for a seller.
  • Additional Buyer Assignment Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xi) Assignments

    [05/16/2016 the following section updated]

    A contract assignment occurs when a buyer transfers the contract to buy property to someone else before the completion date. The buyer can transfer the contract for any price, even for a higher price than they paid for the property. The buyer does not have to pay the seller any additional money if they make money from selling the contract.

    Real estate contracts are assignable under the law unless the contract expressly forbids it. Section 36 of the Law and Equity Act   — will open in a new tabprovides that the seller’s consent to the assignment is not required, provided that notice in writing of the assignment is given to the seller.

    b) Provincial Requirements for Licensees Relating to Real Estate Contract Assignments
    On May 16, 2016, requirements relating to the assignment of real estate contracts came into force in BC. These requirements apply in all transactions where a licensee is acting for the seller and/or the prospective buyer of real estate (except where the contract is for the sale of a development unit by a developer, as those terms are defined in section 1 of the Real Estate Development Marketing Act  — will open in a new tab).

    All licensees providing trading services should carefully review the amendments to the Regulation  — will open in a new tab.

    The amendments provide that a licensee preparing a proposed contract for the purchase and sale of real estate (an “offer”) must include the following terms (the “Standard Assignment Terms”) unless otherwise instructed in writing by the person to whom they are providing trading services:

    1. this contract must not be assigned without the written consent of the seller; and
    2. the seller is entitled to any profit resulting from an assignment of the contract by the buyer or any subsequent assignee.

    The amendments further provide that licensees must take certain steps if they are involved in a potential real estate transaction where an offer to be presented to the seller does not include the Standard Assignment Terms. These requirements are further discussed below.

    c) Licensees Acting for Buyers

    Notice to Seller Regarding Assignment Terms
    If you are acting for a buyer and you are aware that an offer to be presented to the seller:

    • does not include one or both of the Standard Assignment Terms;
    • alters either of the Standard Assignment Terms;
    • or creates a new assignment term that is in any way different from the Standard Assignment Terms;

    you must notify the seller’s licensee (or the seller, if the seller is unrepresented) using the Notice to Seller Regarding Assignment Terms form, available on RECBC’s Forms page under the subheading “Disclosure Forms”.

    Provide the form to the seller’s licensee at the same time the offer is presented.

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Buyers

    You must use RECBC’s form entitled Notice to Seller Regarding Assignment Terms, which is available on RECBC’s website under the heading “Forms and Fees” and the subheading “Disclosure Forms”. You must provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented.

    The same obligations apply to you if you are acting on your own behalf or on behalf of an associate as a buyer (directly or indirectly) in a real estate transaction. If you are aware that an offer to be presented to a seller does not include one or both of the Standard Assignment Terms, alters either of the Standard Assignment Terms, or creates a new assignment term that is in any way different from the Standard Assignment Terms you must provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented. These notice obligations are in addition to your obligation to disclose your interest in trade to the seller.

    Advice to Buyers Regarding Assignment Terms and Conditions in Offers
    When you are acting for a buyer and advising the buyer on whether to include the Standard Assignment Terms (or other terms and conditions relating to the assignment of the contract) in an offer, you should carefully consider and discuss with the buyer what may be best for them. For example:

    In every case, when acting for a buyer you must be guided by your duties to your client. This includes your duties to act in the best interests of the client and in accordance with the client’s lawful instructions, and to advise the client to seek independent professional advice on matters outside of your expertise.

    Assignment Option Clause 
    Where the buyer wishes to have an express right to assign the contract to any third party, you should ensure they strike the default clauses from the Contract of Purchase and Sale (if the standard contract form is used) and consider using the following clause in the contract:

    Assignment Option Clause

    The Buyer reserves the right to assign this contract in whole or in part to any third party without further notice to the Seller; said assignment not to relieve the Buyer from his or her obligation to complete the terms and conditions of this contract should the assignee default.

    In preparing an offer where the assignment of the contract of purchase and sale is contemplated, you should not use clauses such as ‘‘and/or nominee’’ or ‘‘and/or assignee’’ to describe the buyer. Arguments could be made that contracts containing such phrases in the description of the buyer are unenforceable due to uncertainty in the identity of the buyer.

    Additional Buyer Assignment Clause 
    Where the buyer wishes to have an express right to assign the contract by adding a specific buyer prior to closing (e.g. a spouse or family member), consider using the Additional Buyer Assignment clause in the contract, and provide the Notice to Seller Regarding Assignment Terms form to the seller or the seller’s licensee at the same time the offer is presented:

    Additional Buyer Assignment Clause

    Notwithstanding Section 20A of the Contract, the Parties agree that the Buyer may, without the consent of the Seller, add (insert name of specific party/parties) as an additional buyer to the contract prior to closing. The Seller’s consent does not release the Buyer from liability under this Contract.

    In preparing an offer where the assignment of the contract of purchase and sale is contemplated, you should not use clauses such as ‘‘and/or nominee’’ or ‘‘and/or assignee’’ to describe the buyer. Arguments could be made that contracts containing such phrases in the description of the buyer are unenforceable due to uncertainty in the identity of the buyer.

    Licensees Acting for the Assignor or Assignee of a Contract
    If you are asked to represent an assignor (original buyer) or assignee (ultimate buyer) pursuant to a Contract of Purchase and Sale, you should, as a minimum, ensure that:

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Buyers

    Contract Assignments: What to Do When You Need to Add or Change a Buyer

    1. the assignor has the right to assign and the assignee has the right to receive a valid assignment by referring to the original contract;
    2. a proper assignment is drafted and validly executed (BCREA has created two forms entitled ‘‘Assignment of Contract of Purchase and Sale — New Development’’ and ‘‘Assignment of Contract of Purchase and Sale — Non-Development’’, both available on Webforms);
    3. the assignor is aware of their obligation to provide the seller with notice in writing of the assignment (unless the clause in the Assignment Option Clause has been used);
    4. the identities of the parties are clear and verified (e.g., proper photo identification, passport, etc., especially when the assignment involves parties with whom the seller may not be familiar); licensees acting for assignors should be particularly careful to establish the identity of the assignor. Licensees should confirm through acceptable identification that the person asking that the contract be assigned is the purchaser on the contract;
    5. the assignor’s and the assignee’s rights to the initial deposit under the original contract, if any, are dealt with; and
    6. in the event that an assignor or assignee is a corporate party, the individual signing on behalf of the corporate entity has the authority to bind the corporation (this may involve conducting a company search and obtaining a copy of the corporate resolution allowing that individual to execute the assignment on the company’s behalf).

    Assignors should determine whether GST applies as a result of the assignment. As a licensee, you should advise your clients to seek independent professional advice on that issue.

    Because the procedure and documentation for assignment can be complex and fraught with difficulties, it is in everyone’s best interest to advise all parties to seek legal advice in the drafting of effective and enforceable assignments of any Contract of Purchase and Sale. You should document having provided this advice. Members of real estate boards/associations may also wish to refer to the additional information about assignments of contracts (e.g., BCREA Assignment of Contract of Purchase and Sale — Q&A Guide and ‘‘A REALTOR’s Guide to the BCREA-CBA Assignment Agreement’’) found on the REALTORLink website.

    d) Licensees Acting for Sellers
    If an offer presented to a seller does not include one or both of the Standard Assignment Terms, as the seller’s licensee you must do the following, before the seller accepts the offer:

    For More Information

    Contract Assignment FAQ: Guidance for Licensees Acting for Sellers

    Contract Assignment FAQ: Using the New Notice to Seller Regarding Assignment Terms form

    a) Provide the seller with the Notice to Seller Regarding Assignment Terms form presented by the buyer’s licensee;

    b) Inform the seller that the offer before them is missing the Standard Assignment Term(s);

    c) Advise the seller whether the offer provides that the contract may be assigned;

    d) If the offer provides that the contract may be assigned, advise the seller:
    i. about any conditions on the right of assignment of the contract, and
    ii. about the seller’s entitlement under the contract to any profit resulting from an assignment of the contract, if applicable.

    The goal of the these requirements is to ensure that before they enter into a contract for the purchase and sale of their property, the seller understands and accepts the terms and conditions that will govern any assignment of the contract by the buyer, regardless of whether:

    • the offer contains the Standard Assignment Terms;
    • the offer is silent with respect to assignments; or
    • the offer contains assignment terms that differ from the Standard Assignment Terms.

    When you are advising the seller on whether or not to insist that an offer include the Standard Assignment Terms (or other terms and conditions relating to the assignment of the contract), you should carefully consider and discuss with the seller what may be in their best interests. For example:

    • Consider the market conditions: is it a buyers market? A seller’s market?
    • Consider the seller’s circumstances.
    • Discuss your obligations under the regulations and the Notice to Seller Regarding Assignment Terms form, when appropriate.
    • If there are any issues outside of your expertise, advise your client to seek independent legal advice.

    As a licensee, you have an obligation to discuss everything material to the transaction with your client, including the subject of assignments. If the seller is uncertain about any of the terms in the contract they should be advised to seek legal advice.

    In every case, as a licensee acting for a seller you should be guided by your duties to your client. This includes the duty to act in the best interests of the client and in accordance with the client’s lawful instructions, and to advise the client to seek independent professional advice on matters outside of your expertise.

    e) Requirements for Brokerages

    For More Information

    Contract Assignment FAQ: Guidance in other situations

    Brokerages are required by section 8-4(1) of the Rules to keep copies of Notice to Seller Regarding Assignment Terms forms.

    These copies must be provided to the brokerage by licensees who:

    • act for a buyer,
    • act for themselves as a buyer, or
    • act for a seller.

Back-Up / Time

  • Back-up Contract Clause

    Excerpt from Trading Services | Section 2. Acting for Sellers

    Go To

    (h) Offers 

    (xi) Offers after an Offer Has Been Accepted (Back-up Offers)

    Once an offer has been accepted but before the conditions have been removed, a back-up offer that is accepted by the seller sits in second position waiting for the first offer to collapse or firm up. Back-up offers should always have a clause such as the following written into the contract:

    Back-up Contract Clause

    Subject to the Seller ceasing to be obligated in any way under the previously accepted Contract of Purchase and Sale on the subject property on or before (date).
    This condition is for the sole benefit of the Seller.

    It happens, at times, that the seller/buyer of the first offer may seek to renegotiate terms and conditions of the first offer. The listing licensee should counsel the seller to seek legal advice because renegotiations may result in activating the back-up contract. The risk is in selling the property to both buyers simultaneously! The licensee should advise the seller to obtain legal advice before changing the first offer when there is a back-up contract. The licensee should also advise the second buyer to obtain legal advice under the same circumstances.

    Secondary or back-up offers frequently do not contemplate that the buyer may find another property and may wish to withdraw the back-up offer. Before preparing a back-up offer, the licensee should consult with the buyer as to what will happen if the buyer finds a more suitable property.

    Licensees need to be aware that back-up contracts, while useful in some cases, can create serious problems when the contractual limitations and obligations of each party are not properly explained to all parties.

    On the face of it, the intent is usually that a back-up contract will become firm and binding if the buyer under the previously accepted contract does not remove the subject to clauses by the date agreed to in the previous contract.

    After conditions have been removed, but before completion, additional offers may be accepted as back-ups in sequence by the seller. Licensees should not stop presenting offers until transactions have completed. If a seller instructs the listing agent not to show the property after a transaction is firm, then the agent must obey these instructions, but the agent should advise the seller that firm sales can collapse before completion for a variety of reasons (death of the buyer or one of the buyers, loss of job, financial disaster, unforeseen problems with the property itself, etc.), and the seller is not protected until the transfer of title is complete and the money is in the seller’s hands.

  • Notice Invoking the Time Clause

    Excerpt from Trading Services | Section 2. Acting for Sellers

    Go to

    (h) Offers

    (xiv) Time Clauses

    Time clauses should be inserted for the protection of the seller when an offer is written or received containing a subject to the sale of clause.

    It is important to ensure that the time period is precisely defined (e.g., 72 hours).

    Terms such as ‘‘banking days’’, ‘‘working days’’, ‘‘business days’’, etc., should be avoided.

    Sale of the Buyer’s Property, with Time Clause

    Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address) on or before (date).
    However, the Seller may, (select either “at any time” or “upon receipt of another acceptable offer”) deliver a written notice to the Buyer* or to (name of his or her representing real estate company) requiring the Buyer to remove all conditions from the contract within (number) hours** of the delivery of the notice, not to include Sundays and Statutory Holidays. Should the Buyer fail to remove all the conditions before the expiry of the notice period, the contract will terminate.
    This condition is for the sole benefit of the Buyer.

    * See sample following.

    ** The period usually ranges from 24 to 72 hours, depending on market conditions.

    NOTE: This time clause may be adapted to fit other similar circumstances where the subject to clause is really an option. Examples include allowing time to obtain zoning approval, feasibility studies, engineering reports, etc. This clause protects both parties because the property is never completely off the market except for the designated number of hours between the invocation of the time clause and its deadline.

    A clause such as the following should be used when a seller wishes to have the buyer with the first accepted offer remove all conditions or withdraw in order for an accepted back-up offer to move into first position. The circumstances for invocation will depend on how the time clause was written in the first offer, with either ‘‘at any time’’ or ‘‘upon receipt of another acceptable offer’’ being the reference to allow invocation.

    Notice Invoking the Time Clause (for use with preceding time clause)

    This document constitutes written notice from the Seller to the Buyer requiring the removal of (select either all conditions or the condition) from this contract within (number of hours) hours* not including Sunday or Statutory Holidays, or this contract will terminate at the end of the (number of hours)-hour period and the deposit will be returned to the Buyer.
    This Time Clause will start running on delivery of this Notice to the Buyer or to (his or her representing brokerage) which will be at (time of delivery of notice) o’clock (select either a.m. or p.m.) on (date). Therefore, the (number of hours) hours will expire at (time) o’clock (select either a.m. or p.m.) on (date).
    * Fill in the same number of hours as in preceding clause.
    NOTE: When there is a time clause in the first offer and in the second offer, if the offers are not handled carefully, the Seller could lose both offers.
    NOTE: The licensee should obtain evidence of the time of delivery as it may be necessary to prove this in the event of a dispute.

Business

  • Buyer to Approve Documents in Sale of Business Clause

    Excerpt from Trading Services | Section 10. Sale of a Business

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    (g) Relevant Documents

    Although the sale of a business that includes real property is governed by RESA, neither RESA, the Regulations nor the Rules stipulate what documents must be provided by the seller.

    A prudent licensee will ensure that all the appropriate documents are obtained for review by a prospective buyer.

    The following clauses are designed to assist licensees in obtaining important financial and other information from the seller:

    If the financial statements are not available, a licensee should advise the buyer to obtain professional advice from an accountant.

    Buyer To Approve Documents in Sale of Business Clause

    Subject to the Buyer receiving, perusing and being satisfied with:

    (a) a profit and loss statement showing the revenue and expenses of the business for a period of 12 months ending not more than 120 days before the signing of the agreement;

    (b) a statement of assets and liabilities; and

    (c) a statement containing a list of fixtures, goods, chattels, rights and other assets relating to or connected with the business that are not included in this transaction, on or before (date).

    This condition is for the sole benefit of the Buyer.

    Sale of Small Business Clause

    The Buyer is buying the (select either assets or shares) of the business known as (name of business) and located at (location) , B.C.

    Purchase price includes all assets, goods and chattels listed as included in the sale of the business, according to the attached schedule, except inventory on hand.

    Subject to the Buyer receiving and approving the list of assets on or before (date).

    This condition is for the sole benefit of the Buyer.

    NOTE: The decision as to whether assets or shares are being purchased should be made with an accountant’s advice.

  • Inventory Clause

    Excerpt from Trading Services | Section 10. Sale of a Business

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    (h) Inventory Valuation

    The inventory of the business is often purchased separately from the purchase of the business itself. The method for valuing the inventory should be referred to the parties’ advisers and a valuation date agreed upon by the parties prior to entering into the Contract of Purchase and Sale.

    Licensees must be aware of the problem associated with inventory. It is important to seek the guidance of those experienced in evaluating inventory.

    Some concerns are described in the following examples:

    • shoe stores: stock on hand includes not only current styles, but also boxes of out-of-fashion shoes;
    • grocery stores: stock includes large amounts of time-dated products and foods;
    • florist shops: stock includes aging, wilting, and dying flowers;
    • gift stores: stock includes items that a buyer is not interested in buying at all or for which he or she does not see a market; and
    • lawn mower and small engine repair shops: stock includes boxes of parts for old and obsolete engines.

    One of the differences between residential and business/commercial transactions is that often the parties involved in the transaction are far more knowledgeable than the licensees in the operation of the particular business and, more than likely, meetings and discussions have taken place previously between the parties. Frequently, the function of the licensee is to put into an agreement format those things that have already been discussed and agreed to by the parties.

    The contract must state clearly whether or not the price includes inventory. The following clause can be used:

    Inventory Clause

    Purchase price(select either includes or does not include) (select either inventory or stock) .

    This offer is conditional on the Seller and Buyer and their respective advisers establishing an agreed method for the purpose of valuing the inventory/stock. This agreement is to be in place and in writing within (number of days) days of acceptance of this offer. Inventory/Stock taking is to be performed within (number of days) days before the completion of this transaction. The Seller will allow reasonable access to the Buyer for purposes of reviewing the inventory for purposes of this condition.

    This condition is for the benefit of both the Buyer and the Seller.

    If the business is occupying leased space, the following clause should be inserted in the contract:

    Lease of Premises Clause

    Subject to the Buyer being able to arrange on or before (date) a lease for the premises satisfactory to the Buyer.
    This condition is for the sole benefit of the Buyer.
    OR
    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.
    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date).
    This condition is for the sole benefit of the Buyer.
    OR
    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.
    Subject to the Buyer receiving approval of the lessor to such assumption on or before (date) .
    This condition is for the benefit of both the Seller and the Buyer.
    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .
    This condition is for the sole benefit of the Buyer.
     

    Adequate time must be allowed within the contract for the buyer to receive the documents and review them. A specific date on the contract for the provision of the documents to the buyer by the seller, in addition to the date for their acceptance, is recommended.

  • Sale of Small Business Clause

    Excerpt from Trading Services | Section 10. Sale of a Business

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    (g) Relevant Documents

    Although the sale of a business that includes real property is governed by RESA, neither RESA, the Regulations nor the Rules stipulate what documents must be provided by the seller.

    A prudent licensee will ensure that all the appropriate documents are obtained for review by a prospective buyer.

    The following clauses are designed to assist licensees in obtaining important financial and other information from the seller:

    If the financial statements are not available, a licensee should advise the buyer to obtain professional advice from an accountant.

    Buyer To Approve Documents in Sale of Business Clause

    Subject to the Buyer receiving, perusing and being satisfied with:

    (a) a profit and loss statement showing the revenue and expenses of the business for a period of 12 months ending not more than 120 days before the signing of the agreement;

    (b) a statement of assets and liabilities; and

    (c) a statement containing a list of fixtures, goods, chattels, rights and other assets relating to or connected with the business that are not included in this transaction, on or before (date).

    This condition is for the sole benefit of the Buyer.

    Sale of Small Business Clause

    The Buyer is buying the (select either assets or shares) of the business known as (name of business) and located at (location) , B.C.

    Purchase price includes all assets, goods and chattels listed as included in the sale of the business, according to the attached schedule, except inventory on hand.

    Subject to the Buyer receiving and approving the list of assets on or before (date) .

    This condition is for the sole benefit of the Buyer.

    NOTE: The decision as to whether assets or shares are being purchased should be made with an accountant’s advice.

Co-Ops

  • Co-operatives - Suite/Townhouse Clause

    Excerpt from Trading Services | Section 6. Real Estate Development Marketing Act

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    (e) Forms of Development Property under the Real Estate Development Marketing Act

    (See also information regarding strata properties.)

    Cooperative Interests

    A cooperative interest is the interest that includes both a right of ownership in the shares of a cooperative association or to be a partner or member in the cooperative association and the right to use or occupy a part of the land in which the cooperative association has an interest.

    The Real Estate Development Marketing Act defines a cooperative association as

    (a) a corporation, as defined in the Business Corporations Act;

    (b) a limited liability company as defined in the Business Corporations Act;

    (c) a partnership; and

    (d) an entity incorporated or other wise created outside British Columbia that is similar to one described in paragraphs (a) to (c).

    Thus, an owner of a cooperative interest acquires shares, or some other form of ownership in a corporate entity or partnership, which carry with them the right to occupy only a portion of the land that the cooperative association owns. The particular portion may be an apartment or a recreational vehicle site.

    Sellers are unable to carry primary or secondary financing on cooperative interests by way of a mortgage registered against the title or by an Agreement for Sale, as there is no title in a cooperative interest to encumber. It is, therefore, strongly recommended, in a situation where the seller is asked to carry any financing, that the seller’s lawyer and the buyer’s lawyer be consulted before the acceptance of any offer.

    Licensees are also advised to consult their financial advisers, including experienced mortgage brokers, for guidance in such financing, as well as ascertaining from the cooperative’s rules and regulations whether or not there is a prohibition on financing in any way.

    A Disclosure Statement must be filed with the Superintendent of Real Estate before a developer or a developer’s agent can market one cooperative interest if the cooperative interest is part of a development consisting of two or more cooperative interests. Accordingly, licensees involved in the sale or purchase of a cooperative interest by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement. It is possible for a cooperative association to own a strata lot. Hence, the Strata Property Act may also be applicable.

    Regardless of whether the transaction involves a developer or a single unit resale, licensees should be knowledge- able with respect to the proportion of the share capital acquired by the purchaser, the allocation of ongoing maintenance and operating costs, the presence of any other assets or liabilities that the cooperative association may have, the terms of the agreement which restricts an owner to using only a portion of the land that the cooperative association owns, the applicability of the homeowner’s grant and property transfer tax, and the particulars of the cooperative association’s share capital, such as provisions related to voting rights or restrictions on transfer.

    Rental Leases and Head Leases

    Another type of ownership, which fits between cooperative and strata on leased land, is the rental lease, where the cooperative building sits on leased land. It is financed like a cooperative, although sometimes private leaseholders will allow for less down payment and provide financing directly themselves. The holder of the head lease, the corporation which owns the building, determines how units in the building are purchased. As with cooperatives, these are purchases of shares in exchange for the exclusive right to occupy a designated unit in the building. Owners do not have title to the unit itself. Owners must not make alterations to the unit (unlike strata ownership) without permission from the cooperative association. These are long-term leases (often 99 years). Licensees are advised to consult experienced financial advisers, lawyers and mortgage brokers for guidance.

    The following clause should be used in the purchase of cooperative interests. This clause may also be used for the purchase of rental-lease properties but it is strongly recommended that the buyer seek legal advice and ensure understanding of the head lease’s restrictions and duration.

    Co-operatives-Suite/Townhouse Clause

    This contract is for the purchase of (number of shares) shares in (name of co-operative association) together with a lease of (unit number) to the Buyer, and other considerations as may accompany said lease.

    Buyer to assume payments of the monthly maintenance charge of $(amount) (which includes a proportionate share of annual taxes).

    Subject to the approval of the Buyer by the Board of Directors of (name of co-operative association) on or before (date) .

    This condition is for the benefit of both the Buyer and the Seller.

    Buyer has approved the Rules and Regulations, the Memorandum and Articles of Association, any lease documentation and any financial obligations of (name of co-operative association) including the following specific restriction(s):

    Ώ Warning re Approval of buyer by Directors: The Board of Directors of a Cooperative is allowed to make a decision as to the suitability of any buyer. The reasons for such a decision are to be kept confidential to the Board of Directors.

    Optional Assumption of Portion of Mortgage Clause

    NOTE: The Buyer should obtain legal advice before assuming a mortgage in these circumstances.

    Buyer will assume obligations on an assigned portion under the existing first mortgage held by (name of mortgage lender) registered against the property at (address) with an outstanding balance on the assigned portion of approximately $(amount) at an interest rate of ___% per annum, calculated (frequency), not in advance, with an original (number of years)-year amortization and a ‘‘balance due” term date of (date), with blended payments of $ (amount) per month including principal and interest.

    (i) Shared Interests in Land

    A shared interest in land is a person’s interest in one or more parcels of land, if the parcel or parcels are owned or leased by the person and at least one other person and as part of any arrangement relating to the acquisition of the person’s interests, that person’s right of use or occupation of the land is limited to a part of the land.

    Thus, an owner of a shared interest in land acquires a direct ownership interest in land, typically an undivided fractional fee simple interest, which carries with it, by agreement amongst the co-owners, a right to occupy only a portion of the land.

    A Disclosure Statement must be filed with the Superintendent of Real Estate before a developer or the developer’s agent can market one shared interest in a development containing at least two shared interests. Accordingly, licensees involved in the sale or purchase of a shared interest in land by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement.

    Regardless of whether the transaction involves a developer or a single unit resale, licensees should be knowledge- able with respect to the proportionate fractional interest acquired, the allocation of ongoing maintenance and operating costs, the applicability of the Homeowner’s Grant and Property Transfer Tax, and the particulars of the agreement which restricts owners to using only a portion of the land that they own, such as voting rights or restrictions on transfers.

    (ii) Time Share Interest

    A time share interest is defined in the Real Estate Development Marketing Act as a person’s interest in a time share plan. A time share plan is a plan in which the persons participating each have a right of recurring use, of all or part of the land. A time share plan does not require that the persons acquire an ownership interest in the land that is the subject of the plan.

    A Disclosure Statement must be filed before a developer may market one time share interest in a development containing five or more time share interests. Accordingly, licensees involved in the sale or purchase of a time share interest by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement.

    (iii) Real Estate Securities

    In some cases, the offering of a real estate development unit may constitute the offering of an investment contract, which is a security within the meaning of the Securities Act. Where a real estate development includes an interest in land and an ancillary agreement, usually with the developer, for management of the property, combined with financial commitments such as rental guarantees or revenue and expense pooling, the arrangement may meet the requirements of a security. A typical example of such an offering is the marketing of strata lots in a hotel or resort in which there is an agreement that the strata lots will be rented out by a manager. The agreement may include a rental guarantee or revenue or expense pooling, or it may simply be a mandatory requirement that the strata lot be provided to the manager for rental as part of the overall development. In such cases, both the Real Estate Development Marketing Act and the Securities Act apply. Policy Statement 13 – Real Estate Securities  — will open in a new tab issued by the Superintendent’s office sets out an explanation of real estate securities and includes reference to the related documents issued by the Securities Commission. Licensees involved in the purchase and sale of real estate offerings, where the purchaser must rely on the promoter for an investment return, should familiarize themselves with these requirements.

    (iv) Leasehold Units

    A leasehold unit is a unit in a residential leasehold complex which is defined as containing one or more buildings capable of being used for leasehold residential purposes other than buildings comprised of strata lots, cooperative interests or shared interests in land.

    Although not specifically identified in the Real Estate Development Marketing Act, a common form of leasehold unit that has been marketed in British Columbia is a life lease. A life lease in its broadest sense is a leasehold interest in land, the term of which extends for the life of the lessee. In many ways, it resembles a life estate. In particular, life leases typically must prepay a large portion or all of the rent, and the possessionary interest of a life estate and a life lease both terminate with the life of the person holding the interest. However, a life estate is a freehold interest in land whereas a life lease is a leasehold interest in land that creates a landlord and tenant relationship.

    The distinction between a life lease and a life estate should not be forgotten because a life lessee is subject to a lease. Accordingly, most, if not all, aspects of the law governing landlord and tenant relationships will apply and licensees should be aware of their duties and responsibilities, which apply to all lease transactions. The following characteristics of many life leases should also be considered.

    Most, if not all, life lease offerings obligate the landlord to repay some or all of the prepaid rent to the lessee, or his or her heirs, on the death of the lessee or the termination of the lease. The obligation to repay the rent (capital payment) results from the contractual terms of the lease. The repayment term is basically peculiar to life leases. Licensees should familiarize themselves with the security arrangements, if any, associated with the obligation to repay and the financial ability of the landlord to make the repayment.

    Additionally, landlords can generally terminate a life lease for non-payment of rent or a breach of any other covenant in the lease. The life lease may or may not be registrable. Section 4 of the Residential Tenancy Act provides that the Act does not apply to living accommodation rented under a tenancy agreement that has a term longer than 20 years. Life lessees generally may not assign or sublet their lease as the landlord typically controls the renting of the premises. Life leases generally obligate the lessees to pay monthly charges related to the maintenance and operation of the development. Often, these charges are payable as rent.

    The Real Estate Development Marketing Act requires that a developer file a Disclosure Statement before marketing a leasehold unit of a term of three years or more in a development property containing five or more residential leasehold units. All long-term leases, including life leases contained within developments other than buildings comprised of strata lots, cooperatives or shared interests, are subject to the requirements of the Real Estate Development Marketing Act. Because the marketing of strata lots, cooperative interests and shared interests are specifically addressed in the Real Estate Development Marketing Act and because the definition of marketing includes selling or leasing, the offering of a long-term lease of a strata lot, cooperative interests or shared interests already requires compliance with the Real Estate Development Marketing Act.

    Each offering of a leasehold interest, including a life lease, requires that a current Disclosure Statement, which has been filed with the Superintendent of Real Estate, be provided to the lessee. Developers may therefore be required to update the Disclosure Statement to ensure that it is current before each new leasehold interest is marketed. In other words, as lessees die or otherwise terminate their lease, the developer will offer a new leasehold interest which requires an up to date Disclosure Statement. Developers reselling life leases must therefore provide a current Disclosure Statement to new lessees.

    (v) First Nations Lands

    The Superintendent of Real Estate has advised that his opinion is that RESA applies to the sale of real estate on First Nations property. However, the Superintendent is of the view that the Real Estate Development Marketing Act is not applicable to the sale or lease of development units on First Nations property and a developer is not required to file a Disclosure Statement or comply with any other requirements contained in the Real Estate Development Marketing Act when a development is located on First Nations property.

    Licensees should advise consumers that the Real Estate Development Marketing Act does not apply and that the disclosure requirement and rescission rights contained in the Real Estate Development Marketing Act also do not apply. Furthermore, the Strata Property Act does not apply to multi-family developments located on First Nations land.

Deposits

  • Authorization to Pay Trust Money to Lawyer or Notary Clause

    Excerpt from Trading Services | Section 2. Acting for Sellers

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    (f) Deposits 

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms: All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.
    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Conveyancer as Stakeholder Clause

    Excerpt from Trading Services | Section 2. Acting for Sellers

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    (f) Deposits 

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.

    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Default on Deposit Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits 

    (v) Buyer’s Failure To Pay Deposit

    The following wording has been added to the first page of the Contract of Purchase and Sale:

    Default on Deposit Clause

    If the Buyer fails to pay the deposit money as required by this contract, the Seller may, at the Seller’s option, terminate this contract.

    WARNING: If licensees are not using the standard Contract of Purchase and Sale developed by the BCREA, they should check the contract to ensure that this wording is present. Older versions of the standard Contract do not contain this wording and it must be added.

  • Deposit Payable within a Specified Period Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits 

    (vii) Deposit Payable on Acceptance or Within a Stated Time Period

    Section 27 of RESA requires that when a deposit is given to a licensee, that licensee must promptly deliver it to the licensee’s related brokerage, and, in turn, the brokerage must promptly place it in the brokerage’s trust account. Sometimes, the seller and buyer agree that a deposit will be payable on acceptance or within a stated time period. The following alternative methods of providing for the payment of a deposit are common:

    (a) the Contract of Purchase and Sale may provide that the deposit is payable within a specified period of time after the acceptance of an offer. In this case, the following clause should be used in the contract:

    Deposit Payable Within a Specified Period Clause

    Deposit to be payable within(number of hours) hours of acceptance of this offer.

    (b) the Contract of Purchase and Sale may provide for a small initial deposit payable within a specified period of time after the acceptance of an offer, which is to be increased to a specified amount upon removal of conditions precedent. In this case, use the following clause in the contract:

    Increase of Deposit Clause

    The deposit will be increased to $ (amount) upon removal of all conditions precedent. 

    Pursuant to section 28 of RESA, a brokerage which receives a deposit holds that deposit as a stakeholder once there is an agreement between the parties for the acquisition and disposition of the real estate. Once there is this agreement, the brokerage does not hold the funds as an agent for one of the parties to the transaction. Therefore, once this agreement is in place, the brokerage can then only return the deposit to one of the parties to the transaction by express agreement between the parties.

    If the buyer advises the brokerage that he or she has stopped payment or intends to stop payment on the deposit cheque before it has been deposited, the brokerage should advise the buyer that it is obligated under RESA to deposit the cheque as soon as possible. In this situation, the brokerage must deposit the cheque and then inform the seller or the seller’s agent of the situation without delay. The brokerage should advise the seller to obtain legal advice as to their position vis-a`-vis the buyer.

  • Deposit to be Placed in Trust Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits

    (ix) Deposit To Bear Interest

    As licensees are aware, the wording in the Contract of Purchase and Sale states ‘‘Deposits to be held in trust in accordance with the provisions of the Real Estate Services Act’’. As not all consumers may be aware that the intent of this wording means that interest is paid to the Real Estate Foundation, licensees should ensure that they familiarize themselves with their brokerage’s policy with respect to interest on trust deposits. Further, licensees should have a discussion with their clients with respect to this policy and, where a client requests that the deposit is to be placed in an interest bearing trust account, the following clause should be added to the Contract of Purchase and Sale.

    Deposit To Bear Interest Clause

    This deposit is to be placed in an interest-bearing trust account with interest accruing to the benefit of the (select either Buyer or Seller) .

    Licensees should check with their managing broker as to the minimum amount and time frame which their company requires in order to pay interest. Also, the buyer’s Social Insurance Number (SIN) should be obtained for income tax purposes.

  • Deposit to Bear Interest Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits

    (ix) Deposit To Bear Interest

    As licensees are aware, the wording in the Contract of Purchase and Sale states ‘‘Deposits to be held in trust in accordance with the provisions of the Real Estate Services Act’’. As not all consumers may be aware that the intent of this wording means that interest is paid to the Real Estate Foundation, licensees should ensure that they familiarize themselves with their brokerage’s policy with respect to interest on trust deposits. Further, licensees should have a discussion with their clients with respect to this policy and, where a client requests that the deposit is to be placed in an interest bearing trust account, the following clause should be added to the Contract of Purchase and Sale.

    Deposit To Bear Interest Clause

    This deposit is to be placed in an interest-bearing trust account with interest accruing to the benefit of the (select either Buyer or Seller) .

    Licensees should check with their managing broker as to the minimum amount and time frame which their company requires in order to pay interest. Also, the buyer’s Social Insurance Number (SIN) should be obtained for income tax purposes.

  • Increase of Deposit Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits 

    (vii) Deposit Payable on Acceptance or Within a Stated Time Period

    Section 27 of RESA requires that when a deposit is given to a licensee, that licensee must promptly deliver it to the licensee’s related brokerage, and, in turn, the brokerage must promptly place it in the brokerage’s trust account. Sometimes, the seller and buyer agree that a deposit will be payable on acceptance or within a stated time period. The following alternative methods of providing for the payment of a deposit are common:

    (a) the Contract of Purchase and Sale may provide that the deposit is payable within a specified period of time after the acceptance of an offer. In this case, the following clause should be used in the contract:

    Deposit Payable Within a Specified Period Clause

    Deposit to be payable within(number of hours) hours of acceptance of this offer.

    (b) the Contract of Purchase and Sale may provide for a small initial deposit payable within a specified period of time after the acceptance of an offer, which is to be increased to a specified amount upon removal of conditions precedent. In this case, use the following clause in the contract:

    Increase of Deposit Clause

    The deposit will be increased to $ (amount) upon removal of all conditions precedent.

    Pursuant to section 28 of RESA, a brokerage which receives a deposit holds that deposit as a stakeholder once there is an agreement between the parties for the acquisition and disposition of the real estate. Once there is this agreement, the brokerage does not hold the funds as an agent for one of the parties to the transaction. Therefore, once this agreement is in place, the brokerage can then only return the deposit to one of the parties to the transaction by express agreement between the parties.

    If the buyer advises the brokerage that he or she has stopped payment or intends to stop payment on the deposit cheque before it has been deposited, the brokerage should advise the buyer that it is obligated under RESA to deposit the cheque as soon as possible. In this situation, the brokerage must deposit the cheque and then inform the seller or the seller’s agent of the situation without delay. The brokerage should advise the seller to obtain legal advice as to their position vis-a`-vis the buyer.

  • Lawyer Approval of Deposit Arrangement Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits 

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.
    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (f) Deposits 

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.

    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Third Party Holding Deposit Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (f) Deposits 

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.
    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

Disclosure

  • Buyer Approving the Property Disclosure Statement Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xxiii) Property Disclosure Statement Clause

    Property Disclosure Statement Clause

    The attached Property Disclosure Statement dated (date) is incorporated into and forms part of this contract.

    If the PDS is not available before the offer is written, then a subject to clause should be inserted in the offer to allow for delivery and approval of the applicable PDS.

    Buyer Approving the Property Disclosure Statement Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement with respect to the information that reasonably may adversely affect the use or value of the property.

    This condition is for the sole benefit of the Buyer.

    If approved, such statement will be incorporated into and form part of this contract.

    NOTE: These documents have been produced by BCREA. The instruction here does not apply to any other generic disclosure statements produced elsewhere.

    It is advisable for the licensee to provide, on the contract, a deadline by which the seller will provide the appropriate PDS and a slightly later deadline by which the buyer will approve or reject it.

    Licensees will find it helpful to colleagues to leave copies of the disclosure statement available for review when the property is being shown.

    (1) Disclosing Defects: How the Law Works

    Licensees should be aware of the B.C. Supreme Court decision in Curtin v. Blewett.

    The Curtins bought a strata property from the Blewetts. The PDS was incorporated into the Contract of Purchase and Sale.

    The sellers answered ‘‘NO’’ to question #25 on the PDS which asked ‘‘Are you aware of any infestation by insects or rodents?’’

    The sellers had a previous termite problem in March 1997 which they considered solved after treatment and a 10-year guarantee. There were no further problems up to the time the buyers took possession, and shortly thereafter, the termites appeared again.

    The judge held that the sellers were not at fault because the question and others that start ‘‘Are you aware’’ is in the present tense and did not refer to past infestations.

    The judge also held that there was no fraudulent misrepresentation on the seller’s part. The representation regarding infestation was not false at the time they made it.

    The buyers apparently removed the subject to inspection clause without getting an inspection.

    The judge quoted Mr. Justice Boyle in Arsenault v. Pedersen et al. who made the following comments about the PDS:

    I have no idea who drafted those questions but they are clearly drawn in a manner offering more protection to a vendor than to a purchaser and in a manner to provide a sales person or vendor with an air of rectitude which might not on all occasions be deserved even given the cautionary line: ‘‘buyers are urged to carefully inspect the property and, if desired, to have the property inspected by an inspection service of their choice’’.

    The disclosure statement does not call upon a vendor to warrant a certain state of affairs. It requires the vendor to say no more than he or she is or is not aware of the problem.

    Licensees who act for buyers should caution their clients that questions on the PDS worded ‘‘Are you aware…’’ refer only to the present tense. A negative answer does not mean that there has not been a problem in the past or that a past problem will not recur.

    Buyers should be advised to obtain an independent inspection, even if a PDS exists and is incorporated into the contract.

  • Buyer's/Seller's Acknowledgement of Licensee's Interest in Trade Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Disclosure of Interest in Trade

    For More Information

    Disclosure, Assignment, and Council Discipline

    If a licensee acquires, directly or indirectly, or disposes of real estate, or if the licensee assists an associate in acquiring, directly or indirectly, or disposing of real estate, section 5-9 of the Rules requires that the licensee make a disclosure in writing to the opposite party promptly and before any agreement for the acquisition or disposition of the real estate is entered into.

    Section 5-9(2) of the Rules sets out an example of an indirect acquisition. As provided in the Rules, a licensee or associate may acquire real estate indirectly by having a third party purchase real estate with the intention of reselling the real estate to the licensee or the licensee’s associate.

     Under RESA, the need for disclosure includes:

    • when a licensee is acquiring real estate
    • disclosure when a licensee is disposing of real estate and
    • when a licensee is assisting an associate in the acquisition or disposition of real estate.

    The need for disclosure arises whenever a licensee is disposing of real estate, regardless of whether the licensee has personally listed the property for sale. Licensees should keep in mind that disposing includes both selling and leasing.

    RESA establishes that the disclosure must be in writing, be separate from a service agreement or any other agreement under which real estate services are provided, and also separate from any agreement giving effect to the trade in real estate.

    Section 5-9(4)(b) of the Rules requires that the disclosure must be in a form approved by Council. RECBC has approved a form entitled ‘‘Disclosure of Interest in Trade.’’ The form includes the name of the person to whom the disclosure is made, as well as the name of the associate, if any, and the licensee’s relationship to the associate. The form requires the licensee to indicate the purpose for which the licensee or the licensee’s associate is acquiring the property and, in the case of an acquisition, the amount of remuneration earned and who will receive the remuneration. If the real estate is to be resold and the licensee or associate has negotiated or is currently negotiating the resale of the real estate, the terms of the resale must be disclosed. Where the form is used in relation to the disposition of real estate, the form only requires that the licensee indicates whether the licensee or licensee’s associate is the owner or tenant of the real estate.

    The licensee who has made the disclosure must promptly provide either the original or a copy of the Disclosure of Interest in Trade form to their related managing broker. At the bottom of the second page of the form there is a section entitled ‘Brokerage Use Only.’  This section is where the brokerage acknowledges receiving a copy of the form.  Managing brokers are reminded that while such duties may be delegated to another person who the managing broker believes is qualified to perform them, that delegation does not relieve the managing broker of their ultimate responsibility for the control and conduct of the business of the brokerage. Therefore, when duties are delegated, the managing broker should regularly review the work of the person to whom the work has been delegated. 

    The Disclosure of Interest in Trade Form is not required to be submitted to RECBC; however, a copy must be retained by the brokerage.

    Section 5-7 of the Rules defines ‘‘associate’’ as follows:

    1. ‘‘associate’’ in relation to a licensee means a person who is any of the following:
      1. in the case of an individual licensee,
        1. a spouse or family partner of the licensee,
        2. a trust or estate in which the licensee, or a spouse or family partner of the licensee, has a substantial beneficial interest or for which the licensee, spouse or family partner serves as trustee or in a similar capacity, or
        3. a corporation, partnership, association, syndicate or unincorporated organization in respect of which the licensee, or a spouse or family partner of the licensee, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits;
      2. in the case of a brokerage that is a corporation or partnership,
        1. a director, officer or partner of the brokerage,
        2. a shareholder of the brokerage who holds more than 10% of the voting shares of the brokerage,
        3. a trust or estate
          1. in which the brokerage, or a director, officer or partner of the brokerage, has a substantial beneficial interest, or
          2. for which the brokerage, or a director, officer or partner of the brokerage, serves as trustee or in a similar capacity, or
        4. a corporation, partnership, association, syndicate or unincorporated organization in respect of which the brokerage, or a director, officer or partner of the brokerage, holds not less than 5% of its capital or is entitled to receive not less than 5% of its profits;

    The definition of ‘‘associate’’ is broad. In some cases, the relationship may be somewhat removed and not immediately obvious. For example, an associate of an individual licensee includes a company of which a spouse or family partner is entitled to not less than 5% of the profit. An associate of a brokerage can be a company in which a director of the brokerage is entitled to not less than 5% of the profits. Whenever a licensee assists either an individual or company that is ‘‘connected’’ in some fashion to the licensee or the brokerage, the licensee should refer to the definition of ‘‘associate’’ to determine whether a ‘‘Disclosure of Interest in Trade’’ form is required. Licensees should note that children and parents do not fall within the definition of ‘‘associate’’.

    Licensees should keep in mind that acquisition and disposition includes renting. As a result, when a licensee acquires property as a tenant, disclosure must be made to the landlord except in limited circumstances. Section 5-9 of the Rules exempts a licensee from the need to make disclosure if the rental real estate that is being acquired by the licensee, or the licensee’s spouse or family partner, complies with the following provisions:

    • the rental real estate is being acquired with the intention that it will be used for personal residential purposes;
    • the lease is for a term not exceeding one year;
    • the lease or agreement does not contain an option to purchase or a right of first refusal; and
    • any provisions for renewal do not extend the total lease period beyond one year.

    Additionally, when a licensee offers property for rent in circumstances where either sections 9-1 and 9-2 of the Rules do not apply (as explained above under the heading ‘‘Application of RESA’’), the licensee must also make the appropriate disclosure. For example, if a licensee offered property for rent that was owned by a company of which the licensee or the licensee’s spouse was a shareholder and entitled to not less than 5% of the profits, disclosure would be required.

    Licensees should also keep in mind that the disclosure must be made before an agreement for the acquisition or disposition of the real estate is entered into. When purchasing or renting real estate, the disclosure can easily be made prior to presenting the offer. However, when selling or offering real estate for rent, it may be that an offer is received before the disclosure is made. In such cases, in order for disclosure to be effective, the licensee must provide the disclosure to the prospective buyer or tenant and allow the prospective buyer or tenant to determine whether they wish to withdraw their offer.

    Licensees who are required to make disclosure when offering real estate for sale may wish to include the fact that disclosure will be required on the listing. In this way, the buyer’s agent could obtain a disclosure form from the licensee offering real estate for sale or lease prior to writing up the offer.

    In addition, licensees should be aware that their Real Estate Errors and Omissions Insurance Indemnity Plan excludes coverage for licensees when they are either buying or selling real estate. The exclusion reads as follows:

    “This indemnity plan does not apply to: 9. a claim relating to or arising from providing real estate services in a transaction where the Insured or the Insured’s spouse, or a firm or corporation more than 10% owned separately or in combination by the Insured and the Insured’s spouse, has or may acquire an ownership interest;”

    For further clarification, especially regarding spouses owning property, licensees are directed to the policy entitled ‘‘Indemnity Plan’’, available through the Real Estate Errors and Omissions Insurance Corporation  — will open in a new tab website.

    To clarify that the necessary disclosure has occurred prior to entering into a Contract of Purchase and Sale, licensees are encouraged to include the following clause in the Contract of Purchase and Sale:

    Buyer’s/Seller’s Acknowledgement of Licensee’s Interest in Trade Clause

    The Buyer/Seller acknowledges having received and signed a disclosure of the licensee’s interest in the transaction before the making/receipt of this offer.

    [updated 06/15/2018]

  • Buyer's Approval of Property Disclosure Statement - Strata Title Properties Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents 

    (iii) Property Disclosure Statement

    Often the first document that licensees working with buyers see regarding the condition of a property is the Property Disclosure Statement (PDS). This document is useful as a starting point for buyers to begin their due diligence process.

    A buyer’s agent should always recommend to the buyer that the PDS be incorporated into the Contract of Purchase and Sale. A buyer’s legal remedies are severely curtailed if the buyer does NOT make the PDS part of the contract.

    Merely attaching a PDS to a Contract of Purchase and Sale does NOT incorporate the PDS into the contract. Clear evidence must exist that all of the parties intend to make the PDS part of the contractual obligations between them. To clearly state that the PDS is incorporated into the Contract of Purchase and Sale, the following clause must be inserted into the contract:

    Property Disclosure Statement — Strata Title Properties Clause

    The attached Property Disclosure Statement — Strata Title Properties dated (date) is incorporated into and forms part of this contract.

    If the Property Disclosure Statement — Strata Title Properties has not been attached to the offer at the time it was written, the licensee must use a subject clause to allow for approval of the Property Disclosure

    Statement — Strata Title Properties, as follows:

    Buyer’s Approval of Property Disclosure Statement — Strata Title Properties Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement — Strata Title Properties, with respect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential.

    This condition is for the sole benefit of the Buyer.

    If approved such statement will be incorporated into and form part of this contract.

    A buyer’s agent should still recommend a property inspection, even where there is a PDS that is incorporated into the Contract of Purchase and Sale. A buyer’s agent should also recommend that the buyer carefully discuss the Property Disclosure Statement with the buyer’s property inspector.

  • Disclosure Receipt Clause

    Excerpt from Trading Services | Section 6. Real Estate Development Marketing Act

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    (c) Disclosure Requirements

    If a development unit is not exempted, section 14  — will open in a new tab of the Real Estate Development Marketing Act requires that before marketing a development unit, the developer must prepare and file a Disclosure Statement with the Superintendent of Real Estate. The Disclosure Statement must be in the form and include the content required by the Superintendent and, without misrepresentation, plainly disclose all material facts.

    A developer may not enter into a purchase agreement with a purchaser for the sale or lease of a development unit unless a copy of the Disclosure Statement has been provided to the purchaser, the purchaser has been afforded an opportunity to read the Disclosure Statement, and the purchaser has signed a written statement acknowledging that the purchaser had an opportunity to read the Disclosure Statement. The Real Estate Development Marketing Act requires developers, or licensees offering the property for sale on the developer’s behalf, to retain the written statement from the purchaser for a period of three years.

    It is not acceptable under the Real Estate Development Marketing Act to create a ‘‘subject to’’ clause to the effect that the offer is subject to the buyer receiving, reading and approving the Disclosure Statement. It is also not acceptable for a term to be created in the contract, which states that the seller will provide a copy of the Disclosure Statement to the buyer.

    Licensees should ensure that the proper procedure has been adhered to when selling properties which require a Disclosure Statement, as improper compliance with this procedure could result in the buyer being able to revoke the offer and, subsequently, could result in the seller taking legal action against the licensees involved.

    Disclosure Receipt Clause

    The Buyer acknowledges having received and having had an opportunity to read the developer’s Disclosure Statement.

    The Superintendent’s office has prepared a number of Policy Statements which set out the requirements for the Disclosure Statement for each type of development property. The Policy Statements require that the content of each Disclosure Statement must be set out in the order prescribed in the Policy Statement.

    The Real Estate Development Marketing Act requires that if the developer becomes aware that the Disclosure Statement contains a misrepresentation, the developer must file either a new Disclosure Statement or an amendment to the Disclosure Statement and provide copies to new purchasers and to those who have entered into a purchase agreement but who have not yet received title or the interest for which the purchaser has contracted. A new Disclosure Statement must be filed if the identity of the developer has changed, or a receiver or liquidator has been appointed.

  • Disclosure of Material Latent Defect Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (l) Disclosure of Material Latent Defects

    At common law, a seller, and correspondingly, a seller’s agent, must disclose all known material latent defects. A latent defect is one that is not visible upon ordinary inspection, but which materially affects the property’s use or value. On the other hand, a patent defect is one that is readily visible and/or obvious upon ordinary inspection. A patent defect may also materially affect the property’s use or value.

    Section 5-13 of the Rules requires disclosure of known material latent defects and that section defines a material latent defect as follows:

    1. material latent defect means a latent defect that cannot be discerned through a reasonable inspection of the property, including any of the following:
      1. a defect that renders the real estate
        1. dangerous or potentially dangerous to the occupants,
        2. unfit for habitation, or
        3. unfit for the purpose for which a party is acquiring it, if
          1. the party has made this purpose known to the licensee, or
          2. the licensee has other wise become aware of this purpose;
      2. a defect that would involve great expense to remedy;
      3. a circumstance that affects the real estate in respect of which a local government or other local authority has given a notice to the client or the licensee, indicating that the circumstance must or should be remedied;
      4. a lack of appropriate municipal building and other permits respecting the real estate.

    Further, section 5-8 of the Rules requires that disclosure to be in writing and separate from any agreement under which real estate services are provided and separate from any agreement giving effect to a trade in real estate. A licensee is not required to disclose a known material latent defect to a buyer if the seller has already disclosed all known material latent defects, in writing, to the buyer. For example, disclosing the material latent defect on the Property Disclosure Statement (PDS) may now satisfy the requirements of the Rules.

    Timing of the disclosure is critical. Written disclosure of all known material latent defects must be provided to the buyer before there is an accepted offer. This applies whether the PDS, or some other document is to be used to disclose these defects. A licensee acting for the seller must ensure that the written disclosure of the material latent defect was provided to the buyer prior to the acceptance of the offer by the seller. Licensees should include the following clause in the Contract of Purchase and Sale whenever a material latent defect is disclosed.

    Disclosure of Material Latent Defect Clause

    The buyer acknowledges having received separate written disclosure of a material latent defect relating to (general reference to issue) .

    For More Information

    Material Latent Defect? Tell the Tenants!

    Licensees must keep in mind that trading services includes offering real estate for rent or lease. As a result, written disclosure of a material latent defect is required regardless of whether the real estate is offered for sale or for rent or lease.

    Section 5-13 of the Rules also provides that if the client instructs the licensee not to disclose the material latent defect, the licensee must refuse to provide further trading services to the client in respect of the trade in real estate.

  • Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    1. written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    1. the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    1. written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    1. the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • No Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    Excerpt from Trading Services | Section 2. Acting for Sellers

    Go To

    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    1. written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    a) the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

     

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • No Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    Excerpt from Trading Services | Section 2. Acting for Sellers

    Go To

    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    1. written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and
    2. the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    a) the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

     

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • Possible Safety, Health or Environmental Condition Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert**
    Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.
  • Property Disclosure Statement Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxiii) Property Disclosure Statement Clause

    Property Disclosure Statement Clause

    The attached Property Disclosure Statement dated (date) is incorporated into and forms part of this contract.

    If the PDS is not available before the offer is written, then a subject to clause should be inserted in the offer to allow for delivery and approval of the applicable PDS.

    Buyer Approving the Property Disclosure Statement Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement with respect to the information that reasonably may adversely affect the use or value of the property.

    This condition is for the sole benefit of the Buyer.

    If approved, such statement will be incorporated into and form part of this contract.

    NOTE: These documents have been produced by BCREA. The instruction here does not apply to any other generic disclosure statements produced elsewhere.

    It is advisable for the licensee to provide, on the contract, a deadline by which the seller will provide the appropriate PDS and a slightly later deadline by which the buyer will approve or reject it.

    Licensees will find it helpful to colleagues to leave copies of the disclosure statement available for review when the property is being shown.

    (1) Disclosing Defects: How the Law Works

    Licensees should be aware of the B.C. Supreme Court decision in Curtin v. Blewett.

    The Curtins bought a strata property from the Blewetts. The PDS was incorporated into the Contract of Purchase and Sale.

    The sellers answered ‘‘NO’’ to question #25 on the PDS which asked ‘‘Are you aware of any infestation by insects or rodents?’’

    The sellers had a previous termite problem in March 1997 which they considered solved after treatment and a 10-year guarantee. There were no further problems up to the time the buyers took possession, and shortly thereafter, the termites appeared again.

    The judge held that the sellers were not at fault because the question and others that start ‘‘Are you aware’’ is in the present tense and did not refer to past infestations.

    The judge also held that there was no fraudulent misrepresentation on the seller’s part. The representation regarding infestation was not false at the time they made it.

    The buyers apparently removed the subject to inspection clause without getting an inspection.

    The judge quoted Mr. Justice Boyle in Arsenault v. Pedersen et al. who made the following comments about the PDS:

    I have no idea who drafted those questions but they are clearly drawn in a manner offering more protection to a vendor than to a purchaser and in a manner to provide a sales person or vendor with an air of rectitude which might not on all occasions be deserved even given the cautionary line: ‘‘buyers are urged to carefully inspect the property and, if desired, to have the property inspected by an inspection service of their choice’’.

    The disclosure statement does not call upon a vendor to warrant a certain state of affairs. It requires the vendor to say no more than he or she is or is not aware of the problem.

    Licensees who act for buyers should caution their clients that questions on the PDS worded ‘‘Are you aware…’’ refer only to the present tense. A negative answer does not mean that there has not been a problem in the past or that a past problem will not recur.

    Buyers should be advised to obtain an independent inspection, even if a PDS exists and is incorporated into the contract.

  • Property Disclosure Statement — Strata Title Properties Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents 

    (iii) Property Disclosure Statement

    Often the first document that licensees working with buyers see regarding the condition of a property is the Property Disclosure Statement (PDS). This document is useful as a starting point for buyers to begin their due diligence process.

    A buyer’s agent should always recommend to the buyer that the PDS be incorporated into the Contract of Purchase and Sale. A buyer’s legal remedies are severely curtailed if the buyer does NOT make the PDS part of the contract.

    Merely attaching a PDS to a Contract of Purchase and Sale does NOT incorporate the PDS into the contract. Clear evidence must exist that all of the parties intend to make the PDS part of the contractual obligations between them. To clearly state that the PDS is incorporated into the Contract of Purchase and Sale, the following clause must be inserted into the contract:

    Property Disclosure Statement — Strata Title Properties Clause

    The attached Property Disclosure Statement — Strata Title Properties dated (date) is incorporated into and forms part of this contract.

    If the Property Disclosure Statement — Strata Title Properties has not been attached to the offer at the time it was written, the licensee must use a subject clause to allow for approval of the Property Disclosure Statement — Strata Title Properties, as follows:

    Buyer’s Approval of Property Disclosure Statement — Strata Title Properties Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement — Strata Title Properties, with respect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential.

    This condition is for the sole benefit of the Buyer.

    If approved such statement will be incorporated into and form part of this contract.

    A buyer’s agent should still recommend a property inspection, even where there is a PDS that is incorporated into the Contract of Purchase and Sale. A buyer’s agent should also recommend that the buyer carefully discuss the Property Disclosure Statement with the buyer’s property inspector.

  • Seller's Disclosure Where Condition Has Been Tested Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert**

    Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.

  • Seller's Disclosure Where Condition Has Been Removed Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert** Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.
  • Seller's Disclosure but Corrective Measures Taken Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert** Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.
  • Seller's Disclosure but Condition at Acceptable Level Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert** Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.
  • Seller's Warranty Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert** Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.
  • UFFI and Asbestos Insulation Disclosure Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .
    The Seller will allow access to the property for this purpose on reasonable notice.
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .
    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .
    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert* Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.

Financing

  • Agreement for Sale (With No Underlying Mortgage Which Allows Resale) Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (11) Agreement for Sale (Right To Purchase)

    Although not in common use, an agreement for sale is a contract for the sale of an interest in land under which the buyer agrees to pay the purchase price, over a period of time and, on full payment, the seller is obliged to convey title to the buyer.

    Licensees should note that, when performing title searches, they may discover the notation ‘‘RP’’ or Right to Purchase. This is what the Land Title Office uses to denote an agreement for sale. Agreement for Sale is the term used in the real estate industry to denote a Right to Purchase. Licensees should also note that only one RP can be registered on a title.

    The time period involved in an agreement for sale, whereby a seller can take action against a buyer who is in arrears on payments in an agreement for sale, is now the same as that for a mortgage.

    Agreements for sale may still be advantageous in certain circumstances, for example, where the seller has an existing mortgage at an interest rate which is lower than current market rate. In that case, the interest rate on the agreement for sale would be at least either the current interest rate or a higher rate than the seller has on the current mortgage. In this case, the clause for an agreement for sale with an underlying mortgage would be the appropriate clause to use. The term of the agreement for sale should be concurrent with and not exceed the term of the first mortgage.

    Some lenders do not allow assumption of an agreement for sale. It is important to ensure that the clients have confirmation in writing from either the mortgagee or the mortgagee’s lawyer.

    When proposing agreements for sale, licensees should keep in mind the particular requirements of the seller and the buyer. The most important concerns will be the interest rate to be charged, the payments on the agreement for sale and the term of the agreement for sale. The terms of the underlying first mortgage will influence the position of the principals to the agreement for sale.

    Agreement for Sale (With No Underlying Mortgage Which Allows Resale) Clause

    The Seller will carry the remaining balance of $ (amount) by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of % per annum, calculated (frequency) not in advance, with a _____–year amortization period, ______-year term and repayable in blended payments of $ (payment) per month, including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The Agreement for Sale will provide that if the Buyer disposes, or agrees to dispose of his or her interest in the property, the full amount then owing under the Agreement for Sale will immediately become due and payable at the Seller’s option.

    The Seller will draw and register the Agreement for Sale at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    Agreement for Sale (With Underlying Mortgage) Clause

    The Seller will carry the balance of $ (amount) * by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of %per annum calculated (frequency) , not in advance, with a (number)-year amortization period and a term to expire (date) ** and repayable in blended payments of $ (payment) *** per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller). The Seller covenants and agrees to pay the existing first mortgage in favour of according to the terms of the mortgage.

    * Amount includes underlying mortgage.

    ** Term expiry date to correspond to underlying mortgage.

    *** In order to protect the Buyer, this amount should be at least as large as monthly payments on the underlying mortgage.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    In most cases, the term expiry date of the agreement for sale will correspond with the underlying mortgage. In any event, the parties are advised to seek expert advice from a mortgage broker or accountant with regard to the terms.

    Licensees must ensure that the parties are adequately informed regarding their risks if payments on the underlying mortgage are not made.

    Licensees should also advise the buyer and seller to seek legal advice regarding their respective risks in this situation.

    The Agreement for Sale Clause will contain the following additional provisions:

    Agreement for Sale Clause

    The Agreement for Sale is subject to an underlying mortgage held by (name) with an outstanding balance of approximately $ (amount) at an interest rate of % per annum calculated (frequency), not in advance, with a ‘‘balance due’’ term date of (date) , and with blended payments of $ (amount) per month including principal and interest.

    The Seller covenants to maintain the underlying mortgage in good standing and to pay and satisfy in full when due or when the Agreement for Sale is paid off, and on any failure to do so, the Buyer may pay the underlying mortgage directly, and deduct such payment from amounts owing to the Seller under the Agreement for Sale.

    If the Buyer disposes of or agrees to dispose of the property, the full amount then owing under the Agreement for Sale shall immediately become due and payable at the option of the Seller, and any penalty payable because of the resulting prepayment of the underlying mortgage will be paid by the Buyer.

    The Seller will draw and register the Agreement for Sale at the Buyer’s expense. The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

  • Agreement for Sale (With Underlying Mortgage) Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (11) Agreement for Sale (Right To Purchase)

    Although not in common use, an agreement for sale is a contract for the sale of an interest in land under which the buyer agrees to pay the purchase price, over a period of time and, on full payment, the seller is obliged to convey title to the buyer.

    Licensees should note that, when performing title searches, they may discover the notation ‘‘RP’’ or Right to Purchase. This is what the Land Title Office uses to denote an agreement for sale. Agreement for Sale is the term used in the real estate industry to denote a Right to Purchase. Licensees should also note that only one RP can be registered on a title.

    The time period involved in an agreement for sale, whereby a seller can take action against a buyer who is in arrears on payments in an agreement for sale, is now the same as that for a mortgage.

    Agreements for sale may still be advantageous in certain circumstances, for example, where the seller has an existing mortgage at an interest rate which is lower than current market rate. In that case, the interest rate on the agreement for sale would be at least either the current interest rate or a higher rate than the seller has on the current mortgage. In this case, the clause for an agreement for sale with an underlying mortgage would be the appropriate clause to use. The term of the agreement for sale should be concurrent with and not exceed the term of the first mortgage.

    Some lenders do not allow assumption of an agreement for sale. It is important to ensure that the clients have confirmation in writing from either the mortgagee or the mortgagee’s lawyer.

    When proposing agreements for sale, licensees should keep in mind the particular requirements of the seller and the buyer. The most important concerns will be the interest rate to be charged, the payments on the agreement for sale and the term of the agreement for sale. The terms of the underlying first mortgage will influence the position of the principals to the agreement for sale.

    Agreement for Sale (With No Underlying Mortgage Which Allows Resale) Clause

    The Seller will carry the remaining balance of $ (amount) by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of % per annum, calculated (frequency) not in advance, with a _____–year amortization period, ______-year term and repayable in blended payments of $ (payment) per month, including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The Agreement for Sale will provide that if the Buyer disposes, or agrees to dispose of his or her interest in the property, the full amount then owing under the Agreement for Sale will immediately become due and payable at the Seller’s option.

    The Seller will draw and register the Agreement for Sale at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    Agreement for Sale (With Underlying Mortgage) Clause

    The Seller will carry the balance of $ (amount) * by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of %per annum calculated (frequency) , not in advance, with a (number)-year amortization period and a term to expire (date) ** and repayable in blended payments of $ (payment) *** per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller). The Seller covenants and agrees to pay the existing first mortgage in favour of according to the terms of the mortgage.

    * Amount includes underlying mortgage.

    ** Term expiry date to correspond to underlying mortgage.

    *** In order to protect the Buyer, this amount should be at least as large as monthly payments on the underlying mortgage.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    In most cases, the term expiry date of the agreement for sale will correspond with the underlying mortgage. In any event, the parties are advised to seek expert advice from a mortgage broker or accountant with regard to the terms.

    Licensees must ensure that the parties are adequately informed regarding their risks if payments on the underlying mortgage are not made.

    Licensees should also advise the buyer and seller to seek legal advice regarding their respective risks in this situation.

    The Agreement for Sale Clause will contain the following additional provisions:

    Agreement for Sale Clause

    The Agreement for Sale is subject to an underlying mortgage held by (name) with an outstanding balance of approximately $ (amount) at an interest rate of % per annum calculated (frequency), not in advance, with a ‘‘balance due’’ term date of (date) , and with blended payments of $ (amount) per month including principal and interest.

    The Seller covenants to maintain the underlying mortgage in good standing and to pay and satisfy in full when due or when the Agreement for Sale is paid off, and on any failure to do so, the Buyer may pay the underlying mortgage directly, and deduct such payment from amounts owing to the Seller under the Agreement for Sale.

    If the Buyer disposes of or agrees to dispose of the property, the full amount then owing under the Agreement for Sale shall immediately become due and payable at the option of the Seller, and any penalty payable because of the resulting prepayment of the underlying mortgage will be paid by the Buyer.

    The Seller will draw and register the Agreement for Sale at the Buyer’s expense. The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

  • Agreement for Sale Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (11) Agreement for Sale (Right To Purchase)

    Although not in common use, an agreement for sale is a contract for the sale of an interest in land under which the buyer agrees to pay the purchase price, over a period of time and, on full payment, the seller is obliged to convey title to the buyer.

    Licensees should note that, when performing title searches, they may discover the notation ‘‘RP’’ or Right to Purchase. This is what the Land Title Office uses to denote an agreement for sale. Agreement for Sale is the term used in the real estate industry to denote a Right to Purchase. Licensees should also note that only one RP can be registered on a title.

    The time period involved in an agreement for sale, whereby a seller can take action against a buyer who is in arrears on payments in an agreement for sale, is now the same as that for a mortgage.

    Agreements for sale may still be advantageous in certain circumstances, for example, where the seller has an existing mortgage at an interest rate which is lower than current market rate. In that case, the interest rate on the agreement for sale would be at least either the current interest rate or a higher rate than the seller has on the current mortgage. In this case, the clause for an agreement for sale with an underlying mortgage would be the appropriate clause to use. The term of the agreement for sale should be concurrent with and not exceed the term of the first mortgage.

    Some lenders do not allow assumption of an agreement for sale. It is important to ensure that the clients have confirmation in writing from either the mortgagee or the mortgagee’s lawyer.

    When proposing agreements for sale, licensees should keep in mind the particular requirements of the seller and the buyer. The most important concerns will be the interest rate to be charged, the payments on the agreement for sale and the term of the agreement for sale. The terms of the underlying first mortgage will influence the position of the principals to the agreement for sale.

    Agreement for Sale (With No Underlying Mortgage Which Allows Resale) Clause

    The Seller will carry the remaining balance of $ (amount) by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of % per annum, calculated (frequency) not in advance, with a _____–year amortization period, ______-year term and repayable in blended payments of $ (payment) per month, including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The Agreement for Sale will provide that if the Buyer disposes, or agrees to dispose of his or her interest in the property, the full amount then owing under the Agreement for Sale will immediately become due and payable at the Seller’s option.

    The Seller will draw and register the Agreement for Sale at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    Agreement for Sale (With Underlying Mortgage) Clause

    The Seller will carry the balance of $ (amount) * by way of an Agreement for Sale, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) ), at an interest rate of %per annum calculated (frequency) , not in advance, with a (number)-year amortization period and a term to expire (date) ** and repayable in blended payments of $ (payment) *** per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller). The Seller covenants and agrees to pay the existing first mortgage in favour of according to the terms of the mortgage.

    * Amount includes underlying mortgage.

    ** Term expiry date to correspond to underlying mortgage.

    *** In order to protect the Buyer, this amount should be at least as large as monthly payments on the underlying mortgage.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

    In most cases, the term expiry date of the agreement for sale will correspond with the underlying mortgage. In any event, the parties are advised to seek expert advice from a mortgage broker or accountant with regard to the terms.

    Licensees must ensure that the parties are adequately informed regarding their risks if payments on the underlying mortgage are not made.

    Licensees should also advise the buyer and seller to seek legal advice regarding their respective risks in this situation.

    The Agreement for Sale Clause will contain the following additional provisions:

    Agreement for Sale Clause

    The Agreement for Sale is subject to an underlying mortgage held by (name) with an outstanding balance of approximately $ (amount) at an interest rate of % per annum calculated (frequency), not in advance, with a ‘‘balance due’’ term date of (date) , and with blended payments of $ (amount) per month including principal and interest.

    The Seller covenants to maintain the underlying mortgage in good standing and to pay and satisfy in full when due or when the Agreement for Sale is paid off, and on any failure to do so, the Buyer may pay the underlying mortgage directly, and deduct such payment from amounts owing to the Seller under the Agreement for Sale.

    If the Buyer disposes of or agrees to dispose of the property, the full amount then owing under the Agreement for Sale shall immediately become due and payable at the option of the Seller, and any penalty payable because of the resulting prepayment of the underlying mortgage will be paid by the Buyer.

    The Seller will draw and register the Agreement for Sale at the Buyer’s expense. The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

  • Assumption of Existing Mortgage Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (4) Assumption of Existing Mortgage Clause

    Assumption of Existing Mortgage Clause

    The sum of approximately $ (amount A) by way of cash down payment.

    The Buyer will assume all obligations under the existing (rank)mortgage held by (name of lender) with an outstanding balance of approximately $ (amount B) at an interest rate of % per annum calculated (select either half-yearly or monthly)not in advance, with a ‘‘balance due’’ term date of (date)with blended payments of $ (payment amount)per month including principal and interest (plus 1/12 of the annual taxes, if required by mortgagee).

    NOTE: Amounts (A) and (B) must equal total purchase price.

    Subject to the mortgagee approving the Buyer in writing on or before (date), thereby releasing the Seller from liability under section 24 of the Property Law Act.

    This condition is for the benefit of both the Buyer and the Seller.

     

  • Financial Obligations Exceed Sale Price Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (6) Sale Price Insufficient To Cover Financial Encumbrances

    Licensees should be aware that, in some instances, sellers may find themselves unable to clear title as their financial obligations are greater than they expected and exceed the proceeds of the sale. Examples of this might occur when penalties are applied for the early pay-out of a mortgage, interest has accumulated if mortgage payments have fallen into arrears, or if a lien against the property is unsatisfied. The amounts of these sorts of financial obligations can be very substantial and, when combined with commissions payable, may create a circumstance where the seller has no practical remedy and the transaction collapses, leaving the buyer, the seller and the licensees involved all in regrettable positions with potential legal implications.

    At the time of listing a property, it is a prudent practice for licensees to discuss with a seller their obligation to clear title and the nature of the expenses they will face at closing. Licensees should advise their seller-clients to review the terms of their mortgage, as well as to seek written confirmation from their lending institution of the amount of any outstanding mortgage balances, accrued interest, or penalties. A seller who is planning on acquiring another property, based on the sale of an existing property, may also want to familiarize himself or herself as to the portability of his or her existing mortgage and any terms, conditions and time limitations that may apply.

    Licensees who advise and assist their clients in obtaining clear and certain information as to their financial obligations at the time of listing a property, place their clients in a position of being able to make informed decisions when considering any offers. This ultimately sets the stage for a smooth completion without surprises.

    In the event there is any question whether the sale price is sufficient to cover financial encumbrances and real estate commission, licensees should protect the seller (and themselves) by use of the following clause in the contract:

    Financial Obligations Exceed Sale Price Clause

    Subject to the Seller’s confirmation and satisfaction with the arrangement of financial affairs, on or before (date), which enable the Seller to proceed with this sale.
    This condition is for the sole benefit of the Seller.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

  • Lawyer's Approval of Financing Terms Clause

    Excerpt from Trading Services | 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (7) Seller To Take Back First Mortgage

    It is recommended that preparation of all seller-take-back mortgages be referred to the seller’s lawyer.

    Seller To Take Back First Mortgage Clause

    The Seller will take back a first mortgage, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) , in the amount of $ (amount) at an interest rate of % per annum calculated (select either half-yearly or monthly) , not in advance, with a ___–year amortization period and ___–year term and repayable in blended payments of $ (amount) per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The mortgage will provide that if the Buyer disposes of or agrees to dispose of the property, the full balance will immediately become due and payable at the Seller’s option. The Seller will draw and register the mortgage at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.
     

    NOTE: If the seller is being asked to carry a second mortgage, it is important that the listing agent find out the terms and amount of the first mortgage the buyer is contemplating. The licensee must disclose the amount of the first mortgage when writing subject clauses regarding seller-take-back mortgages. See also ‘‘Additional Mortgage/Agreement for Sale Clauses.’’ Otherwise, the seller may be inadequately secured.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the seller has not sought legal advice before signing the offer, a subject clause such as the one found below should be added allowing him or her to obtain such advice.

    Lawyer’s Approval of Financing Terms Clause

    Subject to the Seller’s lawyer approving the financing terms and conditions on or before (date). 
    This condition is for the sole benefit of the Seller.

  • New Second Mortgage Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection
    (8) Second Mortgages

    The term of the second mortgage should be concurrent with and not exceed the term of the first mortgage.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    New Second Mortgage Clause

    Subject to a new second mortgage being made available to the Buyer on or before (date), in the amount of $ (amount) at an interest rate not to exceed ___ % per annum calculated (select either half-yearly or monthly), not in advance, with a ___–year amortization period, ___–year term and repayable in blended payments of approximately $(amount) per month including principal and interest (plus 1/12 of the annual taxes, if required by the mortgagee).

    This condition is for the sole benefit of the Buyer.

  • Open (Prepayment in Part) Mortgage Clause

    Trading Services | 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (12) Additional Mortgage/Agreement for Sale Clauses

    Open (Prepayment in Part) Mortgage Clause

    The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty.

    Open (Prepayment in Full) Mortgage Clause

    The principal balance may be paid at any time, in full, without notice, bonus, or penalty.

    Penalty (Prepayment in Part) Clause

    The principal balance may be paid at any time, in whole or in part, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Penalty (Prepayment in Full) Clause

    The principal balance may be paid at any time, in full, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Some lenders require an interest differential in lieu of or even in addition to a prepayment privilege commonly called a penalty. This amount is usually the loss of interest for the balance of the term. The licensee must confirm what is payable by a seller as it may affect his or her ability to clear title, pay a commission and/or buy again. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected.

    A prepayment privilege is a designated amount of interest, usually three to six months, which is normally less onerous than the interest differential.

  • Open (Prepayment in Full) Mortgage Clause

    Trading Services | 4. General Information

    Go To

    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (12) Additional Mortgage/Agreement for Sale Clauses

    Open (Prepayment in Part) Mortgage Clause

    The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty.

    Open (Prepayment in Full) Mortgage Clause

    The principal balance may be paid at any time, in full, without notice, bonus, or penalty.

    Penalty (Prepayment in Part) Clause

    The principal balance may be paid at any time, in whole or in part, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Penalty (Prepayment in Full) Clause

    The principal balance may be paid at any time, in full, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Some lenders require an interest differential in lieu of or even in addition to a prepayment privilege commonly called a penalty. This amount is usually the loss of interest for the balance of the term. The licensee must confirm what is payable by a seller as it may affect his or her ability to clear title, pay a commission and/or buy again. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected.

    A prepayment privilege is a designated amount of interest, usually three to six months, which is normally less onerous than the interest differential.

  • Optional Assumption of Portion of Mortgage Clause

    Excerpt from Trading Services | Section 6. Real Estate Development Marketing Act

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    (e) Forms of Development Property under the Real Estate Development Marketing Act

    (See also information regarding strata properties.)

    Cooperative Interests

    A cooperative interest is the interest that includes both a right of ownership in the shares of a cooperative association or to be a partner or member in the cooperative association and the right to use or occupy a part of the land in which the cooperative association has an interest.

    The Real Estate Development Marketing Act defines a cooperative association as

    (a) a corporation, as defined in the Business Corporations Act;

    (b) a limited liability company as defined in the Business Corporations Act;

    (c) a partnership; and

    (d) an entity incorporated or other wise created outside British Columbia that is similar to one described in paragraphs (a) to (c).

    Thus, an owner of a cooperative interest acquires shares, or some other form of ownership in a corporate entity or partnership, which carry with them the right to occupy only a portion of the land that the cooperative association owns. The particular portion may be an apartment or a recreational vehicle site.

    Sellers are unable to carry primary or secondary financing on cooperative interests by way of a mortgage registered against the title or by an Agreement for Sale, as there is no title in a cooperative interest to encumber. It is, therefore, strongly recommended, in a situation where the seller is asked to carry any financing, that the seller’s lawyer and the buyer’s lawyer be consulted before the acceptance of any offer.

    Licensees are also advised to consult their financial advisers, including experienced mortgage brokers, for guidance in such financing, as well as ascertaining from the cooperative’s rules and regulations whether or not there is a prohibition on financing in any way.

    A Disclosure Statement must be filed with the Superintendent of Real Estate before a developer or a developer’s agent can market one cooperative interest if the cooperative interest is part of a development consisting of two or more cooperative interests. Accordingly, licensees involved in the sale or purchase of a cooperative interest by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement. It is possible for a cooperative association to own a strata lot. Hence, the Strata Property Act may also be applicable.

    Regardless of whether the transaction involves a developer or a single unit resale, licensees should be knowledge- able with respect to the proportion of the share capital acquired by the purchaser, the allocation of ongoing maintenance and operating costs, the presence of any other assets or liabilities that the cooperative association may have, the terms of the agreement which restricts an owner to using only a portion of the land that the cooperative association owns, the applicability of the homeowner’s grant and property transfer tax, and the particulars of the cooperative association’s share capital, such as provisions related to voting rights or restrictions on transfer.

    Rental Leases and Head Leases

    Another type of ownership, which fits between cooperative and strata on leased land, is the rental lease, where the cooperative building sits on leased land. It is financed like a cooperative, although sometimes private leaseholders will allow for less down payment and provide financing directly themselves. The holder of the head lease, the corporation which owns the building, determines how units in the building are purchased. As with cooperatives, these are purchases of shares in exchange for the exclusive right to occupy a designated unit in the building. Owners do not have title to the unit itself. Owners must not make alterations to the unit (unlike strata ownership) without permission from the cooperative association. These are long-term leases (often 99 years). Licensees are advised to consult experienced financial advisers, lawyers and mortgage brokers for guidance.

    The following clause should be used in the purchase of cooperative interests. This clause may also be used for the purchase of rental-lease properties but it is strongly recommended that the buyer seek legal advice and ensure understanding of the head lease’s restrictions and duration.

    Co-operatives-Suite/Townhouse Clause

    This contract is for the purchase of (number of shares) shares in (name of co-operative association) together with a lease of (unit number) to the Buyer, and other considerations as may accompany said lease.

    Buyer to assume payments of the monthly maintenance charge of $(amount) (which includes a proportionate share of annual taxes).

    Subject to the approval of the Buyer by the Board of Directors of (name of co-operative association) on or before (date) .

    This condition is for the benefit of both the Buyer and the Seller.

    Buyer has approved the Rules and Regulations, the Memorandum and Articles of Association, any lease documentation and any financial obligations of (name of co-operative association) including the following specific restriction(s):

    Ώ Warning re Approval of buyer by Directors: The Board of Directors of a Cooperative is allowed to make a decision as to the suitability of any buyer. The reasons for such a decision are to be kept confidential to the Board of Directors.

    Optional Assumption of Portion of Mortgage Clause

    NOTE: The Buyer should obtain legal advice before assuming a mortgage in these circumstances.

    Buyer will assume obligations on an assigned portion under the existing first mortgage held by (name of mortgage lender) registered against the property at (address) with an outstanding balance on the assigned portion of approximately $(amount) at an interest rate of ___% per annum, calculated (frequency), not in advance, with an original (number of years)-year amortization and a ‘‘balance due” term date of (date), with blended payments of $ (amount) per month including principal and interest.

    (i) Shared Interests in Land

    A shared interest in land is a person’s interest in one or more parcels of land, if the parcel or parcels are owned or leased by the person and at least one other person and as part of any arrangement relating to the acquisition of the person’s interests, that person’s right of use or occupation of the land is limited to a part of the land.

    Thus, an owner of a shared interest in land acquires a direct ownership interest in land, typically an undivided fractional fee simple interest, which carries with it, by agreement amongst the co-owners, a right to occupy only a portion of the land.

    A Disclosure Statement must be filed with the Superintendent of Real Estate before a developer or the developer’s agent can market one shared interest in a development containing at least two shared interests. Accordingly, licensees involved in the sale or purchase of a shared interest in land by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement.

    Regardless of whether the transaction involves a developer or a single unit resale, licensees should be knowledge- able with respect to the proportionate fractional interest acquired, the allocation of ongoing maintenance and operating costs, the applicability of the Homeowner’s Grant and Property Transfer Tax, and the particulars of the agreement which restricts owners to using only a portion of the land that they own, such as voting rights or restrictions on transfers.

    (ii) Time Share Interest

    A time share interest is defined in the Real Estate Development Marketing Act as a person’s interest in a time share plan. A time share plan is a plan in which the persons participating each have a right of recurring use, of all or part of the land. A time share plan does not require that the persons acquire an ownership interest in the land that is the subject of the plan.

    A Disclosure Statement must be filed before a developer may market one time share interest in a development containing five or more time share interests. Accordingly, licensees involved in the sale or purchase of a time share interest by or from a developer should familiarize themselves with the content of and the requirements associated with the Disclosure Statement.

    (iii) Real Estate Securities

    In some cases, the offering of a real estate development unit may constitute the offering of an investment contract, which is a security within the meaning of the Securities Act. Where a real estate development includes an interest in land and an ancillary agreement, usually with the developer, for management of the property, combined with financial commitments such as rental guarantees or revenue and expense pooling, the arrangement may meet the requirements of a security. A typical example of such an offering is the marketing of strata lots in a hotel or resort in which there is an agreement that the strata lots will be rented out by a manager. The agreement may include a rental guarantee or revenue or expense pooling, or it may simply be a mandatory requirement that the strata lot be provided to the manager for rental as part of the overall development. In such cases, both the Real Estate Development Marketing Act and the Securities Act apply. Policy Statement 13 – Real Estate Securities  — will open in a new tab issued by the Superintendent’s office sets out an explanation of real estate securities and includes reference to the related documents issued by the Securities Commission. Licensees involved in the purchase and sale of real estate offerings, where the purchaser must rely on the promoter for an investment return, should familiarize themselves with these requirements.

    (iv) Leasehold Units

    A leasehold unit is a unit in a residential leasehold complex which is defined as containing one or more buildings capable of being used for leasehold residential purposes other than buildings comprised of strata lots, cooperative interests or shared interests in land.

    Although not specifically identified in the Real Estate Development Marketing Act, a common form of leasehold unit that has been marketed in British Columbia is a life lease. A life lease in its broadest sense is a leasehold interest in land, the term of which extends for the life of the lessee. In many ways, it resembles a life estate. In particular, life leases typically must prepay a large portion or all of the rent, and the possessionary interest of a life estate and a life lease both terminate with the life of the person holding the interest. However, a life estate is a freehold interest in land whereas a life lease is a leasehold interest in land that creates a landlord and tenant relationship.

    The distinction between a life lease and a life estate should not be forgotten because a life lessee is subject to a lease. Accordingly, most, if not all, aspects of the law governing landlord and tenant relationships will apply and licensees should be aware of their duties and responsibilities, which apply to all lease transactions. The following characteristics of many life leases should also be considered.

    Most, if not all, life lease offerings obligate the landlord to repay some or all of the prepaid rent to the lessee, or his or her heirs, on the death of the lessee or the termination of the lease. The obligation to repay the rent (capital payment) results from the contractual terms of the lease. The repayment term is basically peculiar to life leases. Licensees should familiarize themselves with the security arrangements, if any, associated with the obligation to repay and the financial ability of the landlord to make the repayment.

    Additionally, landlords can generally terminate a life lease for non-payment of rent or a breach of any other covenant in the lease. The life lease may or may not be registrable. Section 4 of the Residential Tenancy Act provides that the Act does not apply to living accommodation rented under a tenancy agreement that has a term longer than 20 years. Life lessees generally may not assign or sublet their lease as the landlord typically controls the renting of the premises. Life leases generally obligate the lessees to pay monthly charges related to the maintenance and operation of the development. Often, these charges are payable as rent.

    The Real Estate Development Marketing Act requires that a developer file a Disclosure Statement before marketing a leasehold unit of a term of three years or more in a development property containing five or more residential leasehold units. All long-term leases, including life leases contained within developments other than buildings comprised of strata lots, cooperatives or shared interests, are subject to the requirements of the Real Estate Development Marketing Act. Because the marketing of strata lots, cooperative interests and shared interests are specifically addressed in the Real Estate Development Marketing Act and because the definition of marketing includes selling or leasing, the offering of a long-term lease of a strata lot, cooperative interests or shared interests already requires compliance with the Real Estate Development Marketing Act.

    Each offering of a leasehold interest, including a life lease, requires that a current Disclosure Statement, which has been filed with the Superintendent of Real Estate, be provided to the lessee. Developers may therefore be required to update the Disclosure Statement to ensure that it is current before each new leasehold interest is marketed. In other words, as lessees die or otherwise terminate their lease, the developer will offer a new leasehold interest which requires an up to date Disclosure Statement. Developers reselling life leases must therefore provide a current Disclosure Statement to new lessees.

    (v) First Nations Lands

    The Superintendent of Real Estate has advised that his opinion is that RESA applies to the sale of real estate on First Nations property. However, the Superintendent is of the view that the Real Estate Development Marketing Act is not applicable to the sale or lease of development units on First Nations property and a developer is not required to file a Disclosure Statement or comply with any other requirements contained in the Real Estate Development Marketing Act when a development is located on First Nations property.

    Licensees should advise consumers that the Real Estate Development Marketing Act does not apply and that the disclosure requirement and rescission rights contained in the Real Estate Development Marketing Act also do not apply. Furthermore, the Strata Property Act does not apply to multi-family developments located on First Nations land.

  • Penalty (Prepayment in Part) Clause

    Trading Services | 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (12) Additional Mortgage/Agreement for Sale Clauses

    Open (Prepayment in Part) Mortgage Clause

    The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty.

    Open (Prepayment in Full) Mortgage Clause

    The principal balance may be paid at any time, in full, without notice, bonus, or penalty.

    Penalty (Prepayment in Part) Clause

    The principal balance may be paid at any time, in whole or in part, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Penalty (Prepayment in Full) Clause

    The principal balance may be paid at any time, in full, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Some lenders require an interest differential in lieu of or even in addition to a prepayment privilege commonly called a penalty. This amount is usually the loss of interest for the balance of the term. The licensee must confirm what is payable by a seller as it may affect his or her ability to clear title, pay a commission and/or buy again. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected.

    A prepayment privilege is a designated amount of interest, usually three to six months, which is normally less onerous than the interest differential.

  • Penalty (Prepayment in Full Clause)

    Trading Services | 4. General Information

    Go To

    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (12) Additional Mortgage/Agreement for Sale Clauses

    Open (Prepayment in Part) Mortgage Clause

    The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty.

    Open (Prepayment in Full) Mortgage Clause

    The principal balance may be paid at any time, in full, without notice, bonus, or penalty.

    Penalty (Prepayment in Part) Clause

    The principal balance may be paid at any time, in whole or in part, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Penalty (Prepayment in Full) Clause

    The principal balance may be paid at any time, in full, upon payment of an additional (number of months) months’ interest as a penalty and by way of compensation for said prepayment.

    Some lenders require an interest differential in lieu of or even in addition to a prepayment privilege commonly called a penalty. This amount is usually the loss of interest for the balance of the term. The licensee must confirm what is payable by a seller as it may affect his or her ability to clear title, pay a commission and/or buy again. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected.

    A prepayment privilege is a designated amount of interest, usually three to six months, which is normally less onerous than the interest differential.

  • Refinancing with Existing Mortgagee Clause

    Excerpt from Trading Services | 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (5) Refinance of Existing Mortgage

    Under certain circumstances, a substantial payout penalty may be avoided by the buyer arranging a new mortgage through the existing mortgagee.

    Refinancing with Existing Mortgagee Clause

    Subject to the Buyer arranging financing with (name of existing mortgagee) and to (name of existing mortgagee) providing the Seller with written confirmation on or before (date), that upon completion the Seller shall be released, without penalty or cost, from its covenants under the existing mortgage.

    This condition is for the benefit of the Seller and the Buyer.

    CAUTION: This clause is to be used only in conjunction with the ‘‘New First Mortgage Clause’’ detailing the mortgage to be arranged by the Buyer.

    Such a clause should be reviewed by the seller’s lawyer.

  • Seller to Take Back First Mortgage Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (7) Seller To Take Back First Mortgage

    It is recommended that preparation of all seller-take-back mortgages be referred to the seller’s lawyer.

    Seller To Take Back First Mortgage Clause

    The Seller will take back a first mortgage, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) , in the amount of $ (amount) at an interest rate of % per annum calculated (select either half-yearly or monthly) , not in advance, with a ___–year amortization period and ___–year term and repayable in blended payments of $ (amount) per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The mortgage will provide that if the Buyer disposes of or agrees to dispose of the property, the full balance will immediately become due and payable at the Seller’s option. The Seller will draw and register the mortgage at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.

    NOTE: If the seller is being asked to carry a second mortgage, it is important that the listing agent find out the terms and amount of the first mortgage the buyer is contemplating. The licensee must disclose the amount of the first mortgage when writing subject clauses regarding seller-take-back mortgages. See also ‘‘Additional Mortgage/Agreement for Sale Clauses.’’ Otherwise, the seller may be inadequately secured.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the seller has not sought legal advice before signing the offer, a subject clause such as the one found below should be added allowing him or her to obtain such advice.

    Lawyer’s Approval of Financing Terms Clause

    Subject to the Seller’s lawyer approving the financing terms and conditions on or before (date). 

    This condition is for the sole benefit of the Seller.

  • Seller to Take Back Second Mortgage Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (9) Seller Taking Back Second Mortgage

    It is absolutely imperative to state the exact amount and details of any first-mortgage financing ranking ahead of the second mortgage to be carried by the seller. Failure to do so could result in a buyer being able to finance a property via the first mortgage in excess of its value, leaving the seller in the bad position of having little or no equity left in the property to protect the seller’s second mortgage.

    It is customary for mortgagees to stipulate that mortgage documents will be prepared by their conveyancer at the expense of the mortgagor. It is recommended that this provision be included in the Contract of Purchase and Sale whenever the seller and/or a private investor will be carrying or advancing mortgage money.

    **Alert**
    Some mortgages may contain a term that provides that the mortgage secures all amounts that the borrower may owe to the financial institution. If the first mortgagor initiates foreclosure, the amount secured by the mortgage may be the amount of the first mortgage as well as any other borrowings, including amounts owed on personal loans or credit cards.  Sellers willing to take back a second mortgage should consider inserting a term in the contract that prohibits the buyer from entering into a mortgage which contains such terms.

    Seller To Take Back Second Mortgage Clause

    The Seller will take back a second mortgage, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date), and approved by the Buyer on or before (date), in the amount of (amount) at an interest rate of __ % per annum, calculated (select either half-yearly or monthly), not in advance, with a ___-year amortization period, ___ -year term and repayable in blended payments of $ (payment) per month, including principal and interest (plus 1/12 of the annual taxes if required by the Seller, if not already being collected by the first mortgagee). Such second mortgage will provide that if the Buyer disposes or agrees to dispose of the property, the full balance will immediately become due and payable at the Seller’s option.

    The Seller will draw and register the mortgage at the Buyer’s cost. This condition is for the sole benefit of the Seller.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date). This condition is for the sole benefit of the Seller.

    The Seller’s second mortgage is to rank after the (select either new or existing) first mortgage of no more than $(amount) at ___% interest with a term due date of (date) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the seller has not sought legal advice before signing the offer, a subject clause such as the one hereshould be added allowing him or her to obtain such advice.

  • Seller to Pay Discount to Buy-Down Rate for Buyer Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (10) Buy-Down of New First Mortgage

    Where the seller is buying down a new first mortgage arranged by the buyer, it is recommended that the buy down clause follow the subject to first mortgage clause.

    NOTE: This technique is used in periods of high interest rates when the buyer wants a more attractive mortgage rate. The seller is willing to accept a reduction by paying a sum to the mortgagee/broker to accomplish this end. The mortgagee receives a better ‘‘yield’’ on the mortgage. The net result to the buyer is less interest to pay over the term of the mortgage.

    Seller To Pay Discount To Buy-Down Rate for Buyer Clause

    Subject to a (select either first or second) mortgage being made available to the Buyer on or before (date) , in the amount of $ (amount) at an interest rate not to exceed %* per annum, calculated (select either half-yearly or monthly), not in advance, with a ___-year amortization period, ___–year term, and repayable in blended payments of approximately $ (payment) per month, including principal and interest (plus 1/12 of the annual taxes, if required by the mortgagee).

    The Seller will pay a discount to the (select either mortgagee or broker) on the  (select either first or second) mortgage arranged by the Buyer, sufficient to yield the mortgagee an interest rate of ___ %** per annum, calculated (select either half-yearly or monthly), not in advance, for a term of  ___ years, but the amount of discount and buy-down costs may not exceed $(amount) in total and will be deducted from the proceeds of sale due to the Seller on completion.

    This condition is for the sole benefit of the Buyer.

    * This is the ‘‘bought-down’’ rate (i.e., what the Buyer wants).

    ** This is the ‘‘market ’ rate (i.e., what the Lender wants).

    Ω If the seller has not sought legal advice before signing the offer, a subject clause similar to the one here should be added allowing him or her to obtain such advice.

  • Subject to New First Mortgage Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses 

    (xvii) Financing Information - View Subsection

    (2) New First Mortgage Clause

    New First Mortgage Clause

    Subject to a new first mortgage being made available to the Buyer on or before (date) , in the amount of $ (amount) at an interest rate not to exceed ___ % per annum calculated (select either half-yearly or monthly) , not in advance, with a ____- year amortization period, ____- year term and repayable in blended payments of approximately $ (amount) per month including principal and interest (plus 1/12 of the annual taxes, if required by the mortgagee).
    This condition is for the sole benefit of the Buyer.

    NOTE: This clause must not be used for a Seller-take-back mortgage.

    While the standard ‘‘New First Mortgage Clause’’ can be applied to nearly every residential contract, there will be occasions when the buyer will be applying for unconventional financing (e.g., land assembly, shopping centres, high-rise buildings or warehouse purchases). Licensees must be aware that courts have sometimes declared vague mortgage clauses to be unenforceable whim and fancy clauses.

    Because the standard Contract of Purchase and Sale contains an option clause and is executed under seal, when using a standard Contract of Purchase and Sale, the seller is irrevocably bound by the contract even if the subject to financing clause is vague. See the section entitled ‘‘Option Clause’’ for more information.

Fish Protection

  • Fish Protection Act Clause

    Excerpt from Trading Services | Section 3. Acting For Buyers

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    (n) Items Affecting A Property 

    (i) Issues Affecting an Owner’s Interests - View Subsection

    (6) Fish Protection Act — Riparian Areas Regulation

    [12/18/2012 The following section was amended with updated information]

    The Riparian Areas Regulation  — will open in a new tab under the Riparian Areas Protection Act  — will open in a new tab is intended to protect riparian fish habitat, while facilitating urban development that exhibits high standards of environmental stewardship.

    A licensee acting for a buyer or seller in a transaction that involves a “stream” (as defined below) on the subject property or neighboring property should be aware that the Riparian Areas Regulation (RAR) could have a significant effect on the value and potential use or development of the property because of legislated building/development setbacks and other requirements protecting riparian areas, including riparian vegetation and fish habitat.

    A “stream” in the province of BC is broadly defined in the RAR to include the following that provides fish habitat:

    • (a) a watercourse, whether it usually contains water or not;
    • (b) a pond, lake, river, creek or brook;
    • (c) a ditch, spring or wetland that is connected by surface flow to something referred to in paragraph (a) or (b);

    Riparian vegetation and streams are protected by the Federal Fisheries Act; the Provincial Riparian Areas Protection Act, and the Water Act. Municipal bylaws may also apply.

    While licensees are not expected to be experts in the Riparian Areas Regulation, they are expected to be alert to the implications of RAR and are obliged to advise clients who are buying, selling or developing property that is impacted by the legislation to seek independent professional advice.

    In instances where a “stream”, as defined above is present, licensees drafting contracts of purchase and sale should incorporate the following clause:

    Riparian Areas Protection Act Clause

    Subject to the Buyer receiving and approving independent professional advice concerning any limitations on the use and/or development of the property resulting from the Riparian Areas Protection Act, on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the RAR applies to a property, the local government will require the riparian area and development to first be assessed by a Qualified Environmental Professional (QEP) such as a Registered Professional Biologist (R.P.Bio.) to determine a Streamside Protection and Enhancement Area (SPEA), which is defined as a setback that protects degradation of fish habitat. The SPEA is delineated by a QEP as part of RAR to protect fish habitat from land alteration including consideration of sediment and erosion control; damage or alteration of vegetation, and trails and landscaping.

    For a list of regional districts and municipalities where the RAR applies visit:

    www.env.gov.bc.ca/habitat/fish_protection_act/riparian/documents/applicable_regulations_table.pdf  — will open in a new tab

    For more information about riparian areas visit:

    www.env.gov.bc.ca/habitat/fish_protection_act/riparian/riparian_areas.html  — will open in a new tab

    www.livingbywater.ca  — will open in a new tab

    www.stewardshipcentre.bc.ca  — will open in a new tab

Franchises

  • Subject to Franchisor Approving Assignment of Franchise Clause

    Excerpt from Trading Services | Section10. Sale Of A Business

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    (i) Sale of Franchise Requires Real Estate Licence

    Subject to the licensing exemptions, a sale of a franchise as an operating business, whether sold on behalf of the franchisor or of the franchisee, is governed by the requirements of RESA if the business also includes the sale or lease of real property.

    Buyer Approving Franchise Agreement Clause

    Subject to the Buyer receiving, perusing and being satisfied with the franchise agreement on or before (date) .

    This condition is for the sole benefit of the Buyer.

    The licensee should allow time on the contract for the seller to provide the documents to the buyer and to allow the buyer time to review them.

    Franchisor Approving Assignment of Franchise Clause

    Subject to the franchisor’s written approval of the assignment of the franchise on or before (date) .

    This condition is for the benefit of both the Buyer and the Seller.

  • Subject to Buyer Approving Franchise Agreement Clause

    Excerpt from Trading Services | Section10. Sale Of A Business

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    (i) Sale of Franchise Requires Real Estate Licence

    Subject to the licensing exemptions, a sale of a franchise as an operating business, whether sold on behalf of the franchisor or of the franchisee, is governed by the requirements of RESA if the business also includes the sale or lease of real property.

    Buyer Approving Franchise Agreement Clause

    Subject to the Buyer receiving, perusing and being satisfied with the franchise agreement on or before (date) .

    This condition is for the sole benefit of the Buyer.

    The licensee should allow time on the contract for the seller to provide the documents to the buyer and to allow the buyer time to review them.

    Franchisor Approving Assignment of Franchise Clause

    Subject to the franchisor’s written approval of the assignment of the franchise on or before (date) .

    This condition is for the benefit of both the Buyer and the Seller.

GST

  • Buyer's Responsibility to Pay GST Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xx) Goods and Services Tax (GST)

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    The application of the Goods and Services Tax (GST) to real estate transactions is complex. Generally speaking, GST applies to the sale or rental of real estate unless the sale or rental is exempt.

    Exemptions may include but are not restricted to the following: residential rents, sales of used residential housing other than substantially renovated property, sales of personal-use land by an individual or an estate, certain sales of farmland to related individuals where the farmland is for personal use, and most sales and rentals of real property by charities, non-profit organizations and other public-service organizations.

    NOTE: Licensees are responsible for the accuracy of any advice they may provide concerning the application of GST to real estate transactions. Both the buyer and the seller should be advised that if they have any questions regarding GST liability, exemptions, or their right to apply for a rebate, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office.

    On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal GST and the BC Provincial Sales Tax (PST).  For any contracts entered into prior to April 1, 2013, and which close after April 1, 2013, there are certain rules for the transition from HST to GST and PST that may impact a buyer or seller’s obligations with respect to the payment of GST or PST. If a buyer or seller has entered into a Contract of Purchase and Sale prior to April 1, 2013, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office with respect to the application of such transitional rules.

    There are brochures and GST memoranda available at Canada Revenue Agency offices that licensees may find useful regarding current rebate limits and exemptions, including the GST New Housing Rebate brochure RC4028(E). Licensees in smaller centres not served by a Canada Revenue Agency office may call 1-800-959-1953. On the Internet, government publications are available at www.cra-arc.gc.ca  — will open in a new tab.

    Where the buyer has not received independent advice regarding GST liability, exemptions, or rebates, prior to entering into a Contract of Purchase and Sale, the following clause should be inserted into the Contract:

    Receipt of Information or Professional Advice by Buyer/Seller Concerning GST Liability Clause

    Subject to the (select either Buyer or Seller) receiving and approving information or professional advice concerning the (select either Buyer or Seller) GST liability, GST exemptions or GST rebates, on or before (date) .

    This condition is for the sole benefit of the (select either Buyer or Seller) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Before using the following clauses in the written contract, licensees must clearly indicate whether GST, if applicable, is included in the purchase price or if it is in addition to the purchase price. The following clause should be inserted into the contract for this purpose

    Purchase Price to Include/Not Include GST Clause

    The purchase price to (select either include/not include) GST.

    Where the buyer acknowledges responsibility for paying the GST, the licensee should insert the following clause into the contract:

    Buyer’s Responsibility to Pay GST Clause

    The Buyer confirms the receipt of independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any GST rebate in connection with this transaction.

    Where, for some reason, the seller agrees to pay GST on behalf of the buyer, the licensee should insert the following clause into the contract:

    Seller’s Agreement To Pay GST Clause

    The Seller will pay any GST in connection with this transaction and the Buyer will assign any rebate entitlement to the Seller.

    Of course, the above-noted clauses can be amended or worded to fit a particular situation.

    NOTE: Because of the complexity of the application of the Goods and Services Tax to real estate transactions, it is strongly recommended that licensees not give advice with respect to the application of the Goods and Services Tax to particular situations. If the wrong advice is given, the licensee may be liable for any problems that might arise as a result of incorrect advice.
  • Eligibility for GST Rebate Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xix) Goods and Services Tax - View Subsection

    (1) GST: New Housing Rebates

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    Licensees should be aware that GST is payable not only on new homes (including strata units and manufactured homes), but also on substantially renovated homes, as well. Sellers may need to obtain a ruling from the local GST office on what constitutes ‘‘substantial’’ and keep a record of the official who rendered that opinion.

    Sellers of new homes use various ways to present the GST and the New Housing Rebate to prospective buyers. There are now at least four different combinations that buyers may face:

    • price includes GST; rebate to builder;
    • price includes GST; rebate to buyer;
    • GST over purchase price; rebate to buyer; and
    • GST over purchase price; rebate to builder.

    It is the buyer, however, who is ultimately going to pay the GST, whether it is included in the purchase price or added to the price. It is also the buyer who is entitled to the New Housing Rebate, which the buyer can claim directly from Canada Revenue Agency or assign to the seller, who can claim it from Canada Revenue Agency. If the rebate is transferred to the seller, negotiations between the seller and the buyer should result in a saving to the buyer of the equivalent amount in the purchase price; however, it is expressed as either GST included in, or added to, the purchase price.

    In the written contract, licensees must clearly indicate whether or not GST is included and who is being paid the rebate (if applicable). Licensees should leave the calculation of the exact amounts to the notary/lawyer acting as conveyancer ( just as the notary/lawyer calculates tax and utility adjustments, not the licensee).

    Many developers/builders have their own preprinted GST clauses. A licensee working with an interested buyer should ask for these clauses in advance of the offer and have the buyer discuss them with independent counsel.

    If the GST rebate is being credited to the seller, the following clause should be included in the contract:

    GST: New Housing Rebate Clause

    If the Buyer is not eligible for the New Housing Rebate, or does not complete or execute the documentation to assign the benefit of the rebate to the Seller on the closing date, the purchase price shall be increased by an amount equal to the New Housing Rebate that would have been otherwise available with respect to this purchase. If the Canada Revenue Agency disallows all or any part of the rebate claimed, the Buyer will immediately, upon receiving a written demand from the Seller, reimburse such disallowed amount to the Seller together with any interest and penalties that the Seller is required to pay under the Excise Act as a result of such disallowance.

    An additional form of confirmation for both parties of GST Rebate eligibility is the following clause to be added to the Contract of Purchase and Sale. Licensees should confirm current rebate parameters before using this clause:

    NOTE: The GST New Housing Rebate falls under the Canadian Excise Act. Some buyers may not qualify for the rebate and there is a ceiling to the value of the rebate.

    Eligibility for GST Rebate Clause

    The Buyer confirms that he or she is purchasing the property for use as a principal residence or that of a qualified relative, and hereby is entitled to the GST New Housing Rebate. The Seller and Buyer agree that the purchase price includes GST based on the Buyer assigning any applicable Rebate to the Seller, and that the price reflects the credit given by the Seller to the Buyer for this assignment. The price includes GST payable by the Seller and net of any applicable Rebate. The Buyer hereby assigns the Rebate, if any, to the Seller, and agrees to sign the Rebate application and any other documents necessary to have the Rebate paid or credited to the Seller. If the Buyer is not entitled to the Rebate for any reason, he or she shall immediately remit the amount claimed to Canada Revenue Agency, and/or indemnify the Seller for the loss of the Rebate. The Seller is relying on the Buyer’s declaration of entitlement to the Rebate and shall not be responsible if the claim is disallowed.

    The Seller is to include the GST in the purchase price of the property. The Buyer will execute all documentation necessary to assign the Rebate to the Seller on Completion. The Buyer will occupy the premises.

    The full GST New Housing Rebate for the GST applies only to properties with a value of $350,000 or less. The amount of the rebate for the GST New Housing Rebate is reduced on properties valued between $350,000 and $450,000. There is no GST New Housing Rebate for the GST for properties that are valued at $450,000 or higher.

    As these amounts can change, licensees should check with the Canada Revenue Agency at www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html  — will open in a new tab.

  • GST: New Housing Rebate Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xix) Goods and Services Tax - View Subsection

    (1) GST: New Housing Rebates

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    Licensees should be aware that GST is payable not only on new homes (including strata units and manufactured homes), but also on substantially renovated homes, as well. Sellers may need to obtain a ruling from the local GST office on what constitutes ‘‘substantial’’ and keep a record of the official who rendered that opinion.

    Sellers of new homes use various ways to present the GST and the New Housing Rebate to prospective buyers. There are now at least four different combinations that buyers may face:

    • price includes GST; rebate to builder;
    • price includes GST; rebate to buyer;
    • GST over purchase price; rebate to buyer; and
    • GST over purchase price; rebate to builder.

    It is the buyer, however, who is ultimately going to pay the GST, whether it is included in the purchase price or added to the price. It is also the buyer who is entitled to the New Housing Rebate, which the buyer can claim directly from Canada Revenue Agency or assign to the seller, who can claim it from Canada Revenue Agency. If the rebate is transferred to the seller, negotiations between the seller and the buyer should result in a saving to the buyer of the equivalent amount in the purchase price; however, it is expressed as either GST included in, or added to, the purchase price.

    In the written contract, licensees must clearly indicate whether or not GST is included and who is being paid the rebate (if applicable). Licensees should leave the calculation of the exact amounts to the notary/lawyer acting as conveyancer ( just as the notary/lawyer calculates tax and utility adjustments, not the licensee).

    Many developers/builders have their own preprinted GST clauses. A licensee working with an interested buyer should ask for these clauses in advance of the offer and have the buyer discuss them with independent counsel.

    If the GST rebate is being credited to the seller, the following clause should be included in the contract:

    GST: New Housing Rebate Clause

    If the Buyer is not eligible for the New Housing Rebate, or does not complete or execute the documentation to assign the benefit of the rebate to the Seller on the closing date, the purchase price shall be increased by an amount equal to the New Housing Rebate that would have been otherwise available with respect to this purchase. If the Canada Revenue Agency disallows all or any part of the rebate claimed, the Buyer will immediately, upon receiving a written demand from the Seller, reimburse such disallowed amount to the Seller together with any interest and penalties that the Seller is required to pay under the Excise Act as a result of such disallowance.

    An additional form of confirmation for both parties of GST Rebate eligibility is the following clause to be added to the Contract of Purchase and Sale. Licensees should confirm current rebate parameters before using this clause:

    NOTE: The GST New Housing Rebate falls under the Canadian Excise Act. Some buyers may not qualify for the rebate and there is a ceiling to the value of the rebate.

    Eligibility for GST Rebate Clause

    The Buyer confirms that he or she is purchasing the property for use as a principal residence or that of a qualified relative, and hereby is entitled to the GST New Housing Rebate. The Seller and Buyer agree that the purchase price includes GST based on the Buyer assigning any applicable Rebate to the Seller, and that the price reflects the credit given by the Seller to the Buyer for this assignment. The price includes GST payable by the Seller and net of any applicable Rebate. The Buyer hereby assigns the Rebate, if any, to the Seller, and agrees to sign the Rebate application and any other documents necessary to have the Rebate paid or credited to the Seller. If the Buyer is not entitled to the Rebate for any reason, he or she shall immediately remit the amount claimed to Canada Revenue Agency, and/or indemnify the Seller for the loss of the Rebate. The Seller is relying on the Buyer’s declaration of entitlement to the Rebate and shall not be responsible if the claim is disallowed.

    The Seller is to include the GST in the purchase price of the property. The Buyer will execute all documentation necessary to assign the Rebate to the Seller on Completion. The Buyer will occupy the premises.

    The full GST New Housing Rebate for the GST applies only to properties with a value of $350,000 or less. The amount of the rebate for the GST New Housing Rebate is reduced on properties valued between $350,000 and $450,000. There is no GST New Housing Rebate for the GST for properties that are valued at $450,000 or higher.

    As these amounts can change, licensees should check with the Canada Revenue Agency at www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html  — will open in a new tab.

  • Purchase Price to Include/Not Include GST Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses 

    (xx) Goods and Services Tax (GST)

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    The application of the Goods and Services Tax (GST) to real estate transactions is complex. Generally speaking, GST applies to the sale or rental of real estate unless the sale or rental is exempt.

    Exemptions may include but are not restricted to the following: residential rents, sales of used residential housing other than substantially renovated property, sales of personal-use land by an individual or an estate, certain sales of farmland to related individuals where the farmland is for personal use, and most sales and rentals of real property by charities, non-profit organizations and other public-service organizations.

    NOTE: Licensees are responsible for the accuracy of any advice they may provide concerning the application of GST to real estate transactions. Both the buyer and the seller should be advised that if they have any questions regarding GST liability, exemptions, or their right to apply for a rebate, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office.

    On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal GST and the BC Provincial Sales Tax (PST).  For any contracts entered into prior to April 1, 2013, and which close after April 1, 2013, there are certain rules for the transition from HST to GST and PST that may impact a buyer or seller’s obligations with respect to the payment of GST or PST. If a buyer or seller has entered into a Contract of Purchase and Sale prior to April 1, 2013, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office with respect to the application of such transitional rules.

    There are brochures and GST memoranda available at Canada Revenue Agency offices that licensees may find useful regarding current rebate limits and exemptions, including the GST New Housing Rebate brochure RC4028(E). Licensees in smaller centres not served by a Canada Revenue Agency office may call 1-800-959-1953. On the Internet, government publications are available at www.cra-arc.gc.ca  — will open in a new tab.

    Where the buyer has not received independent advice regarding GST liability, exemptions, or rebates, prior to entering into a Contract of Purchase and Sale, the following clause should be inserted into the Contract:

    Receipt of Information or Professional Advice by Buyer/Seller Concerning GST Liability Clause

    Subject to the (select either Buyer or Seller) receiving and approving information or professional advice concerning the (select either Buyer or Seller) GST liability, GST exemptions or GST rebates, on or before (date) .

    This condition is for the sole benefit of the (select either Buyer or Seller) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

    Before using the following clauses in the written contract, licensees must clearly indicate whether GST, if applicable, is included in the purchase price or if it is in addition to the purchase price. The following clause should be inserted into the contract for this purpose

    Purchase Price to Include/Not Include GST Clause

    The purchase price to (select either include/not include) GST.

    Where the buyer acknowledges responsibility for paying the GST, the licensee should insert the following clause into the contract:

    Buyer’s Responsibility to Pay GST Clause

    The Buyer confirms the receipt of independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any GST rebate in connection with this transaction.

    Where, for some reason, the seller agrees to pay GST on behalf of the buyer, the licensee should insert the following clause into the contract:

    Seller’s Agreement To Pay GST Clause

    The Seller will pay any GST in connection with this transaction and the Buyer will assign any rebate entitlement to the Seller.

    Of course, the above-noted clauses can be amended or worded to fit a particular situation.

    NOTE: Because of the complexity of the application of the Goods and Services Tax to real estate transactions, it is strongly recommended that licensees not give advice with respect to the application of the Goods and Services Tax to particular situations. If the wrong advice is given, the licensee may be liable for any problems that might arise as a result of incorrect advice.

  • Receipt of Information or Professional Advice by Buyer/Seller Concerning GST Liability Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses

    (xx) Goods and Services Tax (GST)

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    The application of the Goods and Services Tax (GST) to real estate transactions is complex. Generally speaking, GST applies to the sale or rental of real estate unless the sale or rental is exempt.

    Exemptions may include but are not restricted to the following: residential rents, sales of used residential housing other than substantially renovated property, sales of personal-use land by an individual or an estate, certain sales of farmland to related individuals where the farmland is for personal use, and most sales and rentals of real property by charities, non-profit organizations and other public-service organizations.

    NOTE: Licensees are responsible for the accuracy of any advice they may provide concerning the application of GST to real estate transactions. Both the buyer and the seller should be advised that if they have any questions regarding GST liability, exemptions, or their right to apply for a rebate, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office.

    On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal GST and the BC Provincial Sales Tax (PST).  For any contracts entered into prior to April 1, 2013, and which close after April 1, 2013, there are certain rules for the transition from HST to GST and PST that may impact a buyer or seller’s obligations with respect to the payment of GST or PST. If a buyer or seller has entered into a Contract of Purchase and Sale prior to April 1, 2013, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office with respect to the application of such transitional rules.

    There are brochures and GST memoranda available at Canada Revenue Agency offices that licensees may find useful regarding current rebate limits and exemptions, including the GST New Housing Rebate brochure RC4028(E). Licensees in smaller centres not served by a Canada Revenue Agency office may call 1-800-959-1953. On the Internet, government publications are available at www.cra-arc.gc.ca  — will open in a new tab.

    Where the buyer has not received independent advice regarding GST liability, exemptions, or rebates, prior to entering into a Contract of Purchase and Sale, the following clause should be inserted into the Contract:

    Receipt of Information or Professional Advice by Buyer/Seller Concerning GST Liability Clause

    Subject to the (select either Buyer or Seller) receiving and approving information or professional advice concerning the (select either Buyer or Seller) GST liability, GST exemptions or GST rebates, on or before (date) .

    This condition is for the sole benefit of the (select either Buyer or Seller) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

    Before using the following clauses in the written contract, licensees must clearly indicate whether GST, if applicable, is included in the purchase price or if it is in addition to the purchase price. The following clause should be inserted into the contract for this purpose

    Purchase Price to Include/Not Include GST Clause

    The purchase price to (select either include/not include) GST.

    Where the buyer acknowledges responsibility for paying the GST, the licensee should insert the following clause into the contract:

    Buyer’s Responsibility to Pay GST Clause

    The Buyer confirms the receipt of independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any GST rebate in connection with this transaction.

    Where, for some reason, the seller agrees to pay GST on behalf of the buyer, the licensee should insert the following clause into the contract:

    Seller’s Agreement To Pay GST Clause

    The Seller will pay any GST in connection with this transaction and the Buyer will assign any rebate entitlement to the Seller.

    Of course, the above-noted clauses can be amended or worded to fit a particular situation.

    NOTE: Because of the complexity of the application of the Goods and Services Tax to real estate transactions, it is strongly recommended that licensees not give advice with respect to the application of the Goods and Services Tax to particular situations. If the wrong advice is given, the licensee may be liable for any problems that might arise as a result of incorrect advice.

  • Seller's Agreement to Pay GST Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses

    (xx) Goods and Services Tax (GST)

    [04/09/2013 The following information updated to reflect switch back to GST]
    [08/24/2010 The following information updated to reflect switch to HST]

    The application of the Goods and Services Tax (GST) to real estate transactions is complex. Generally speaking, GST applies to the sale or rental of real estate unless the sale or rental is exempt.

    Exemptions may include but are not restricted to the following: residential rents, sales of used residential housing other than substantially renovated property, sales of personal-use land by an individual or an estate, certain sales of farmland to related individuals where the farmland is for personal use, and most sales and rentals of real property by charities, non-profit organizations and other public-service organizations.

    NOTE: Licensees are responsible for the accuracy of any advice they may provide concerning the application of GST to real estate transactions. Both the buyer and the seller should be advised that if they have any questions regarding GST liability, exemptions, or their right to apply for a rebate, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office.

    On April 1, 2013, the Harmonized Sales Tax (HST) was replaced by the federal GST and the BC Provincial Sales Tax (PST).  For any contracts entered into prior to April 1, 2013, and which close after April 1, 2013, there are certain rules for the transition from HST to GST and PST that may impact a buyer or seller’s obligations with respect to the payment of GST or PST. If a buyer or seller has entered into a Contract of Purchase and Sale prior to April 1, 2013, they should contact a lawyer, accountant or the nearest Canada Revenue Agency Office with respect to the application of such transitional rules.

    There are brochures and GST memoranda available at Canada Revenue Agency offices that licensees may find useful regarding current rebate limits and exemptions, including the GST New Housing Rebate brochure RC4028(E). Licensees in smaller centres not served by a Canada Revenue Agency office may call 1-800-959-1953. On the Internet, government publications are available at www.cra-arc.gc.ca  — will open in a new tab.

    Where the buyer has not received independent advice regarding GST liability, exemptions, or rebates, prior to entering into a Contract of Purchase and Sale, the following clause should be inserted into the Contract:

    Receipt of Information or Professional Advice by Buyer/Seller Concerning GST Liability Clause

    Subject to the (select either Buyer or Seller) receiving and approving information or professional advice concerning the (select either Buyer or Seller) GST liability, GST exemptions or GST rebates, on or before (date) .

    This condition is for the sole benefit of the (select either Buyer or Seller) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

    Before using the following clauses in the written contract, licensees must clearly indicate whether GST, if applicable, is included in the purchase price or if it is in addition to the purchase price. The following clause should be inserted into the contract for this purpose

    Purchase Price to Include/Not Include GST Clause

    The purchase price to (select either include/not include) GST.

    Where the buyer acknowledges responsibility for paying the GST, the licensee should insert the following clause into the contract:

    Buyer’s Responsibility to Pay GST Clause

    The Buyer confirms the receipt of independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any GST rebate in connection with this transaction.

    Where, for some reason, the seller agrees to pay GST on behalf of the buyer, the licensee should insert the following clause into the contract:

    Seller’s Agreement To Pay GST Clause

    The Seller will pay any GST in connection with this transaction and the Buyer will assign any rebate entitlement to the Seller.

    Of course, the above-noted clauses can be amended or worded to fit a particular situation.

    NOTE: Because of the complexity of the application of the Goods and Services Tax to real estate transactions, it is strongly recommended that licensees not give advice with respect to the application of the Goods and Services Tax to particular situations. If the wrong advice is given, the licensee may be liable for any problems that might arise as a result of incorrect advice.

Heritage

  • Heritage Conservation Act Clause

    Excerpt from Trading Services | Section 3. Acting For Buyers

    Go To

    (n) Items Affecting A Property - View Entire Section

    (i) Issues Affecting an Owner’s Interests - View Subsection

    (5) Heritage Conservation Act

    While the intent of the Heritage Conservation Act  — will open in a new tab with respect to archaeological sites is to balance a respect for heritage and a property owner’s right to develop, some private landowners may face costly archaeological studies and/or limited use of their land.

    The Heritage Conservation Act is concerned with activities that may alter heritage sites automatically protected under the legislation. While it is not likely to affect properties where there is no intended change of use, it could have an impact where a change in that use is contemplated (e.g., subdivision, new construction, construction of an addition or pool).

    If the intent of a property owner or potential buyer is to subdivide the property, then, as part of the process of subdivision, the proposal may be referred by the local municipality or regional district to the Archaeology Branch (of the Ministry of Tourism, Culture and the Arts) to determine if an archaeological assessment is recommended. The cost of such an assessment would be borne by the property owner and can be substantial.

    Further, the Local Government Act  — will open in a new tab gives municipalities and regional districts the power to pass bylaws to withhold the issuance of building permits if they would result in an alteration to protected heritage property.

    Licensees should be aware that archaeological sites are not at this time commonly noted on the title of affected properties. However, the statute applies regardless of whether or not the notice is registered on title.

    What significance does this have for licensees? Based on court decisions in similar situations, it is likely that a court would find a licensee has a duty to know whether there are archaeologically sensitive areas in the community in which they work and, if so, whether a search for archaeological sites may provide necessary information for a seller or a buyer.

    The first potential source of that information is the local municipality or regional district. However, not all municipalities and regional districts maintain up-to-date information respecting archaeological sites. The second source is the Archaeology Branch. Its website (www.for.gov.bc.ca/archaeology/index.htm  — will open in a new tab) contains a broad range of information on the Heritage Conservation Act and its application, including a Data Request Form for requesting information about specific sites. Most requests for information about a specific site can be answered within four to five days. More detailed enquiries may require up to two weeks.

    Licensees can also request from the Archaeology Branch a copy of a map that identifies registered sites in a specific region of the province. These sites are more likely to be clustered around existing urban areas, major rivers or other waterways, and other areas that are most attractive for human habitation.

    A prudent licensee working with a buyer who becomes interested in a particular property will want to determine if the proposed use or redevelopment of that property will result in ground alteration that might be affected by Heritage Conservation Act. If the buyer does intend to alter the use, the following clause should be incorporated into the Contract of Purchase and Sale:

    Heritage Conservation Act Clause

    Subject to the Buyer satisfying himself/herself on or before(date) regarding the potential effect of the Heritage Conservation Act on the use and/or development of the property.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    The Archaeology Branch may be contacted as follows:

    Ministry of Tourism, Culture and the Arts Archaeology Branch

    PO Box 9375, Stn. Prov. Govt.

    Victoria, B.C. V8W 9M5

    Tel: 250-952-5021

    Fax: 250-952-4188

    Website: www.for.gov.bc.ca/archaeology/index.htm  — will open in a new tab

Homeowners Protection Act

  • Licensed Builder and Warranty Insurance Clauses (Option I)

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) New Home Warranty - View Subsection

    (2) Limits on Coverage

    Coverage on claims is as follows:

    • Fee simple (primarily detached dwelling units):
      • The lesser of the first owner’s purchase price or $200,000.
    • Strata homes:
      • Strata unit: lesser of the first owner’s purchase price or $100,000.
      • Common property: the lesser of $100,000 X the number of dwelling units in the building or $2.5 million per building.

    The following are suggested clauses for use with respect to new-construction warranties where the seller is not an owner-builder:

    Licensed Builder and Warranty Insurance Clauses

    Subject to the Buyer confirming on or before (date) that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    This condition is for the sole benefit of the Buyer.

    OR

    The Seller represents and warrants that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    The Seller will provide to the Buyer on or before (date) all details of the warranty insurance coverage pursuant to the Homeowner Protection Act.

  • Licensed Builder and Warranty Insurance Clauses (Option II)

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) New Home Warranty - View Subsection

    (2) Limits on Coverage

    Coverage on claims is as follows:

    • Fee simple (primarily detached dwelling units):
      • The lesser of the first owner’s purchase price or $200,000.
    • Strata homes:
      • Strata unit: lesser of the first owner’s purchase price or $100,000.
      • Common property: the lesser of $100,000 X the number of dwelling units in the building or $2.5 million per building.

    The following are suggested clauses for use with respect to new-construction warranties where the seller is not an owner-builder:

    Licensed Builder and Warranty Insurance Clauses

    Subject to the Buyer confirming on or before (date) that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    This condition is for the sole benefit of the Buyer.

    OR

    The Seller represents and warrants that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    The Seller will provide to the Buyer on or before (date) all details of the warranty insurance coverage pursuant to the Homeowner Protection Act.

  • Receipt of Home Warranty Insurance Documents Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) Home Warranty Insurance on Resale Homes

    The Homeowner Protection Act creates certain warranty insurance disclosure requirements for warranty providers, but does not place any requirement on future owners to ensure that they provide details on the home warranty insurance to subsequent buyers.

    Home warranty insurance stays with the property. Therefore, if information on the warranty insurance is not provided to a subsequent buyer, it does not mean that a claim cannot be made on the policy.

    Subsequent buyers should be provided copies of home warranty insurance documents, including information regarding the expiry dates associated with the policy. Not being aware of the expiry dates could result in missing the opportunity to submit a claim under the policy. If such documents have not been provided to a buyer at the time an offer is being written, the Contract of Purchase and Sale should include a clause that makes the contract conditional on the seller providing home warranty insurance documents to the buyer, and the buyer having an opportunity to review and accept the policy. While the buyer will not be able to change the level of coverage provided under warranty, he or she may be concerned about the length of the remaining term of the policy. Wording such as the following should be used in these circumstances.

    Receipt of Home Warranty Insurance Documents Clause

    Subject to the Seller providing to the Buyer a copy of the home warranty insurance policy, and the Buyer being satisfied as to this policy, on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

  • Receipt of Owner-Builder Disclosure Notice Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (vii) Owner-Builder Disclosure Notice

    Owner builders who built their home prior to November 19, 2007 must continue to provide prospective purchasers with the old-form Owner-Builder Declaration and Disclosure Notice within the first 10 years after occupancy.

    Owner builders building under an Owner-Builder Authorization (after November 19, 2007) are required to provide an Owner-Builder Disclosure Notice, obtained from the Licensing and Consumer Services branch of BC Housing, to prospective purchasers within the first 10 years after occupancy. The owner-builder must advise the Licensing and Consumer Services branch of BC Housing of the occupancy date and the Licensing and Consumer Services branch of BC Housing does not release the Disclosure Notice until the one-year occupancy requirement has been verified. Subsequent purchasers are also required to provide the Disclosure Notice if they sell the home within the 10-year period. The Disclosure Notice will state that the home was built under an Owner-Builder Authorization, when the 10-year period started, and whether or not there is a voluntary policy of home warranty insurance in place for the home.

    NOTE: A survey of owner-builders conducted in 2007 found that the majority of purchasers of owner-built homes did not receive a disclosure notice and did not know whether or not their home had home warranty insurance. Not providing a disclosure notice is an offence under the legislation and, thanks to stronger compliance tools now available to the Licensing and Consumer Services branch of BC Housing, the requirement to provide the disclosure notice will receive increased attention.

    When a licensee represents a seller who is an owner-builder, or who is a subsequent owner within the first 10 years as required by the HPA Regulations, the licensee should insert a clause in the Contract of Purchase and Sale confirming delivery of the Owner-Builder Disclosure Notice as follows:

    Receipt of Owner-Builder Disclosure Notice Clause

    The Buyer acknowledges having received a copy of the Owner-Builder Disclosure Notice dated (date) , prior to making this offer, in accordance with the Homeowner Protection Act and regulations.

Inspection

  • Buyer's Site Profile Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .

    The Seller will allow access to the property for this purpose on reasonable notice.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .

    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert**

    Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.

  • Inspection of Property Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxiv) Property Inspections

    In recent years, pre-purchase property inspections have become more common in the marketplace. RECBC considers this a positive development in that a property inspection will assist the buyer in understanding, prior to the purchase, the condition of the property and what repairs may be necessary.

    For this reason, a buyer’s agent should always advise a buyer to have an independent inspection of a property and the licensee should explain the importance of why such an inspection is necessary and that licensees are typically not qualified to provide home inspection advice. If a buyer chooses not to have an inspection, the agent’s advice to do so should be documented. This documentation can take one of several forms.

    Some market areas and/or agents have developed a contract addendum that specifies additional terms to be included in all Contracts of Purchase and Sale. Such an addendum might include a clause such as the one that follows, when the buyer is to have the property inspected.

    Inspection of Property Clause

    Subject to the Buyer, on or before (date) at the Buyer’s expense, obtaining and approving an inspection report against any defects whose cumulative cost of repair exceeds (select a monetary value) and which reasonably may adversely affect the property’s use or value.

    The Seller will allow access to the property for this purpose on reasonable notice.

    This condition is for the sole benefit of the Buyer.

    Alternatively, where such a preprinted addendum is not used and the buyer chooses not to have the property inspected after having been so advised, the licensee should provide separate documentation of this fact by way of a letter addressed to the buyer confirming that on a particular date, the buyer was advised to have the property inspected but chose not to do so. A copy of this confirmation letter should be kept in the brokerage’s transaction file.

    In some cases, in addition to a buyer wanting to have the property inspected, a seller may also want such an inspection before listing the property for sale so that the seller is aware of what issues the property inspection report may identify.

    If a licensee intends to refer clients to a property inspector, the safest way to do so is to provide a list of at least three professionals with whom the licensee, or others he or she knows, has dealt and have the client call, interview, and select them independently. It is recommended that licensees avoid ‘‘steering’’ buyers towards particular service providers or communicating information about their fees.

    Effective March 1, 2009, providing a property inspection for a fee became an activity for which a licence is required. Consumer Protection B.C. is the agency responsible for property inspector licensing. For further information, visit www.consumerprotectionbc.ca  — will open in a new tab.

    Licensees should exercise care in selecting those to be included in this list of service providers. Before making a referral, licensees should, ensure the individual is properly licensed, consider the inspector’s experience and credentials and also what insurance coverage the inspector carries, such as errors and omissions insurance, liability insurance and worker’s compensation coverage.

    Once a buyer has determined which property inspector is to be used, licensees must respect the client relationship this creates between the buyer and the property inspector. The buyer is paying the property inspector for professional advice with respect to the condition of the property he or she is considering purchasing. Licensees should not attempt to thwart that relationship either by downplaying the importance of deficiencies noted by property inspectors or by making disparaging comments about the buyer’s choice of property inspectors.

    As with any subject clause, the length of time allowed for its removal should be reasonable while not being unnecessarily long. In the case of property inspections, sufficient time is required to arrange and conduct the inspection, prepare the report, and have the report reviewed by the buyer. The goal is to ensure the buyer has full knowledge of the results of the inspection and, if necessary, clarification from the inspector or any other qualified person as required.

    In order to avoid the possibility or even the appearance of a conflict of interest, licensees are advised not to pay the cost of the inspection report on behalf of a buyer. If the licensee were to pay, the inspector could be suspected of not wanting to jeopardize the transaction of the person paying him or her, who might or might not ask for his or her services in the future, depending on the conclusions of the inspection report.

    Finally, as with any referral, section 5-11 of the Rules requires that if a licensee is to receive a referral fee or other consideration from a property inspector, this must be disclosed in writing to the licensee’s client.

    A question often arises whether the seller’s agent should be present during the inspection. RECBC recommends that the seller’s agent either be present or obtain permission from the seller that the seller’s agent is not required to be present during the inspection. In making this decision, the seller should be advised whether the buyer and/or the buyer’s agent intend to be present when the property inspector views the property. If the seller agrees that the seller’s agent does not need to be present, the seller’s agent should obtain the full name and address of the inspector as well as information on whether the inspector is bonded.

  • Inspection/Testing/Government Approval Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .

    The Seller will allow access to the property for this purpose on reasonable notice.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .

    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert**

    Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.

  • Seller's Site Profile Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (7) Safety, Health and Environmental Disclosure Clauses

    NOTE: The clauses in this section may be used for a wide variety of situations involving possible latent defects. Some clauses allow a seller to disclose or warrant and the buyer to acknowledge and accept (or accept the warranty of) the latent defects previously described. They can be used for situations not adequately covered by a Property Disclosure Statement.

    Examples include, but are not limited to:

    • potability of water;
    • quantity of water;
    • adequacy of sewage disposal/treatment;
    • suitability of site topography;
    • drainage;
    • soil quality;
    • urea formaldehyde insulation;
    • asbestos;
    • underground oil storage tanks; and
    • contaminated material.

    Inspection/Testing/Government Approval Clause

    Subject to the Buyer receiving and being satisfied with a site inspection and report from (select inspecting body or expert tester or government authority) , concerning (describe condition) on or before (date) .

    The Seller will allow access to the property for this purpose on reasonable notice.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Possible Safety, Health or Environmental Condition Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) contains (describe condition) and the Buyer accepts the (select either building or property) in this condition.

    UFFI and Asbestos Insulation Disclosure Clause

    The Seller discloses, and the Buyer acknowledges, that the (select either building or property) (select either contains or has contained) (type of insulation) and the Buyer accepts the (select either building or property) in this condition.

    Seller’s Disclosure Where Condition Has Been Tested Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) , on (date) by (name of testing contractor or government authority) .

    The results of the test indicated that no (describe condition) was present (select either in or on) the (select either building or property) . As evidence of such testing, the Seller attaches the following documents:

    (List)

    The buyer accepts the condition of the (select either building or property) in reliance on these documents.

    Seller’s Disclosure Where Condition Has Been Removed Clause

    The Seller discloses that, although (describe condition) was known to have been (select either in or on) the (select either building or property), such (describe condition) to the best of the Seller’s knowledge, was (select either removed or remedied) on (date) . As evidence of the (select either removal or remedy) , the Seller attaches the following documents:

    (List)

    Seller’s Disclosure but Corrective Measures Taken Clause

    The Seller discloses that the (select either building or property) did have (describe condition) but has undergone the following corrective measures:

    (List)

    The Buyer accepts the condition of the (select either building or property) in reliance on these corrective measures.

    Seller’s Disclosure but Condition at Acceptable Level Clause

    The Seller discloses that the (select either building or property) was tested for (describe condition) on (date) by (name of testing contractor or government authority) .

    The results for such testing indicated that (describe condition) is acceptable and, accordingly, no further action has been taken.

    The Buyer accepts the condition of the (select either building or property) in reliance on this testing.

    Seller’s Warranty Clause

    The Seller warrants that, to the best of the Seller’s knowledge, the (select either building or property) does not have (describe condition) .

    Buyer’s Site Profile Clause

    Subject to the Buyer reviewing and approving the site profile on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Seller’s Site Profile Clause

    The Seller, at his or her expense, will provide to the Buyer a completed site profile (Schedule 1 of the B.C. Contaminated Sites Regulation) for the subject property on or before (date) . The Seller warrants that the information contained therein is true and correct to the best of the Seller’s knowledge.

    **Alert**

    Sellers should be advised that the seller is responsible for all contamination on the property that the seller fails to disclose to a buyer. Sellers should be encouraged to obtain a site profile at the time the property is sold in order to prevent a buyer from later claiming that the property was contaminated.

Insurance

  • Fire/Property Insurance Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxii) Disclosure Issues - View Subsection

    (2) Fire/Property Insurance

    Insurance companies are more frequently declining applications for insurance coverage from individuals who have a bad insurance claim history. If, in the opinion of the insurance company, an individual has had too many claims, the insurance company may decline to provide fire/property insurance. The individual may have an existing policy in place with an insurance company but when he or she attempts to insure a different property, he or she finds the insurance company no longer wants his or her business.

    A second scenario involves the property itself. The current owner of a property may have had insurance on that property for many years and the insurance company continues to provide fire/property insurance. However, when the property is sold and a new buyer applies for insurance, the insurance company may deem at that time that the property no longer qualifies for insurance coverage. This could arise where the electrical service is less than 100 amps, or the roof is old (perhaps 25 years or older), or where the home contains galvanized plumbing, old wiring, or a wood stove that has not passed inspection. With the exception of wood stoves, the insurance provider may consider these unresolved maintenance issues.

    In a typical real estate transaction, the issue of fire/property insurance is not addressed until after the conditions are removed and, in some cases, closer to completion date. If the buyer is unsuccessful in obtaining fire/property insurance, the mortgage company is not protected and will not provide mortgage funds. The end result may be a collapsed transaction, the buyer’s deposit may be at risk, and the seller may suffer losses as a result of the transaction not proceeding.

    To adequately protect your clients, the issue should be discussed with your client, including the potential problems that might arise if the buyer were unsuccessful in obtaining insurance. The buyer should decide if a clause should be included in the offer to confirm that the property and the buyer qualify for insurance coverage. The following sample clause could be included in a Contract of Purchase and Sale in such circumstances.

    Fire/Property Insurance Clause

    This offer is subject to the Buyer obtaining approval for fire/property insurance, on terms and at rates, satisfactory to the Buyer, on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

  • Receipt of Home Warranty Insurance Documents Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) Home Warranty Insurance on Resale Homes

    The Homeowner Protection Act creates certain warranty insurance disclosure requirements for warranty providers, but does not place any requirement on future owners to ensure that they provide details on the home warranty insurance to subsequent buyers.

    Home warranty insurance stays with the property. Therefore, if information on the warranty insurance is not provided to a subsequent buyer, it does not mean that a claim cannot be made on the policy.

    Subsequent buyers should be provided copies of home warranty insurance documents, including information regarding the expiry dates associated with the policy. Not being aware of the expiry dates could result in missing the opportunity to submit a claim under the policy. If such documents have not been provided to a buyer at the time an offer is being written, the Contract of Purchase and Sale should include a clause that makes the contract conditional on the seller providing home warranty insurance documents to the buyer, and the buyer having an opportunity to review and accept the policy. While the buyer will not be able to change the level of coverage provided under warranty, he or she may be concerned about the length of the remaining term of the policy. Wording such as the following should be used in these circumstances.

    Receipt of Home Warranty Insurance Documents Clause

    Subject to the Seller providing to the Buyer a copy of the home warranty insurance policy, and the Buyer being satisfied as to this policy, on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

  • Wood Burner May Void Insurance Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxii) Disclosure Issues - View Subsection

    (1) Wood Burning Stoves/Fireplace Inserts

    Licensees should be aware that there are several factors which affect fire insurance coverage on dwellings which contain a wood burning appliance. Although the BCREA Property Disclosure Statement addresses the issue, it does not, in itself, provide sufficient evidence that the property is insured, or is insurable.

    The following issues should be addressed:

    1. The wood burning unit itself must have the appropriate CSA, UCL or other required approval, or, failing that, specific individual approval by the Insurer.

    2. The chimney must meet current municipal building code and/or insurer’s specifications.

    3. The wood burning unit must be installed with clearances and a non-combustible base that complies with municipal and/or insurer’s specifications.

    4. Application for insurance coverage must be made and notice given to the insurer that the dwelling contains a wood burning device. The insurer may then accept, surcharge or refuse the application.

    A buyer of property where a wood burning device is included should be made aware of the previously mentioned factors and the following notation should be included in the Contract of Purchase and Sale:

    Wood Burner May Void Insurance Clause

    The Buyer acknowledges and accepts that the (select either wood stove or fireplace insert and/or chimney) installed on the property may not be approved for legal use and may render any fire insurance void.

    If required, the following condition may be added to the contract:

    Wood Burner Insurance Confirmation Clause

    Subject to the Buyer obtaining confirmation from his or her insurance agent on or  before (date) that the (select either wood stove or fireplace insert and/or chimney) installed on the property will not void his or her fire insurance coverage.

    This condition is for the sole benefit of the Buyer.

  • Wood Burner Insurance Confirmation Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxii) Disclosure Issues - View Subsection

    (1) Wood Burning Stoves/Fireplace Inserts

    Licensees should be aware that there are several factors which affect fire insurance coverage on dwellings which contain a wood burning appliance. Although the BCREA Property Disclosure Statement addresses the issue, it does not, in itself, provide sufficient evidence that the property is insured, or is insurable.

    The following issues should be addressed:

    1. The wood burning unit itself must have the appropriate CSA, UCL or other required approval, or, failing that, specific individual approval by the Insurer.

    2. The chimney must meet current municipal building code and/or insurer’s specifications.

    3. The wood burning unit must be installed with clearances and a non-combustible base that complies with municipal and/or insurer’s specifications.

    4. Application for insurance coverage must be made and notice given to the insurer that the dwelling contains a wood burning device. The insurer may then accept, surcharge or refuse the application.

    A buyer of property where a wood burning device is included should be made aware of the previously mentioned factors and the following notation should be included in the Contract of Purchase and Sale:

    Wood Burner May Void Insurance Clause

    The Buyer acknowledges and accepts that the (select either wood stove or fireplace insert and/or chimney) installed on the property may not be approved for legal use and may render any fire insurance void.

    If required, the following condition may be added to the contract:

    Wood Burner Insurance Confirmation Clause

    Subject to the Buyer obtaining confirmation from his or her insurance agent on or  before (date) that the (select either wood stove or fireplace insert and/or chimney) installed on the property will not void his or her fire insurance coverage.

    This condition is for the sole benefit of the Buyer.

Lawyer Approval

  • Approval by Seller's/Buyer's Lawyer Clause

    Excerpt from Trading Services | Section 10. Sale Of A Business

    Go To

    (f) Form of Contract

    The standard residential Contract of Purchase and Sale is to be used for residential sales only, not for sales of businesses. Licensees should obtain professional advice from lawyers and accountants regarding the form of a contract. Suitable forms may be available for commercial transactions from board/association offices.

    The standard residential Contract of Purchase and Sale addressed the matter of subjective clauses by including a provision that the seller’s acceptance was irrevocable and providing that the contract was signed under seal. Because the standard residential Contract will not be used for a commercial transaction, licensees should consider whether the subject clauses used in the contract are overly subjective. Licensees should review the section regarding ‘‘ Contracts under Seal’’.

    It is recommended that all offers be written subject to the approval of the seller’s lawyer and the buyer’s lawyer and accountant within a specific time limit.

    Approval by Seller’s/Buyer’s Lawyer Clause

    Subject to (select either Seller’s or Buyer’s) lawyer approving the terms and conditions of the contract on or before (date) .

    This condition is for the sole benefit of the Seller/Buyer.

    Approval by Seller’s/Buyer’s Accountant Clause

    Subject to the Buyer’s accountant approving the financial statements on or before (date).

    This condition is for the sole benefit of the Buyer.

  • Approval of Documentation Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    Subject to the (select either Buyer or Seller) obtaining legal advice satisfactory to the Buyer or Seller concerning (select easement, builders’ lien, financing or define applicable issue)__________ on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

    (i) Obtaining Title Searches

    Licensees acting on behalf of buyers often rely on title search documents provided by the seller or, alternatively, request that the seller make such documents available for the buyer’s review.

    Buyers should be advised that it is possible for an unscrupulous individual to manipulate the title information obtained from the Land Title and Survey Authority (LTSA  — will open in a new tab). Licensees should therefore be very cautious when relying on title information provided by a party that the licensee does not know or trust and should advise buyers to rely only on documents from a reliable source such as the buyer’s agent or lawyer.

    The licensee should not provide incomplete copies of the encumbrances to the buyer because of the legal liability of doing so. Any error or omission or attempted interpretation of the documentation which misled the buyer could lead to serious consequences for the licensee. It is, therefore, best to have the buyer’s lawyer or the buyer himself or herself obtain and analyze these documents.

    Approval of Documentation Clause

    Subject to the Buyer’s(select either lawyer or accountant) approving the form of the documentation on or before (date) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

    Licensees should be aware that there may be restrictions on the property that may affect its use or value that are not registered against the title. For example, restrictions relating to Riparian Areas Regulation  — will open in a new tab under the Fish Protection Act  — will open in a new tabor archaeological sites under the Heritage Conservation Act   — will open in a new taband others that are not currently registered on title may have substantial impact on use or value.

    The title search clause, as set out above, should be used to enable the buyer to search for any charges or other features that may affect the property’s use or value.

  • Lawyer Approval of Deposit Arrangement Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (f) Deposits - View Entire Section

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.

    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Lawyer's Approval of Financing Terms Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses - View Entire Section

    (xvii) Financing Information - View Subsection

    (7) Seller To Take Back First Mortgage

    It is recommended that preparation of all seller-take-back mortgages be referred to the seller’s lawyer.

    Seller To Take Back First Mortgage Clause

    The Seller will take back a first mortgage, in a form acceptable to the Seller (which form will be provided by the Seller on or before (date) and approved by the Buyer on or before (date) , in the amount of $ (amount) at an interest rate of % per annum calculated (select either half-yearly or monthly) , not in advance, with a ___–year amortization period and ___–year term and repayable in blended payments of $ (amount) per month including principal and interest (plus 1/12 of the annual taxes, if required by the Seller).

    The mortgage will provide that if the Buyer disposes of or agrees to dispose of the property, the full balance will immediately become due and payable at the Seller’s option. The Seller will draw and register the mortgage at the Buyer’s cost.

    The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Subject to the Seller approving the Buyer’s credit report on or before (date).

    This condition is for the sole benefit of the Seller.

    NOTE: If the seller is being asked to carry a second mortgage, it is important that the listing agent find out the terms and amount of the first mortgage the buyer is contemplating. The licensee must disclose the amount of the first mortgage when writing subject clauses regarding seller-take-back mortgages. See also ‘‘Additional Mortgage/Agreement for Sale Clauses.’’ Otherwise, the seller may be inadequately secured.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the seller has not sought legal advice before signing the offer, a subject clause such as the one found below should be added allowing him or her to obtain such advice.

    Lawyer’s Approval of Financing Terms Clause

    Subject to the Seller’s lawyer approving the financing terms and conditions on or before (date). 

    This condition is for the sole benefit of the Seller.

  • Excerpt from Trading Services | Section 2. Acting For Sellers

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    (f) Deposits - View Entire Section

    (xi) Deposit To Be Held by Someone Not Regulated under RESA

    [updated September 2015]

    The parties may agree that one of the parties’ lawyers, a notary public, accountant, or indeed anyone that the parties mutually agree upon, is to receive the deposit. This agreement should be detailed in the Contract of Purchase and Sale. However, if a cash deposit is to be given to a licensee so that that licensee can deliver the cash to the person who is to hold it, another step is necessary.

    Section 27(4) describes that additional step. It requires that the seller and buyer enter into a separate written agreement which essentially relieves the licensee and the related brokerage of their obligation to deposit the money into the brokerage’s trust account. Once this separate written agreement has been executed, and the deposit clause in the Contract of Purchase and Sale has been properly amended, the licensee must ensure that the deposit is delivered to the person who is supposed to receive it.

    NOTE: Following amendments to RESA in 2015, unless the money received is cash, a separate written agreement is no longer required, so long as the brokerage takes no action in relation to the money other than to deliver it to the person to whom it is payable. If the money is cash, a separate written agreement is still required.

    To demonstrate, assume that the seller and buyer have agreed that a deposit of $1,000 is to be held by the seller’s lawyer Joe Smith. Randy Ready of ABC Realty, the buyer’s agent who is drafting the contract on behalf of the buyer, has agreed to deliver the deposit to Joe Smith. Paragraph 2 of the ‘‘standard’’ Contract of Purchase and Sale states, in part, the following:

    ‘‘2. DEPOSIT: A deposit of $1,000, which will form part of the Purchase Price, will be paid on the following terms:All monies paid pursuant to this section (Deposit) will be delivered in trust to [Name of the Party to Hold the Deposit] and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    The seller’s lawyer is not licensed under RESA and takes his instructions from the seller. He is not obliged to hold the deposit “in trust in accordance with the provisions of the Real Estate Services Act.” Therefore, the deposit clause should be amended as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.

    All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The Seller will provide irrevocable instructions to Mr. Smith to hold the Deposit in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘Joe Smith, In Trust.’’ No separate written agreement is necessary if the licensee is only to deliver the deposit cheque to the lawyer. If  the deposit in this scenario is in the form of cash, a separate written agreement under section 27(4) of RESA is still required, and that separate written agreement should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by someone who is not a licensee)

    Dated:

    Re:(‘‘Property’’)

    Between:(‘‘Seller’’)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(Contract) in respect of the Property, the Seller and Buyer agree that(Licensee), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act.

    Signed:

    Seller

    Buyer

    Licensee on behalf of the Brokerage

    Deposit To Be Held by Another Licensed Brokerage Not Otherwise Involved in the Trade

    Some brokerages have entered into service agreements with another brokerage whereby the second brokerage (the ‘‘Holding Brokerage’’) agrees to hold deposits in relation to trades involving the first brokerage — the ‘‘Service Brokerage’’. In these circumstances, section 7-1.1 of the Rules requires that there be a separate written agreement under section 27(4) of RESA wherein the parties agree that the deposit will be paid to the ‘‘Holding Brokerage’’. Section 7-1.1 of the Rules also requires that the ‘‘Holding Brokerage’’ deposits the money into a separate brokerage trust account maintained in the name of the ‘‘Service Brokerage’’.

    To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. When Randy writes offers, the deposit clause reflects this, but Randy typically agrees to deliver the deposit cheque when received.

    In this scenario, because the deposit is to be held by another brokerage, that brokerage is governed by RESA. If other deposit details are the same as in the first scenario, the Deposit clause should read as follows:

    ‘‘2. DEPOSIT: A deposit of $1,000 which will form part of the Purchase Price, will be paid on the following terms: within 24 hours of acceptance of this offer.’’

    ‘‘All monies paid pursuant to this section (Deposit) will be delivered in trust to ABC Big Realty and held in trust in accordance with the provisions of the Real Estate Services Act.’’

    In this scenario, the deposit cheque should be made payable to ‘‘ABC Big Realty, In Trust’’. The separate written agreement required by section 27(4) of RESA should contain the following components:

    Agreement Under Section 27(4) of the Real Estate Services Act (where money is to be held by a holding brokerage)

    Dated:

    Re:(‘‘Property’’)

    Between(“Seller”)

    and:(‘‘Buyer’’)

    and:(‘‘Brokerage’’)

    With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage.

    Signed:

    Seller

    Buyer

    _ Licensee on behalf of the Brokerage

    Deposit To Be Held Pursuant to the Real Estate Development Marketing Act

    When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tabsection 18  — will open in a new tab of that legislation applies. Section 18(1)  — will open in a new tab of the Real Estate Development Marketing Act states that: ‘‘A developer who receives a deposit from a purchaser in relation to a development unit must promptly place the deposit with a brokerage, lawyer, notary public or prescribed person who must hold the deposit as a trustee in a trust account in a savings institution in British Columbia.’’

    Deposits are held as a trustee under the Real Estate Development Marketing Act, which is different from how they are held as a stakeholder under RESA. One of the significant differences is that there are certain triggering events which, when they occur, oblige the trustee to release the deposit to the developer. This release takes place without the type of signed agreement of the parties required under RESA.

    There is a link in the wording between RESA and the Real Estate Development Marketing Act with respect to the treatment of deposits. RESA requires that deposits received by a brokerage under section 18  — will open in a new tab of the Real Estate Development Marketing Act be dealt with in accordance with the Real Estate Development Marketing Act.

    If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act.

    Therefore, brokerages which hold deposits related to trades that are subject to the Real Estate Development Marketing Act should familiarize themselves with the requirements of that legislation. Further information is available on the website of the Office of the Superintendent of Real Estate  — will open in a new tab.

    It is also important to recognize that scenarios 1 and 2 above also apply to trades that are subject to the Real Estate Development Marketing Act. If a licensee is going to hold or receive a deposit which the parties have agreed will be delivered to and held by someone other than that licensee’s related brokerage, a separate written agreement must be obtained.

    Other Requirements Where the Deposit Will be Held by Someone Other Than a Licensed Brokerage

    One other issue was that licensees had not advised their clients to seek legal advice where the deposit was not to be held by a brokerage under RESA. RECBC recommends that licensees advise clients to obtain such advice in any circumstance where a deposit is going to be held by a third party other than a real estate brokerage, including by one of the parties to the transaction.

    Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale:

    (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction.

    OR

    Lawyer Approval of Deposit Arrangement Clause

    Subject to the (select either Seller’s or Buyer’s) lawyer approving on or before (date) the arrangements for holding the deposit money in this transaction.

    This condition is for the sole benefit of the (select either Seller or Buyer) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the deposit is not in the trust account of a brokerage but rather in the account of a lawyer/notary, then the licensee must confirm in writing, with the signatures of all parties to the contract, that the deposit is being held by the lawyer/notary as a ‘‘stakeholder’’ and not in trust for one of the parties to the transaction.

    Licensees should be aware that some developers have created their own form of Contract of Purchase and Sale for specific projects. Some of these contracts contain specific clauses directing that a buyer’s deposit is payable directly to the developer or their legal representative and not to the brokerage’s trust account.

    If the developer is to hold the deposit, licensees should advise buyers that a developer governed by the Real Estate Development Marketing Act is not permitted to hold a deposit and the clause should be amended accordingly.

    Refer to the sections entitled ‘‘Real Estate Development Marketing Act and New Construction’’ for further information.

    Authorization To Pay Trust Money to Conveyancing Lawyer or Notary

    The ‘‘standard’’ Contract of Purchase and Sale addresses deposits and states, in part:

    The party who receives the Deposit is authorized to pay all or any portion of the Deposit to the Buyer’s or Seller’s conveyancer (the ‘‘conveyancer’’) without further written direction of the Buyer or Seller, provided that: (a) the conveyancer is a Lawyer or Notary; (b) such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction and not on behalf of any of the principals to the transaction; and (c) if the sale does not complete the money should be returned to such party as stakeholder or paid into court.

    The effect of this wording is to allow the brokerage that holds a deposit in trust as a stakeholder to for ward these funds to the conveyancer, without having to obtain a separate written release from both the seller and the buyer. The following sample clause is intended for use in contracts that are not drafted on the ‘‘standard’’ form.

    Conveyancer as Stakeholder Clause

    The brokerage that receives money in connection with this transaction is authorized to pay such money to the Buyer’s conveyancer, provided that such money is to be held in trust by the conveyancer as stakeholder pursuant to the provisions of the Real Estate Services Act, pending the completion of the transaction and not on behalf of any of the principals to the transaction, and should the sale not complete, the money should be returned to the brokerage as stakeholder.

    Agreed to by Seller:

    and Buyer:

    There are two important issues to note:

    • This pre-authorization only applies to a release of funds to a lawyer or notary. It does not apply to the release of funds from trust for any other reason or to any other party.
    • This clause does not bind the conveyancer to hold the funds in trust as a stakeholder pursuant to the provisions of RESA because the conveyancer is not a party to the Contract of Purchase and Sale. An agent who releases funds to a lawyer or notary under this authority must still clarify the stakeholder role directly with the conveyancer. This can be accomplished by using the following sample wording in a covering letter to the conveyancer:

    Authorization To Pay Trust Money to Lawyer or Notary Clause

    Enclosed is $ (amount) being the deposit money in the above-noted transaction. This money is to be held by you until completion on the following trust conditions:

    1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction;

    2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and

    3. if you are unable to comply with these trust conditions, you will return the said money to our office.

    Regardless of who is acting as the stakeholder, the following clause should be used to clarify the obligations of that stakeholder:

    Third Party Holding Deposit Clause

    The deposit will be held in trust by (name of third party, e.g., conveyancer/notary/builder) as a stakeholder pursuant to the provisions of the Real Estate Services Act pending the completion of the transaction.

  • Excerpt from Trading Services | Section 2. Acting For Sellers

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    Subject to the (select either Buyer or Seller) obtaining legal advice satisfactory to the Buyer or Seller concerning (select easement, builders’ lien, financing or define applicable issue)__________ on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    (i) Obtaining Title Searches

    Licensees acting on behalf of buyers often rely on title search documents provided by the seller or, alternatively, request that the seller make such documents available for the buyer’s review.

    Buyers should be advised that it is possible for an unscrupulous individual to manipulate the title information obtained from the Land Title and Survey Authority (LTSA  — will open in a new tab). Licensees should therefore be very cautious when relying on title information provided by a party that the licensee does not know or trust and should advise buyers to rely only on documents from a reliable source such as the buyer’s agent or lawyer.

    The licensee should not provide incomplete copies of the encumbrances to the buyer because of the legal liability of doing so. Any error or omission or attempted interpretation of the documentation which misled the buyer could lead to serious consequences for the licensee. It is, therefore, best to have the buyer’s lawyer or the buyer himself or herself obtain and analyze these documents.

    Approval of Documentation Clause

    Subject to the Buyer’s(select either lawyer or accountant) approving the form of the documentation on or before (date) .

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    Licensees should be aware that there may be restrictions on the property that may affect its use or value that are not registered against the title. For example, restrictions relating to Riparian Areas Regulation  — will open in a new tab under the Fish Protection Act  — will open in a new tabor archaeological sites under the Heritage Conservation Act   — will open in a new taband others that are not currently registered on title may have substantial impact on use or value.

    The title search clause, as set out above, should be used to enable the buyer to search for any charges or other features that may affect the property’s use or value.

Leasehold / Tenancies

  • Confirmation of Tenancy Details Clause

    Excerpt from Trading Services | Section 8. Tenant Occupied Properties

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    (c) Sale of Rental Properties

    It is recommended that the amounts of security deposits held on behalf of each unit, whether that unit is authorized or not, be specified in any Contract of Purchase and Sale. Information as to the date of the last rent increase for each unit should be included.

    Confirmation of Tenancy Details Clause

    The Seller warrants that (tenant’s name) is a (type of tenancy); the monthly rent is $ (amount) including (utilities included); payable on (day of the month rent is due) a security deposit of $(amount) was taken on (date) and the last rental increase was (date) .

    A licensee who is listing or selling a tenanted property should ask for a copy of the tenancy agreement, if available. After January 1, 2004, the tenancy agreement must be in writing; however, tenancies entered into prior to that date may not have a written agreement. If a tenancy agreement is available, the licensee should attach a copy of it as part of the Contract of Purchase and Sale.

  • Lease of Premises Clause (Option I)

    Excerpt from Trading Services | Section 10. Sale Of A Business

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    (h) Inventory Valuation

    The inventory of the business is often purchased separately from the purchase of the business itself. The method for valuing the inventory should be referred to the parties’ advisers and a valuation date agreed upon by the parties prior to entering into the Contract of Purchase and Sale.

    Licensees must be aware of the problem associated with inventory. It is important to seek the guidance of those experienced in evaluating inventory.

    Some concerns are described in the following examples:

    • shoe stores: stock on hand includes not only current styles, but also boxes of out-of-fashion shoes;
    • grocery stores: stock includes large amounts of time-dated products and foods;
    • florist shops: stock includes aging, wilting, and dying flowers;
    • gift stores: stock includes items that a buyer is not interested in buying at all or for which he or she does not see a market; and
    • lawn mower and small engine repair shops: stock includes boxes of parts for old and obsolete engines.

    One of the differences between residential and business/commercial transactions is that often the parties involved in the transaction are far more knowledgeable than the licensees in the operation of the particular business and, more than likely, meetings and discussions have taken place previously between the parties. Frequently, the function of the licensee is to put into an agreement format those things that have already been discussed and agreed to by the parties.

    The contract must state clearly whether or not the price includes inventory. The following clause can be used:

    Inventory Clause

    Purchase price(select either includes or does not include) (select either inventory or stock) .

    This offer is conditional on the Seller and Buyer and their respective advisers establishing an agreed method for the purpose of valuing the inventory/stock. This agreement is to be in place and in writing within (number of days) days of acceptance of this offer. Inventory/Stock taking is to be performed within (number of days) days before the completion of this transaction. The Seller will allow reasonable access to the Buyer for purposes of reviewing the inventory for purposes of this condition.

    This condition is for the benefit of both the Buyer and the Seller.

    If the business is occupying leased space, the following clause should be inserted in the contract:

    Lease of Premises Clause

    Subject to the Buyer being able to arrange on or before (date) a lease for the premises satisfactory to the Buyer.

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving approval of the lessor to such assumption on or before (date) .

    This condition is for the benefit of both the Seller and the Buyer.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Adequate time must be allowed within the contract for the buyer to receive the documents and review them. A specific date on the contract for the provision of the documents to the buyer by the seller, in addition to the date for their acceptance, is recommended.

  • Lease of Premises Clause (Option II)

    Excerpt from Trading Services | Section 10. Sale Of A Business

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    (h) Inventory Valuation

    The inventory of the business is often purchased separately from the purchase of the business itself. The method for valuing the inventory should be referred to the parties’ advisers and a valuation date agreed upon by the parties prior to entering into the Contract of Purchase and Sale.

    Licensees must be aware of the problem associated with inventory. It is important to seek the guidance of those experienced in evaluating inventory.

    Some concerns are described in the following examples:

    • shoe stores: stock on hand includes not only current styles, but also boxes of out-of-fashion shoes;
    • grocery stores: stock includes large amounts of time-dated products and foods;
    • florist shops: stock includes aging, wilting, and dying flowers;
    • gift stores: stock includes items that a buyer is not interested in buying at all or for which he or she does not see a market; and
    • lawn mower and small engine repair shops: stock includes boxes of parts for old and obsolete engines.

    One of the differences between residential and business/commercial transactions is that often the parties involved in the transaction are far more knowledgeable than the licensees in the operation of the particular business and, more than likely, meetings and discussions have taken place previously between the parties. Frequently, the function of the licensee is to put into an agreement format those things that have already been discussed and agreed to by the parties.

    The contract must state clearly whether or not the price includes inventory. The following clause can be used:

    Inventory Clause

    Purchase price(select either includes or does not include) (select either inventory or stock) .

    This offer is conditional on the Seller and Buyer and their respective advisers establishing an agreed method for the purpose of valuing the inventory/stock. This agreement is to be in place and in writing within (number of days) days of acceptance of this offer. Inventory/Stock taking is to be performed within (number of days) days before the completion of this transaction. The Seller will allow reasonable access to the Buyer for purposes of reviewing the inventory for purposes of this condition.

    This condition is for the benefit of both the Buyer and the Seller.

    If the business is occupying leased space, the following clause should be inserted in the contract:

    Lease of Premises Clause

    Subject to the Buyer being able to arrange on or before (date) a lease for the premises satisfactory to the Buyer.

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving approval of the lessor to such assumption on or before (date) .

    This condition is for the benefit of both the Seller and the Buyer.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Adequate time must be allowed within the contract for the buyer to receive the documents and review them. A specific date on the contract for the provision of the documents to the buyer by the seller, in addition to the date for their acceptance, is recommended.

  • Lease of Premises Clause (Option III)

    Excerpt from Trading Services | Section 10. Sale Of A Business

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    (h) Inventory Valuation

    The inventory of the business is often purchased separately from the purchase of the business itself. The method for valuing the inventory should be referred to the parties’ advisers and a valuation date agreed upon by the parties prior to entering into the Contract of Purchase and Sale.

    Licensees must be aware of the problem associated with inventory. It is important to seek the guidance of those experienced in evaluating inventory.

    Some concerns are described in the following examples:

    • shoe stores: stock on hand includes not only current styles, but also boxes of out-of-fashion shoes;
    • grocery stores: stock includes large amounts of time-dated products and foods;
    • florist shops: stock includes aging, wilting, and dying flowers;
    • gift stores: stock includes items that a buyer is not interested in buying at all or for which he or she does not see a market; and
    • lawn mower and small engine repair shops: stock includes boxes of parts for old and obsolete engines.

    One of the differences between residential and business/commercial transactions is that often the parties involved in the transaction are far more knowledgeable than the licensees in the operation of the particular business and, more than likely, meetings and discussions have taken place previously between the parties. Frequently, the function of the licensee is to put into an agreement format those things that have already been discussed and agreed to by the parties.

    The contract must state clearly whether or not the price includes inventory. The following clause can be used:

    Inventory Clause

    Purchase price(select either includes or does not include) (select either inventory or stock) .

    This offer is conditional on the Seller and Buyer and their respective advisers establishing an agreed method for the purpose of valuing the inventory/stock. This agreement is to be in place and in writing within (number of days) days of acceptance of this offer. Inventory/Stock taking is to be performed within (number of days) days before the completion of this transaction. The Seller will allow reasonable access to the Buyer for purposes of reviewing the inventory for purposes of this condition.

    This condition is for the benefit of both the Buyer and the Seller.

    If the business is occupying leased space, the following clause should be inserted in the contract:

    Lease of Premises Clause

    Subject to the Buyer being able to arrange on or before (date) a lease for the premises satisfactory to the Buyer.

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer will assume all payments, obligations and covenants of the existing lease covering the business premises.

    Subject to the Buyer receiving approval of the lessor to such assumption on or before (date) .

    This condition is for the benefit of both the Seller and the Buyer.

    Subject to the Buyer receiving, perusing and being satisfied with the said lease on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Adequate time must be allowed within the contract for the buyer to receive the documents and review them. A specific date on the contract for the provision of the documents to the buyer by the seller, in addition to the date for their acceptance, is recommended.

  • Notice to Tenants Clause

    Excerpt from Trading Services | Section 8. Tenant Occupied Properties

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    (f) Notice To Tenants

    The Residential Tenancy Act permits a landlord to end a tenancy if the landlord has entered into an agreement to sell the rental unit, all conditions on which the sale depends have been removed, and the purchaser asks the landlord in writing to give notice to end the tenancy. A buyer may request that the seller give notice to end the tenancy if the buyer or a close family member of the buyer intends to occupy the rental unit, or, if the buyer is a family corporation and a person owning voting shares in the corporation, or a close family member intending to occupy the rental unit.

    Notice to Tenants Clause

    The Seller will give legal notice to the Tenant to vacate the premises, but only if the Seller receives the appropriate written request from the Buyer to give such notice in accordance with the requirements of section 49 of the Residential Tenancy Act.

    Ώ NOTE: The Seller cannot give notice to the tenant until all the subject clauses have been removed.

  • Properties Containing Unauthorized Accommodation Clause

    Excerpt from Trading Services | Section 8. Tenant Occupied Properties

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    (b) Unauthorized Accommodation

    Real estate licensees are to avoid advertising illegal suites as a possible source of revenue for homeowners. Section 4-7 of the Rules prohibits false or misleading advertising as follows:

    A licensee must not publish real estate advertising that the licensee knows contains a false statement or misrepresentation concerning real estate, a trade in real estate or the provision of real estate services.

    In order to avoid any confusion, licensees should use the following clause:

    Properties Containing Unauthorized Accommodation Clause

    The Buyer is aware that the property contains unauthorized accommodation and has been informed of the consequences of such ownership and the potential loss of income should the rental use be discontinued.

    NOTE: Licensees should be aware that issues involving unauthorized accommodation often include construction or improvements to the property which could result in an order for demolition of the structure, a requirement by a municipal/city authority to upgrade to present bylaw requirements or for the removal of the addition and changes since the last inspection, the nullification of insurance, and a potential difficulty to mortgage the property.

  • Sale of Leasehold Interests Clause

    Excerpt from Trading Services | Section 9. Manufactured Homes

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    (d) Manufactured Homes on Rented/Leased Pads

    When licensees are involved in the sale of manufactured homes on leased or rented land belonging to a third party, a number of precautions must be taken at the time of taking the listing and when writing the Contract of Purchase and Sale. The British Columbia Real Estate Association has created the ‘‘Contract of Purchase and Sale of a Manufactured Home on a Rental Pad.’’

    It is recommended that the seller’s representative do a title search on the land containing the rental pad to ascertain ownership and the presence of any head leases or options which could have an impact on future rents to be charged. The sale of the park may compromise rental agreements that are not properly in force. Provision for future escalation in rents or lease payments between the landowner and lessee may come as a surprise to inadequately informed tenants.

    The Manufactured Home Park Tenancy Regulation  — will open in a new tab sets out an orderly process for assigning and subletting manufactured home pad tenancy agreements.

    Key features of the regulation are:

    • a process and form for homeowners to use when requesting the park owner’s consent to assign to a purchaser or sublet to a subtenant;
    • a process and form for park owners to respond to the request;
    • park owners will have up to 10 days to consider the request;
    • the park owner’s consent will be deemed if the home owner does not receive the response within 10 days; and
    • the park owner may only withhold consent for one of the permitted grounds set out in the regulation. The regulation also clarifies the meaning of assignment and sublet.

    When a homeowner assigns to the buyer of the home, the tenancy agreement continues on the same terms, including the rent, as existed before the assignment. The buyer becomes the tenant of the park owner and takes on the rights and responsibilities arising under the Manufactured Home Park Tenancy Act and the tenancy agreement.

    When a homeowner sublets, the homeowner becomes the landlord to the subtenant, but the homeowner also continues to be the tenant of the park owner and continues to be responsible for the rent and other terms of the tenancy agreement during the subtenancy.

    In addition to the regulation, the Manufactured Home Park Tenancy Act allows arbitrators to order an assignment or sublet if the park owner withheld consent unreasonably or arbitrarily or for a reason not permitted by the regulation.

    The request for consent to assign and request for consent to sublet forms are available in Residential Tenancy Offices and on the RTO website  — will open in a new tab.

    Sale of Leasehold Interests Clause

    Seller will deliver leasehold interest free and clear of all financial encumbrances. Seller will assign the Buyer all rights, title and interest and the Buyer will assume all payments, obligations and covenants in the lease. Seller will provide reasonable assistance, at the expense of the Buyer, in obtaining consent to the assignment of the lease before the Completion Date. If the consent to the assignment cannot be obtained, this agreement will be null and void. It is understood that the lease has a term ending (date) .

    Subject to the Buyer receiving and reviewing the head lease and any schedules of rules and regulations to the Buyer’s satisfaction and approval on or before (date) .

    A copy of the head lease with each page initialed by the Buyer as having been read and approved will be required by the Seller.

    This subject clause is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal’’

    At the time of sale, the buyer may require a number of conditions which are peculiar to manufactured homes on rented pads. Many parks have rules and regulations for tenants dealing with usage, pets, age, children, etc., and the buyer/tenant must have an opportunity to review their contents. The licensee must not assume that all leases or rental agreements from a common landlord are identical. A copy for the specific pad must be obtained in every case.

    Buyer’s Approval of Rules and Regulations of Manufactured Home Park Clause

    Subject to the Buyer approving the rules and regulations of (name of manufactured home park) and being accepted as a tenant on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer has received copies of the rules and regulations of (name of manufactured home park) and acknowledges acceptance of them.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    If a buyer requires financing, the lender may require the buyer to obtain a priority agreement signed by the landlord, allowing the lender to register a security interest and to acknowledge that the park owner has no financial interest in the manufactured home.

    Buyer’s Permission To Register a Security Interest in a Manufactured Home Clause

    Subject to the Buyer obtaining a site lease or priority agreement in a form acceptable to (the lender) on or before (date) which will allow the lender to register a security interest in the manufactured home.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Licensees should recognize that under section 28 of the Manufactured Home Park Tenancy Act, a seller and buyer of a manufactured home in a manufactured home park must obtain the consent of the landlord to sublease the pad from the former tenant (the seller). Some park managers require an interview with the prospective buyer/tenant. Although the Manufactured Home Park Tenancy Act states that consent may not be unreasonably withheld, a buyer must not be placed in the position of having an unconditional purchase of a manufactured home with no pad to rent. If the landlord withholds consent, the tenant should seek legal advice.

    Seller’s Permission To Sublet a Pad for a Manufactured Home Clause

    Subject to the Seller receiving consent to sublet to(name of proposed occupant) his or her interest in the tenancy agreement for pad number (number) as provided by section 28 of the Manufactured Home Park Tenancy Act on or before (date) .

    This clause is for the benefit of the Seller and the Buyer.

  • Seller to Remain as Tenant Clause

    Excerpt from Trading Services | Section 8. Tenant Occupied Properties

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    (g) Seller To Remain as Tenant

    In some cases, a seller wishes to remain as a tenant after the title has transferred to the buyer. The Residential Tenancy Act requires that all tenancy agreements be in writing and, additionally, that certain standard clauses be included in the tenancy agreement. As a result, the tenancy agreement should be a separate document from the Contract of Purchase and Sale. In addition to the clauses required in the tenancy agreement, the buyer and seller should also consider clauses relating to:

    • what is included in rent;
    • buyer access to premises — storage
    • garden maintenance;
    • insurance; and
    • notice.

    However, in order to make it clear when the buyer may occupy the premises, the termination date should be settled at the time of the purchase negotiations. A clause such as the one below may be used, or for greater clarity, a tenancy agreement may be attached as a term of the offer. The benefit of attaching a completed tenancy agreement is that it leaves neither party the option of backing out of the transaction at a later date due to any uncertainty of terms.

    Seller To Remain as Tenant Clause

    Subject to the Seller and Buyer entering into a tenancy agreement on or before (date) for the Seller to occupy the premises as a tenant until (date) .

    This condition is for the benefit of the Buyer and the Seller.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

Manufactured Homes

  • Buyer's Approval of Rules and Regulations of Manufactured Home Park Clause (Option I)

    Excerpt from Trading Services | Section 9. Manufactured Homes

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    (d) Manufactured Homes on Rented/Leased Pads

    When licensees are involved in the sale of manufactured homes on leased or rented land belonging to a third party, a number of precautions must be taken at the time of taking the listing and when writing the Contract of Purchase and Sale. The British Columbia Real Estate Association has created the ‘‘Contract of Purchase and Sale of a Manufactured Home on a Rental Pad.’’

    It is recommended that the seller’s representative do a title search on the land containing the rental pad to ascertain ownership and the presence of any head leases or options which could have an impact on future rents to be charged. The sale of the park may compromise rental agreements that are not properly in force. Provision for future escalation in rents or lease payments between the landowner and lessee may come as a surprise to inadequately informed tenants.

    The Manufactured Home Park Tenancy Regulation  — will open in a new tab sets out an orderly process for assigning and subletting manufactured home pad tenancy agreements.

    Key features of the regulation are:

    • a process and form for homeowners to use when requesting the park owner’s consent to assign to a purchaser or sublet to a subtenant;
    • a process and form for park owners to respond to the request;
    • park owners will have up to 10 days to consider the request;
    • the park owner’s consent will be deemed if the home owner does not receive the response within 10 days; and
    • the park owner may only withhold consent for one of the permitted grounds set out in the regulation. The regulation also clarifies the meaning of assignment and sublet.

    When a homeowner assigns to the buyer of the home, the tenancy agreement continues on the same terms, including the rent, as existed before the assignment. The buyer becomes the tenant of the park owner and takes on the rights and responsibilities arising under the Manufactured Home Park Tenancy Act and the tenancy agreement.

    When a homeowner sublets, the homeowner becomes the landlord to the subtenant, but the homeowner also continues to be the tenant of the park owner and continues to be responsible for the rent and other terms of the tenancy agreement during the subtenancy.

    In addition to the regulation, the Manufactured Home Park Tenancy Act allows arbitrators to order an assignment or sublet if the park owner withheld consent unreasonably or arbitrarily or for a reason not permitted by the regulation.

    The request for consent to assign and request for consent to sublet forms are available in Residential Tenancy Offices and on the RTO website  — will open in a new tab.

    Sale of Leasehold Interests Clause

    Seller will deliver leasehold interest free and clear of all financial encumbrances. Seller will assign the Buyer all rights, title and interest and the Buyer will assume all payments, obligations and covenants in the lease. Seller will provide reasonable assistance, at the expense of the Buyer, in obtaining consent to the assignment of the lease before the Completion Date. If the consent to the assignment cannot be obtained, this agreement will be null and void. It is understood that the lease has a term ending (date) .

    Subject to the Buyer receiving and reviewing the head lease and any schedules of rules and regulations to the Buyer’s satisfaction and approval on or before (date) .

    A copy of the head lease with each page initialed by the Buyer as having been read and approved will be required by the Seller.

    This subject clause is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    At the time of sale, the buyer may require a number of conditions which are peculiar to manufactured homes on rented pads. Many parks have rules and regulations for tenants dealing with usage, pets, age, children, etc., and the buyer/tenant must have an opportunity to review their contents. The licensee must not assume that all leases or rental agreements from a common landlord are identical. A copy for the specific pad must be obtained in every case.

    Buyer’s Approval of Rules and Regulations of Manufactured Home Park Clause

    Subject to the Buyer approving the rules and regulations of (name of manufactured home park) and being accepted as a tenant on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer has received copies of the rules and regulations of (name of manufactured home park) and acknowledges acceptance of them.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal

    If a buyer requires financing, the lender may require the buyer to obtain a priority agreement signed by the landlord, allowing the lender to register a security interest and to acknowledge that the park owner has no financial interest in the manufactured home.

    Buyer’s Permission To Register a Security Interest in a Manufactured Home Clause

    Subject to the Buyer obtaining a site lease or priority agreement in a form acceptable to (the lender) on or before (date) which will allow the lender to register a security interest in the manufactured home.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Licensees should recognize that under section 28 of the Manufactured Home Park Tenancy Act, a seller and buyer of a manufactured home in a manufactured home park must obtain the consent of the landlord to sublease the pad from the former tenant (the seller). Some park managers require an interview with the prospective buyer/tenant. Although the Manufactured Home Park Tenancy Act states that consent may not be unreasonably withheld, a buyer must not be placed in the position of having an unconditional purchase of a manufactured home with no pad to rent. If the landlord withholds consent, the tenant should seek legal advice.

    Seller’s Permission To Sublet a Pad for a Manufactured Home Clause

    Subject to the Seller receiving consent to sublet to(name of proposed occupant) his or her interest in the tenancy agreement for pad number (number) as provided by section 28 of the Manufactured Home Park Tenancy Act on or before (date) .

    This clause is for the benefit of the Seller and the Buyer.

  • Buyer's Approval of Rules and Regulations of Manufactured Home Park Clause (Option II)

    Excerpt from Trading Services | Section 9. Manufactured Homes

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    (d) Manufactured Homes on Rented/Leased Pads

    When licensees are involved in the sale of manufactured homes on leased or rented land belonging to a third party, a number of precautions must be taken at the time of taking the listing and when writing the Contract of Purchase and Sale. The British Columbia Real Estate Association has created the ‘‘Contract of Purchase and Sale of a Manufactured Home on a Rental Pad.’’

    It is recommended that the seller’s representative do a title search on the land containing the rental pad to ascertain ownership and the presence of any head leases or options which could have an impact on future rents to be charged. The sale of the park may compromise rental agreements that are not properly in force. Provision for future escalation in rents or lease payments between the landowner and lessee may come as a surprise to inadequately informed tenants.

    The Manufactured Home Park Tenancy Regulation  — will open in a new tab sets out an orderly process for assigning and subletting manufactured home pad tenancy agreements.

    Key features of the regulation are:

    • a process and form for homeowners to use when requesting the park owner’s consent to assign to a purchaser or sublet to a subtenant;
    • a process and form for park owners to respond to the request;
    • park owners will have up to 10 days to consider the request;
    • the park owner’s consent will be deemed if the home owner does not receive the response within 10 days; and
    • the park owner may only withhold consent for one of the permitted grounds set out in the regulation. The regulation also clarifies the meaning of assignment and sublet.

    When a homeowner assigns to the buyer of the home, the tenancy agreement continues on the same terms, including the rent, as existed before the assignment. The buyer becomes the tenant of the park owner and takes on the rights and responsibilities arising under the Manufactured Home Park Tenancy Act and the tenancy agreement.

    When a homeowner sublets, the homeowner becomes the landlord to the subtenant, but the homeowner also continues to be the tenant of the park owner and continues to be responsible for the rent and other terms of the tenancy agreement during the subtenancy.

    In addition to the regulation, the Manufactured Home Park Tenancy Act allows arbitrators to order an assignment or sublet if the park owner withheld consent unreasonably or arbitrarily or for a reason not permitted by the regulation.

    The request for consent to assign and request for consent to sublet forms are available in Residential Tenancy Offices and on the RTO website  — will open in a new tab.

    Sale of Leasehold Interests Clause

    Seller will deliver leasehold interest free and clear of all financial encumbrances. Seller will assign the Buyer all rights, title and interest and the Buyer will assume all payments, obligations and covenants in the lease. Seller will provide reasonable assistance, at the expense of the Buyer, in obtaining consent to the assignment of the lease before the Completion Date. If the consent to the assignment cannot be obtained, this agreement will be null and void. It is understood that the lease has a term ending (date) .

    Subject to the Buyer receiving and reviewing the head lease and any schedules of rules and regulations to the Buyer’s satisfaction and approval on or before (date) .

    A copy of the head lease with each page initialed by the Buyer as having been read and approved will be required by the Seller.

    This subject clause is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    At the time of sale, the buyer may require a number of conditions which are peculiar to manufactured homes on rented pads. Many parks have rules and regulations for tenants dealing with usage, pets, age, children, etc., and the buyer/tenant must have an opportunity to review their contents. The licensee must not assume that all leases or rental agreements from a common landlord are identical. A copy for the specific pad must be obtained in every case.

    Buyer’s Approval of Rules and Regulations of Manufactured Home Park Clause

    Subject to the Buyer approving the rules and regulations of (name of manufactured home park) and being accepted as a tenant on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer has received copies of the rules and regulations of (name of manufactured home park) and acknowledges acceptance of them.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal

    If a buyer requires financing, the lender may require the buyer to obtain a priority agreement signed by the landlord, allowing the lender to register a security interest and to acknowledge that the park owner has no financial interest in the manufactured home.

    Buyer’s Permission To Register a Security Interest in a Manufactured Home Clause

    Subject to the Buyer obtaining a site lease or priority agreement in a form acceptable to (the lender) on or before (date) which will allow the lender to register a security interest in the manufactured home.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Licensees should recognize that under section 28 of the Manufactured Home Park Tenancy Act, a seller and buyer of a manufactured home in a manufactured home park must obtain the consent of the landlord to sublease the pad from the former tenant (the seller). Some park managers require an interview with the prospective buyer/tenant. Although the Manufactured Home Park Tenancy Act states that consent may not be unreasonably withheld, a buyer must not be placed in the position of having an unconditional purchase of a manufactured home with no pad to rent. If the landlord withholds consent, the tenant should seek legal advice.

    Seller’s Permission To Sublet a Pad for a Manufactured Home Clause

    Subject to the Seller receiving consent to sublet to(name of proposed occupant) his or her interest in the tenancy agreement for pad number (number) as provided by section 28 of the Manufactured Home Park Tenancy Act on or before (date) .

    This clause is for the benefit of the Seller and the Buyer.

  • Buyer's Permission to Register a Security Interest in a Manufactured Home Clause

    Excerpt from Trading Services | Section 9. Manufactured Homes

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    (d) Manufactured Homes on Rented/Leased Pads

    When licensees are involved in the sale of manufactured homes on leased or rented land belonging to a third party, a number of precautions must be taken at the time of taking the listing and when writing the Contract of Purchase and Sale. The British Columbia Real Estate Association has created the ‘‘Contract of Purchase and Sale of a Manufactured Home on a Rental Pad.’’

    It is recommended that the seller’s representative do a title search on the land containing the rental pad to ascertain ownership and the presence of any head leases or options which could have an impact on future rents to be charged. The sale of the park may compromise rental agreements that are not properly in force. Provision for future escalation in rents or lease payments between the landowner and lessee may come as a surprise to inadequately informed tenants.

    The Manufactured Home Park Tenancy Regulation  — will open in a new tab sets out an orderly process for assigning and subletting manufactured home pad tenancy agreements.

    Key features of the regulation are:

    • a process and form for homeowners to use when requesting the park owner’s consent to assign to a purchaser or sublet to a subtenant;
    • a process and form for park owners to respond to the request;
    • park owners will have up to 10 days to consider the request;
    • the park owner’s consent will be deemed if the home owner does not receive the response within 10 days; and
    • the park owner may only withhold consent for one of the permitted grounds set out in the regulation. The regulation also clarifies the meaning of assignment and sublet.

    When a homeowner assigns to the buyer of the home, the tenancy agreement continues on the same terms, including the rent, as existed before the assignment. The buyer becomes the tenant of the park owner and takes on the rights and responsibilities arising under the Manufactured Home Park Tenancy Act and the tenancy agreement.

    When a homeowner sublets, the homeowner becomes the landlord to the subtenant, but the homeowner also continues to be the tenant of the park owner and continues to be responsible for the rent and other terms of the tenancy agreement during the subtenancy.

    In addition to the regulation, the Manufactured Home Park Tenancy Act allows arbitrators to order an assignment or sublet if the park owner withheld consent unreasonably or arbitrarily or for a reason not permitted by the regulation.

    The request for consent to assign and request for consent to sublet forms are available in Residential Tenancy Offices and on the RTO website  — will open in a new tab.

    Sale of Leasehold Interests Clause

    Seller will deliver leasehold interest free and clear of all financial encumbrances. Seller will assign the Buyer all rights, title and interest and the Buyer will assume all payments, obligations and covenants in the lease. Seller will provide reasonable assistance, at the expense of the Buyer, in obtaining consent to the assignment of the lease before the Completion Date. If the consent to the assignment cannot be obtained, this agreement will be null and void. It is understood that the lease has a term ending (date) .

    Subject to the Buyer receiving and reviewing the head lease and any schedules of rules and regulations to the Buyer’s satisfaction and approval on or before (date) .

    A copy of the head lease with each page initialed by the Buyer as having been read and approved will be required by the Seller.

    This subject clause is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’

    At the time of sale, the buyer may require a number of conditions which are peculiar to manufactured homes on rented pads. Many parks have rules and regulations for tenants dealing with usage, pets, age, children, etc., and the buyer/tenant must have an opportunity to review their contents. The licensee must not assume that all leases or rental agreements from a common landlord are identical. A copy for the specific pad must be obtained in every case.

    Buyer’s Approval of Rules and Regulations of Manufactured Home Park Clause

    Subject to the Buyer approving the rules and regulations of (name of manufactured home park) and being accepted as a tenant on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer has received copies of the rules and regulations of (name of manufactured home park) and acknowledges acceptance of them.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal

    If a buyer requires financing, the lender may require the buyer to obtain a priority agreement signed by the landlord, allowing the lender to register a security interest and to acknowledge that the park owner has no financial interest in the manufactured home.

    Buyer’s Permission To Register a Security Interest in a Manufactured Home Clause

    Subject to the Buyer obtaining a site lease or priority agreement in a form acceptable to (the lender) on or before (date) which will allow the lender to register a security interest in the manufactured home.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Licensees should recognize that under section 28 of the Manufactured Home Park Tenancy Act, a seller and buyer of a manufactured home in a manufactured home park must obtain the consent of the landlord to sublease the pad from the former tenant (the seller). Some park managers require an interview with the prospective buyer/tenant. Although the Manufactured Home Park Tenancy Act states that consent may not be unreasonably withheld, a buyer must not be placed in the position of having an unconditional purchase of a manufactured home with no pad to rent. If the landlord withholds consent, the tenant should seek legal advice.

    Seller’s Permission To Sublet a Pad for a Manufactured Home Clause

    Subject to the Seller receiving consent to sublet to(name of proposed occupant) his or her interest in the tenancy agreement for pad number (number) as provided by section 28 of the Manufactured Home Park Tenancy Act on or before (date) .

    This clause is for the benefit of the Seller and the Buyer.

  • Seller's Permission to Sublet a Pad for a Manufactured Home Clause

    Excerpt from Trading Services | Section 9. Manufactured Homes

    Go To

    (d) Manufactured Homes on Rented/Leased Pads

    When licensees are involved in the sale of manufactured homes on leased or rented land belonging to a third party, a number of precautions must be taken at the time of taking the listing and when writing the Contract of Purchase and Sale. The British Columbia Real Estate Association has created the ‘‘Contract of Purchase and Sale of a Manufactured Home on a Rental Pad.’’

    It is recommended that the seller’s representative do a title search on the land containing the rental pad to ascertain ownership and the presence of any head leases or options which could have an impact on future rents to be charged. The sale of the park may compromise rental agreements that are not properly in force. Provision for future escalation in rents or lease payments between the landowner and lessee may come as a surprise to inadequately informed tenants.

    The Manufactured Home Park Tenancy Regulation  — will open in a new tab sets out an orderly process for assigning and subletting manufactured home pad tenancy agreements.

    Key features of the regulation are:

    • a process and form for homeowners to use when requesting the park owner’s consent to assign to a purchaser or sublet to a subtenant;
    • a process and form for park owners to respond to the request;
    • park owners will have up to 10 days to consider the request;
    • the park owner’s consent will be deemed if the home owner does not receive the response within 10 days; and
    • the park owner may only withhold consent for one of the permitted grounds set out in the regulation. The regulation also clarifies the meaning of assignment and sublet.

    When a homeowner assigns to the buyer of the home, the tenancy agreement continues on the same terms, including the rent, as existed before the assignment. The buyer becomes the tenant of the park owner and takes on the rights and responsibilities arising under the Manufactured Home Park Tenancy Act and the tenancy agreement.

    When a homeowner sublets, the homeowner becomes the landlord to the subtenant, but the homeowner also continues to be the tenant of the park owner and continues to be responsible for the rent and other terms of the tenancy agreement during the subtenancy.

    In addition to the regulation, the Manufactured Home Park Tenancy Act allows arbitrators to order an assignment or sublet if the park owner withheld consent unreasonably or arbitrarily or for a reason not permitted by the regulation.

    The request for consent to assign and request for consent to sublet forms are available in Residential Tenancy Offices and on the RTO website  — will open in a new tab.

    Sale of Leasehold Interests Clause

    Seller will deliver leasehold interest free and clear of all financial encumbrances. Seller will assign the Buyer all rights, title and interest and the Buyer will assume all payments, obligations and covenants in the lease. Seller will provide reasonable assistance, at the expense of the Buyer, in obtaining consent to the assignment of the lease before the Completion Date. If the consent to the assignment cannot be obtained, this agreement will be null and void. It is understood that the lease has a term ending (date) .

    Subject to the Buyer receiving and reviewing the head lease and any schedules of rules and regulations to the Buyer’s satisfaction and approval on or before (date) .

    A copy of the head lease with each page initialed by the Buyer as having been read and approved will be required by the Seller.

    This subject clause is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    At the time of sale, the buyer may require a number of conditions which are peculiar to manufactured homes on rented pads. Many parks have rules and regulations for tenants dealing with usage, pets, age, children, etc., and the buyer/tenant must have an opportunity to review their contents. The licensee must not assume that all leases or rental agreements from a common landlord are identical. A copy for the specific pad must be obtained in every case.

    Buyer’s Approval of Rules and Regulations of Manufactured Home Park Clause

    Subject to the Buyer approving the rules and regulations of (name of manufactured home park) and being accepted as a tenant on or before (date) .

    This condition is for the sole benefit of the Buyer.

    OR

    The Buyer has received copies of the rules and regulations of (name of manufactured home park) and acknowledges acceptance of them.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal

    If a buyer requires financing, the lender may require the buyer to obtain a priority agreement signed by the landlord, allowing the lender to register a security interest and to acknowledge that the park owner has no financial interest in the manufactured home.

    Buyer’s Permission To Register a Security Interest in a Manufactured Home Clause

    Subject to the Buyer obtaining a site lease or priority agreement in a form acceptable to (the lender) on or before (date) which will allow the lender to register a security interest in the manufactured home.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Licensees should recognize that under section 28 of the Manufactured Home Park Tenancy Act, a seller and buyer of a manufactured home in a manufactured home park must obtain the consent of the landlord to sublease the pad from the former tenant (the seller). Some park managers require an interview with the prospective buyer/tenant. Although the Manufactured Home Park Tenancy Act states that consent may not be unreasonably withheld, a buyer must not be placed in the position of having an unconditional purchase of a manufactured home with no pad to rent. If the landlord withholds consent, the tenant should seek legal advice.

    Seller’s Permission To Sublet a Pad for a Manufactured Home Clause

    Subject to the Seller receiving consent to sublet to(name of proposed occupant) his or her interest in the tenancy agreement for pad number (number) as provided by section 28 of the Manufactured Home Park Tenancy Act on or before (date) .

    This clause is for the benefit of the Seller and the Buyer.

Miscellaneous

  • Appliance Warranty Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (u) Warranties on Appliances and Other Components

    While the warranty provided by the builder or other third-party warranty company typically starts to run only when the home is first occupied, other warranties on appliances and building components provided by the suppliers may start to run when the appliance or component is installed as part of the house or condominium. The licensee should advise the buyer of the date of the final inspection or occupancy permit and provide all warranty documentation to the buyer. The onus is on the buyer to read the documentation.

    When it is represented that there is a warranty in existence, a copy of that warranty, with the date and the name of the warranting company, should be given to the buyer for review, as is done with other documents. The warranty, with details as to what it covers, should be referenced on the Contract of Purchase and Sale. Often, the company which has provided the original warranty has gone out of business (e.g., a 50-year roof may no longer be covered). Sometimes, the warranty is not transferable and the next owner does not qualify. Appliances may have a different warranty date than the house does. Frequently, sellers believe they are covered when they are not and they could innocently misrepresent the situation to an unsuspecting buyer. It is imperative that no misrepresentation be made by the licensee.

    Licensees who are referencing warranties on appliances or other components should be prepared to provide a copy of the warranty to the buyer and ensure that all relevant details concerning the warranty are listed on the Contract of Purchase and Sale.

    If the appliances are not in working order, the licensee should disclose this fact in writing.

    The following clause may be used by a buyer’s licensee to protect the buyer’s interests when appliances are included in the purchase:

    Appliance Warranty Clause

    The Seller warrants that the appliances included in the purchase of this property will be in proper working order as of the Possession Date.

  • Confidentiality of Terms Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (h) Offers - View Entire Section

    (xvi) Confidentiality of Offers and Counter-Offers

    A buyer and seller may enter into a confidentiality agreement prior to the presentation of an offer whereby each would agree not to disclose the terms and conditions of any offer or counter-offer to another buyer interested in the property.

    Such a clause would need to be signed as a part of a separate document from the Contract of Purchase and Sale before the offer is presented.

    RECBC recommends the following clause where buyers and sellers wish to enter into such an agreement:

    Confidentiality of Terms Clause

    The Buyer and Seller agree that the terms and conditions of any offer or counter-offer with respect to the property located at(address) shall not be disclosed to any other potential Buyer of the property without the prior written consent of the Buyer and Seller.

  • Friend/Relative Approval (for Buyer or Seller) Clause

    Excerpt from Trading Services | Section 4. General Information

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    (a) Contract Clauses - View Entire Section

    (xviii) Miscellaneous Clauses

    Seller Purchasing Residence Clause

    Subject to the Seller entering into an unconditional agreement on or before (date) to purchase another residence.

    This condition is for the sole benefit of the Seller.

    NOTE: This subject clause is to give a seller the opportunity to acquire a new home before being committed to sell and vacate his or her existing home. From the buyer’s perspective, the subject removal period should be as short as possible.

    Friend/Relative Approval (for Buyer or Seller) Clause

    Subject to approval of the (select either purchase or sale) by (name) on or before (date) .

    This condition is for the sole benefit of the Buyer/Seller.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

  • Seller Taking Buyer's Property in Trade Clause

    Excerpt from Trading Services | Section 1. Practice Standards

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    (n) Trades

    From time to time, licensees will have clients who indicate a willingness to think about alternative compensation for property. Land, time shares, vehicles, boats, and jewellery may be offered and considered. Licensees should treat such offers with the same precautions or qualifications as they would traditional transactions and with added considerations depending upon the nature of the property being offered in trade.

    A primary concern must be the ownership of the property being offered in trade. It may be a simple thing to do a title search on land in BC but searching the title of a time share in Florida or the registration of a Harley-Davidson motorcycle may prove a challenge. Semi-precious gems, while looking like a million dollars, are usually of relatively low value, even by the handful. If the chattel is valuable and saleable, why not consider a clause that allows the buyer to sell the item in question?

    Similar to clauses that permit the buyer to sell its property, a clause can be used that permits the buyer time to sell the chattel. Such a subject clause should include a time clause that permits the seller to force the decision of the buyer once a certain amount of time has passed or an acceptable offer has been received.

    Tax on chattels is frequently ignored in the sale of property, but there may be an obligation for the parties to remit. If a property owner takes a car as partial proceeds, the question of responsibility for the tax, transfer costs, etc., must be clearly identified between the parties. The prudent licensee might suggest the agreement for the transfer of a chattel be separate from the Contract of Purchase and Sale. Whether a real estate licence and its attendant Errors and Omissions Insurance will allow a licensee to engage in the sale of property other than real estate is not a matter to consider lightly.

    If land in BC is being offered in trade, then who will pay the cost of conveyance, including the Property Transfer Tax? Are there GST considerations for the party receiving the trade who will in effect be the buyer? Is a real estate remuneration payable on the trade property? If there is no cash, how will the commission be paid? Should there be one Contract of Purchase and Sale or more? Is the property owned without financial encumbrances or will some debt be assumed?

    Among many considerations, the value of the item being offered may be the most troublesome for the licensee. The licensee must not allow a client to accept a valuation put for ward by the person making the offer without strongly recommending that independent appraisal advice be sought.

    When it comes time to draft a contract, the simplest way may be to treat a trade item other than land as though it were cash. In the case of real estate being offered in trade, it is strongly recommended that one Contract of Purchase and Sale be used for each property involved because of the preprinted aspects contained in the standard Contract of Purchase and Sale. Each contract would be written conditional upon the two transactions completing at the same time. Licensees must seek competent advice in drafting and always recommend in writing, if not as a ‘‘subject to’’ clause of the contract, that the parties seek independent legal and appraisal advice.

    NOTE: The negotiation details for the purchase of the buyer’s property must be set out in a separate Contract of Purchase and Sale.

    Seller Taking Buyer’s Property in Trade Clause

    Subject to the Seller entering into an unconditional Contract of Purchase and Sale with the Buyer for the purchase of the Buyer’s property described as (describe property) on or before (date) .

    This condition is for the benefit of both the Buyer and the Seller.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘Contracts under Seal’.

New Construction

  • Builders Lien Holdback Clause

    Excerpt from Trading Services | Section 7. New Construction

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    (d) Builders Lien Holdback

    [12/03/2010 The following information updated]

    The Builders Lien Act allows contractors, sub-contractors, workers and suppliers to file a lien against the title to properties where they supply work or materials. The lien provides some level of security for the lien claimants to ensure they get paid. Liens can be filed at any time up to 45 days after the work has been completed, and thus when buying a newly constructed home, a buyer can find a validly registered lien registered against the title to their property, that was filed after their closing but within 45 days of the work being substantially completed. Buyers can protect themselves from the potential for such liens by holding back a portion of the purchase price, until the lien period has expired. The holdback can be used to pay out the lien claimant or paid into court to discharge the lien.

    It is a common belief that buyers are entitled to retain a builders lien holdback from the seller when purchasing newly constructed property. The belief may have developed because when the current Builders Lien Act was introduced in 1997, it included provisions allowing buyers of newly constructed homes to retain a holdback. However, this provision has never been brought into force. Additionally, because the Strata Property Act does provide for a holdback for newly constructed strata lots (see below), many buyers assume that a builders lien holdback is also permitted on non-strata titled property.

    For new single-family construction, a buyer is not entitled to retain a holdback under the Builders Lien Act unless the contract of purchase and sale or building contract specifically allows for it. A buyer should attempt to negotiate such a provision into their contract of purchase and sale or building contract with the builder. However, a buyer must be advised that the builder may not agree to such a provision. If a holdback is not negotiated into the contract of purchase and sale or building contract, the builder has no obligation to allow a holdback and typically will not consent to such a holdback later.

    If the builder agrees to a builders lien holdback, a licensee can use the following clause to provide for a holdback. A building contract typically will have much more extensive provisions detailing the builders lien holdback process that is in place throughout the entire construction period, not just a holdback on the conveyance.

    Builders Lien Holdback Clause

    The Buyer will holdback from the sale proceeds, as a builders lien holdback under the Builders Lien Act, an amount equal to 10% of the value of the improvements for (number of days) days after the date of issuance of the certificate of completion or, where there is no certificate, for (number of days) days after the later of the date the head contract is completed, abandoned or terminated or the occupancy permit is issued. The Buyer’s lawyer or notary will place the holdback in an interest-bearing trust account with interest accruing to the benefit of the Seller. The parties agree the improvements are valued at $(amount).

    NOTE: Licensees are advised that the timing requirements for builders lien holdbacks is a complex area of law and they are well advised to have their clients seek legal advice in situations involving new or recent construction.

    If builders liens are filed against the title to the property, the builder’s liens holdback funds can be used as part of the process of clearing the lien off title. The parties should be referred to their respective legal advisers if liens are filed.

    It should be noted that unless the parties agree otherwise, a builders lien holdback cannot be used as a deficiency holdback and a deficiency holdback cannot be used as a builders lien holdback, as they serve two distinct purposes at law. To fully protect a buyer, both a deficiency holdback and a builders lien holdback should be negotiated as part of the contract.

    If no builders lien holdback is provided for, the buyer will still be obligated to close on their purchase. The title should be monitored by the buyer’s conveyancer to see if a lien is filed within the lien period. If it is, the buyer, typically with the assistance of a lawyer, should demand the seller take steps to have the lien discharged. If the seller fails to do so, the buyer will have to seek a discharge, which may require payment of a substantial sum to the lien claimant or at least the payment of a sum equal to the amount of the lien into trust or into court. The buyer may be able to sue the seller for damages, but that may not be an easy or successful task.

  • Licensed Builder and Warranty Insurance Clauses

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) New Home Warranty - View Subsection

    (2) Limits on Coverage

    Coverage on claims is as follows:

    • Fee simple (primarily detached dwelling units):
      • The lesser of the first owner’s purchase price or $200,000.
    • Strata homes:
      • Strata unit: lesser of the first owner’s purchase price or $100,000.
      • Common property: the lesser of $100,000 X the number of dwelling units in the building or $2.5 million per building.

    The following are suggested clauses for use with respect to new-construction warranties where the seller is not an owner-builder:

    Licensed Builder and Warranty Insurance Clauses

    Subject to the Buyer confirming on or before (date) that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    This condition is for the sole benefit of the Buyer.

    OR

    The Seller represents and warrants that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

    The Seller will provide to the Buyer on or before (date) all details of the warranty insurance coverage pursuant to the Homeowner Protection Act.

  • Mandatory Warranty Insurance Coverage Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) New Home Warranty - View Subsection

    (4) Permission To Sell New Homes under Construction

    Under the Homeowner Protection Act, new homes that are under construction but not complete may not be sold (or offered for sale) unless the home is covered by home warranty insurance or exempt. This affects new homes that originally had home warranty insurance coverage but are de-enrolled for a variety of reasons, including: cancellation of a builder’s contract, owner bankruptcy or cancellation of builder’s acceptance by a warranty provider. Such homes may no longer be offered for sale or sold ‘‘as is.’’ Owners must write to the Licensing and Consumer Services branch of BC Housing for the registrar’s express permission, and may be subject to conditions, such as that the home is sold to a licensed residential builder to enrol with home warranty insurance. This ensures that a partially complete new home is not inadvertently sold without the protection of the legislation in place for a new homebuyer. The prohibition applies to new homes at all stages of construction.

    The Homeowner Protection Act states that a new home built by a residential builder may not be built, offered for sale, or sold without warranty insurance. The following clause could, however, make a buyer’s position more certain should the warranty insurance commitment be revoked for any reason.

    Mandatory Warranty Insurance Coverage Clause

    It is a fundamental term of this contract that the mandatory warranty insurance coverage required pursuant to the Homeowner Protection Act be provided.

  • Receipt of Home Warranty Insurance Documents Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (v) Home Warranty Insurance on Resale Homes

    The Homeowner Protection Act creates certain warranty insurance disclosure requirements for warranty providers, but does not place any requirement on future owners to ensure that they provide details on the home warranty insurance to subsequent buyers.

    Home warranty insurance stays with the property. Therefore, if information on the warranty insurance is not provided to a subsequent buyer, it does not mean that a claim cannot be made on the policy.

    Subsequent buyers should be provided copies of home warranty insurance documents, including information regarding the expiry dates associated with the policy. Not being aware of the expiry dates could result in missing the opportunity to submit a claim under the policy. If such documents have not been provided to a buyer at the time an offer is being written, the Contract of Purchase and Sale should include a clause that makes the contract conditional on the seller providing home warranty insurance documents to the buyer, and the buyer having an opportunity to review and accept the policy. While the buyer will not be able to change the level of coverage provided under warranty, he or she may be concerned about the length of the remaining term of the policy. Wording such as the following should be used in these circumstances.

    Receipt of Home Warranty Insurance Documents Clause

    Subject to the Seller providing to the Buyer a copy of the home warranty insurance policy, and the Buyer being satisfied as to this policy, on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

  • Receipt of Owner-Builder Disclosure Notice Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (vii) Owner-Builder Disclosure Notice

    Owner builders who built their home prior to November 19, 2007 must continue to provide prospective purchasers with the old-form Owner-Builder Declaration and Disclosure Notice within the first 10 years after occupancy.

    Owner builders building under an Owner-Builder Authorization (after November 19, 2007) are required to provide an Owner-Builder Disclosure Notice, obtained from the Licensing and Consumer Services branch of BC Housing, to prospective purchasers within the first 10 years after occupancy. The owner-builder must advise the Licensing and Consumer Services branch of BC Housing of the occupancy date and the Licensing and Consumer Services branch of BC Housing does not release the Disclosure Notice until the one-year occupancy requirement has been verified. Subsequent purchasers are also required to provide the Disclosure Notice if they sell the home within the 10-year period. The Disclosure Notice will state that the home was built under an Owner-Builder Authorization, when the 10-year period started, and whether or not there is a voluntary policy of home warranty insurance in place for the home.

    NOTE: A survey of owner-builders conducted in 2007 found that the majority of purchasers of owner-built homes did not receive a disclosure notice and did not know whether or not their home had home warranty insurance. Not providing a disclosure notice is an offence under the legislation and, thanks to stronger compliance tools now available to the Licensing and Consumer Services branch of BC Housing, the requirement to provide the disclosure notice will receive increased attention.

    When a licensee represents a seller who is an owner-builder, or who is a subsequent owner within the first 10 years as required by the HPA Regulations, the licensee should insert a clause in the Contract of Purchase and Sale confirming delivery of the Owner-Builder Disclosure Notice as follows:

    Receipt of Owner-Builder Disclosure Notice Clause

    The Buyer acknowledges having received a copy of the Owner-Builder Disclosure Notice dated (date) , prior to making this offer, in accordance with the Homeowner Protection Act and regulations.

  • Walk-Through Inspection Deficiency List Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (c) Deficiencies

    [12/03/2010 The following information updated]

    The building contract should provide for a mechanism of identifying construction deficiencies, the date by which they must be repaired, any holdback mechanism and a dispute resolution process.

    The typical deficiency provision will require that representatives of both the buyer and the seller (builder) jointly conduct a walk-through of the property prior to possession in order to identify any work that requires correction. The parties should prepare a written deficiency list at the time that this walk-through is completed, and both seller and the buyer must sign and date the list. A copy of the list should be retained by both parties.

    If there is a dispute as to any particular deficiency, the contract should provide for a neutral third party to determine the extent of the deficiencies (typically an architect or engineer), the cost of repairing the deficiencies and whether or not they are satisfactorily completed.

    If the builder agrees to a deficiency holdback, a licensee can use the following clause to provide for such a holdback.

    Walk-Through Inspection Deficiency List Clause

    The Buyer and an authorized representative of the Seller will jointly conduct a walk-through inspection of the property no later than (number of days) days before the Completion Date.

    The Parties will, immediately after completion of the walk-through inspection, complete a deficiency list of mutually agreed upon items that are to be remedied by the Seller (the “Deficiency List”). The Deficiency List, which will form part of the contract will identify the deficiencies and include a mutually agreed upon value for each of the deficiencies to be remedied. Both parties will sign, date and retain a copy of the Deficiency List. The quality of work and materials used to correct the deficiencies will be equal to or better than that of the surrounding construction.

    In the event that the deficiencies are not rectified (number of days) days prior to the Completion Date, the Buyer’s conveyancer will hold back from the sale proceeds the amount specified for any uncorrected deficiency until all the deficiencies specified on the Deficiency List are completed, and will place this holdback in the Buyer’s conveyancer’s trust account.

    The Seller agrees that if the conveyance of the Property has completed and any of the specified deficiencies have not been corrected, the Buyer’s conveyancer will retain the specified holdback until the Seller corrects the deficiencies, which shall not be later than (number of days) days after the Completion Date. The Seller agrees that if the deficiencies have not been corrected by the later date, the Buyer’s conveyancer may release the balance of holdback to the Buyer and the Buyer may correct the deficiencies himself/herself.

    Any dispute concerning the identification and pricing of deficiencies, the rectification of the deficiencies, and release of the holdback will be settled by _________________ [or the following alternative language: “arbitration under the British Columbia Commercial Arbitration Act” at the expense of (the Buyer, the Seller, or both)]

    * BC Housing, Licensing and Consumer Services has outlined a number of additional methods for resolving disputes, including mediation, arbitration and litigation. For owners of homes that are required to have new home warranty insurance under the Homeowner Protection Act (homes built by licensed residential builders with building permits applied for on or after July 1, 1999), a mandatory mediation process has been set up. Owners who are in a dispute with their home warranty insurance providers can compel them to mediation. In addition, the Notice to Mediate (Residential Construction) Regulation allows any party to a Supreme Court action involving a residential construction dispute to compel the other parties of the dispute to a structured mediation session. Both mediation processes are performed independently of BC Housing, Licensing and Consumer Services. For further information, refer to the BC Housing, Licensing and Consumer Services website  — will open in a new tab

    A well drafted deficiency holdback clause will provide a dispute resolution mechanism for any dispute that arises between the parties. If the deficiencies are not corrected in accordance with the deficiency clause, the clause will typically provide that the buyer may (but not must) elect to use any retained deficiency holdback to cure the defects. Alternatively they may refer the matter to the designated arbitrator (if one is designated in the deficiency clause) or if the clause simply refers to the Commercial Arbitration Act, they may start the process of invoking that Act and choosing an arbitrator. Or they may elect to sue the seller/builder for breach of contract if arbitration is not provided for or if the arbitration clause allows for such actions. If there is a new home warranty provided as part of the transaction, the buyer may also pursue a claim through the new home warranty provider. In any case, the parties should be referred to their respective legal advisers if such a dispute arises.

Occupancy Permit

  • Occupancy Certificate Clause

    Excerpt from Trading Services | Section 7. New Construction

    Go To

    (j) Homeowner Protection Act Matters - View Entire Section

    (xii) Construction To Be Finished Before Completion Date (for New or Unfinished Construction)

    Licensees should discuss the progress of construction with the builder before inserting the Completion Date in the Contract of Purchase and Sale in order to allow enough time to completely finish the house. However, if it appears that unforeseen delays in construction will prevent the house being finished on time, the parties can always agree to extend the Completion and Possession Dates.

    Because the parties can disagree on whether the house is ‘‘finished’’ for the purpose of the Completion Date, the use of an Occupancy Permit provides a convenient way to rely on a qualified third party.

    Occupancy Certificate Clause

    It is a fundamental term of this contract that the Seller must have finished all work, and delivered to the Buyer on or before the Completion Date, an unconditional Municipal/City/Regional District Occupancy Certificate or other evidence satisfactory to the Buyer that construction is finished.

    This clause is onerous on the seller because it enables a buyer of an unfinished house to back out if the house is not finished by the Completion Date.

    Licensees must remember that an Occupancy Permit does not mean that all deficiencies have been finished (i.e., landscaping). It just means that the buyer can safely occupy the house; however, the clause also says the seller (builder) ‘‘must have finished all work’’, so if there are still deficiencies at the time of completion, the deficiency holdback clause should be added as an addendum to the Contract of Purchase and Sale and delivered to the conveyancer, who will then hold back the appropriate amount.

Sewage

  • Approval Uncertain Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (ii) Water Supply

    In the case of unproven water supply from either an existing or a new source, the buyer will be concerned not only with quality but also with quantity.

    When a property is connected to a municipal or community water supply, water is often taken for granted. The rural experience is often quite different — water conservation practices being the rule rather than the exception. When the water supply expected by the buyer disappears, the consequences can be disastrous.

    During examinations for discovery in an Alberta case, the plaintiff buyers testified that the water supply was much less than capable of meeting their family’s needs. As a result, a number of extraordinary measures were required. Two members of the family showered in the morning and the other members showered in the evening. They could not do any watering in the yard and they flushed the toilets only when absolutely necessary. That sort of evidence has the potential to generate considerable sympathy at trial.

    What should a licensee do when he or she is asked a question with respect to the well? Many buyers do not know the proper questions to ask of the sellers or the buyer’s agent to make an informed decision to purchase a rural property. The water quality and quantity is crucial to a buyer in deciding to purchase a property and a buyer may not be aware of the importance of water quality and quantity.

    Licensees have an obligation to avoid error, misrepresentation or concealment of pertinent facts. Therefore, licensees must take reasonable steps to discover the facts pertaining to every property they may list or sell.

    When someone says, ‘‘I want the water tested’’, a licensee should be clear what tests the client wants conducted on the water and a condition should be included in the offer to purchase to meet those standards to the buyer’s satisfaction. The test for mortgage approval may be at a lower standard than is satisfactory to the buyer’s personal needs for water quantity and quality. The buyer needs to determine the quality and quantity of water to meet his or her personal needs and then request water tests that will determine if the water meets those standards.

    When sellers state that they had enough water quantity for their needs, what does that mean for the buyer? The water needs for each family may be significantly different as a result of the number and age of people living in the house, laundry washed, cattle or horses to water, etc. Does the buyer need the water to be of the quality that babies or individuals with heart conditions can consume?

    To minimize potential liability in rural well cases, a listing agent might consider the following practices as a minimum:

    • Secure any representations by the seller concerning the well in writing so as to eliminate any doubt at a later time as to what was said.
    • Does the seller have a well report that verifies his or her information? Have you obtained a copy? Is the well report current? Does it test at the levels necessary to satisfy the buyer’s needs?
    • If a representation based on a well report is to be set out in the listing information, set out the fact that the information comes from a well report and the date of that report. Has the seller experienced any problems with the water supply, on a seasonal or other basis?
    • Are there any restrictions on the use of water by the seller’s household? When acting as agent for a prospective buyer, your duty is to assist the buyer in determining his or her water quality and quantity needs having a regard for all of the inquiries above and also considering the following:
      • If there is no well report or no current well report, recommend as a condition of the sale that the well be tested and approved by the buyer.
      • Determine whether your buyer had any prior experience with wells. If not, ensure that your client understands that the water supply cannot be guaranteed, that a good well can go dry with little or no warning and that even a good well may be subject to seasonal fluctuations.
      • Do not make representations to your client about the sufficiency of the water supply. One family of four people may be able to get by on a two gallon per minute well while another family may need two or three times that amount of water.

    Because of the obvious importance of water supply and quality to any rural transaction, prudent licensees will be careful in documenting their files to reflect all of the discussions between them and their client about the water supply and quality.

    If necessary, a clause such as the following should be included in the Contract of Purchase and Sale.

    Water Quality and Supply Clause

    Subject to the Buyer, at the Buyer’s expense, receiving and being satisfied with a report from (name of source of report) concerning the quantity and quality of the water supply on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Water Potability Clause

    Subject to the Buyer receiving and approving a water potability test report done by (name of service) on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    In situations where the existing services were not approved or the site cannot be approved for new services, the prudent licensee should protect the parties to the transaction by noting the same in the contract.

    Approval Uncertain Clause

    The Buyer acknowledges and accepts that the property may not receive approval for an onsite sewage system and that no representations to the contrary have been made by either the Seller or his or her agent.

    In some circumstances, where the property is not serviced by municipal water and sewer services, mortgage lenders may require appropriate certificates regarding water potability and the septic system. Also, a well driller’s certificate confirming adequate water flow may be required.

    To meet the Canada Mortgage and Housing Corporation’s (CMHC) requirements, water potability must meet the provincial standard, or in the absence of such standard, Health Canada’s Guide on Canadian Drinking Water.

    CMHC advises that it will not delay approval of any insured mortgage application pending lender receipt of a potability certificate. The approved lender is responsible for obtaining the required certificates prior to advancing funds. Copies of all certificates must be retained in the approved lender’s file. For further information, contact CMHC at 1-888-463-6454 or visit www.cmhc-schl.gc.ca  — will open in a new tab.

  • Assessing Property for Wastewater Treatment System Clause

    Excerpt from Trading Services | 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (i) Sewage Disposal Systems

    In BC, many homes outside major urban areas don’t have access to a public sewer system. This means wastewater must be treated on the property, in accordance with the provincial Sewerage System Regulation, using what is known as an “onsite wastewater treatment system.” 

     

    For licensees representing sellers of properties with onsite wastewater treatment systems, there are a number of details they should be familiar with, in order to provide informed and competent service to their clients.

    Licensees may wish to consider the following questions when listing a property with an onsite wastewater treatment system:

    Does the Sewage System Regulation (SSR) apply to my client’s property?

    The Sewerage System Regulation (SSR), which came into force on May 31, 2005, covers onsite wastewater systems that:

    • process a sewage flow of less than 22,700 litres per day;
    • serve single-family systems or duplexes;
    • serve different buildings on a single parcel of land; and
    • serve one or more parcels on strata lots or on a shared interest of land.

    The SSR requires that records of the construction of the onsite system, and of any subsequent alterations to it, be filed with the local health authority. This applies to all properties, including those in remote areas or unorganized territories, whether a building permit is required or not.

    What about properties with systems constructed prior to May 31, 2005?

    The SSR is not retroactive. However, the seller should be able to prove that the system was in compliance with the regulation in effect at the time the system was constructed. Permits were required for systems built prior to May 31, 2005 and should be available at the local health authority. Please keep in mind that many documents have been lost/destroyed through the years, so the lack of information at the health unit may not necessarily mean that a permit was not taken.

    Has the system been planned and installed according to the regulations?

    Owners who have constructed a new onsite wastewater treatment system on or after May 31, 2005, or whose systems have been altered or repaired since that date, must have retained the services of an authorized person to plan, install and maintain the system. An authorized person is either a professional engineer or a Registered Onsite Wastewater Practitioner (ROWP). Although systems constructed prior to May 31, 2005 are not subject to this requirement, it is highly recommended that system maintenance be performed by a ROWP.

    ROWPS are registered with the Applied Science Technologists & Technicians of British Columbia (ASTTBC), which recognizes four categories of practitioners:

    • Planners, who perform site and soil assessments, design systems, and create maintenance plans for systems,
    • Installers, who install systems according to design plans,
    • Maintenance Providers, who monitor and maintain systems, and
    • Private Inspectors, who inspect and assess existing systems.

    Before beginning construction of an onsite wastewater treatment system, the authorized person must file the system’s plans and specifications with the local health authority. Within 30 days of completing the installation of the system, the authorized person must file the following documents with the local health authority, and provide copies of all documents to the owner:

    • a letter of certification;
    • a plan of the system including an As-Built Drawing; and
    • the Operating and Maintenance Manual.

    Has the Use Changed?

    Where a new use will be made of an existing onsite wastewater treatment system previously permitted under the 1985 Wastewater Treatment Regulation (for example, a house being built to replace a temporary or seasonal dwelling), an authorized person should conduct a site evaluation and a documented inspection of the system to determine if it is suitable for the new use.

    If the system requires upgrading, all regulatory filing provisions apply, including plans, specifications and a site evaluation with report.

    Has the system been adequately maintained?

    All onsite wastewater treatment systems need regular ongoing maintenance. Once an onsite system is installed, upgraded or repaired, it is the homeowner’s responsibility to ensure that the maintenance plan is followed. If the homeowner does not maintain the wastewater treatment system properly, malfunction and possible failure of the system can result, and the homeowner may need to pay for costly repairs or replacement of the disposal system.

    The Sewerage System Regulation and the Sewerage System Standard Practice Manual (created by the Ministry of Health) stipulate who may design, install or maintain sewage systems. All work on onsite systems, such as repairs to systems, and any maintenance on systems, must be performed by an authorized person. This includes the regular monitoring and maintenance of septic tanks, treatment plants or processes and dispersal fields (which may be required up to three times per year depending on usage and other conditions that may affect performance).

    Have I obtained all required documentation for the system?

    As a licensee acting for the seller of a property with an installed onsite wastewater treatment system, you should obtain the pertinent records from the local health authority in order to verify that:

    • for a wastewater treatment system installed prior to May 2005, the appropriate permit has been issued and the system was installed with the approval and inspection of the appropriate department of the B.C. government; or
    • for any wastewater treatment system installed after May 2005, that it was installed by an authorized person as defined in the Sewerage System Regulation and a Letter of Certification was filed with the local health authority; and
    • records of any major repairs and/or upgrades to the system have been filed with the health authority.

    Wastewater treatment systems may be subject to periodic inspections by the local government or the health authority may have issued a work order for a particular system. Licensees should check with the local health authority for the existence of such work orders and inspection reports.

    Should the system be inspected?

    Inspections of a property’s onsite wastewater treatment system, which are a condition of sale by mortgage or insurance companies, or by prospective buyers, must be performed by an authorized person, either a ROWP registered as a Private Inspector or a professional engineer. ASTTBC recommends that sellers have an inspection prior to listing their property for sale in order to identify any necessary maintenance or repairs. This can simplify the disclosure to buyers and alleviate concerns.

    Allow for appropriate time line to book an inspection and to gather all the required paperwork. Accessing the required documents from health authority offices or archives may take several days. Inspections of existing onsite wastewater treatment systems can be challenging and time-consuming, as they may be buried beneath mature landscaping, making the system in some cases difficult to locate and assess, as well as to perform any necessary maintenance and repairs.

    Ensure the authorized person receives:

    • all documents from the health authority,
    • land title documents indicating the location of any reserve fields and/or any existing covenants for reserve field easements,
    • records of past maintenance done on the system.

    If the system is to be inspected, a clause such as the following should be included in the Contract of Purchase and Sale:

    Sewage System Inspection Clause

    Subject to the Buyer, at the Buyer’s expense, receiving, reviewing and being satisfied with a report from an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation (‘‘Regulation’’)) concerning the operational function and condition of the components of the wastewater treatment system on the property (‘‘System’’), and compliance of the System with the Regulation on or before (date) .

    This condition is for the sole benefit of the Buyer.

    What if the inspection reveals problems with the system?

    Existing systems that require repairs and/or replacement must be brought into compliance with the Sewerage System Regulation, with limited exceptions. In addition to determining that the system was appropriately installed, a buyer should determine whether any maintenance on the system is in compliance with the Maintenance Plan filed with the health authority.

    What disclosure is required?

    Sellers must disclose any known problems with a septic system. Typically, a record of pumping (of the septic tank) and a copy of the septic permit (if applicable) is usually sufficient for disclosure purposes. Filing with the health authority is only required if there has been a substantive change to the septic system.

    If a Seller has confirmed that an existing wastewater treatment system has been properly installed, inspected and approved, the following clause should be suggested by buyers’ agents for inclusion in an offer:

    Seller Sewage System Representation and Warranty Clause

    The Seller represents and warrants that:

    1. the wastewater treatment system on the property (‘‘System’’) was installed, inspected and approved by an authorized person as defined in the British Columbia Sewerage System Regulation; and
    2. a permit/letter of certification respecting the System is on file with the local health authority.

    If an inspection reveals that the wastewater treatment system for the property does not meet the necessary standards, the contract should provide a clause such as the following:

    The Buyer acknowledges and agrees that the onsite wastewater treatment system (“System”) does not meet the approved standards as required and defined in the British Columbia Sewerage System Regulation, and/or that a permit and/or letter of certification respecting the System is not on file with the local health authority. The Buyer acknowledges and agrees that the Seller has not made any representations nor given any express or implied warranties with respect to the System. The Buyer accepts the System, in its present condition, “as is, where is.”

    What if there’s no wastewater system on the property?

    In the case of a property without sewage services, the contract should provide a clause allowing the buyer to obtain a site assessment by an authorized person for an onsite wastewater treatment system.

    Assessing Property for Wastewater Treatment System Clause

    Subject to the Buyer, at the Buyer’s expense, having the property assessed (‘‘Assessment’’) by an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation), to determine the feasibility of installing an onsite wastewater treatment system on the property (‘‘System’’), along with the cost associated with the installation of the System, and the Buyer being satisfied with the Assessment on or before (date).

    This condition is for the sole benefit of the Buyer.

    Our thanks to the Applied Science Technologists and Technicians of BC for their review and feedback on this article.

    For Further Information

  • Seller Sewage System Representation and Warranty

    Excerpt from Trading Services | 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (i) Sewage Disposal Systems

    In BC, many homes outside major urban areas don’t have access to a public sewer system. This means wastewater must be treated on the property, in accordance with the provincial Sewerage System Regulation, using what is known as an “onsite wastewater treatment system.” 

     

    For licensees representing sellers of properties with onsite wastewater treatment systems, there are a number of details they should be familiar with, in order to provide informed and competent service to their clients.

    Licensees may wish to consider the following questions when listing a property with an onsite wastewater treatment system:

    Does the Sewage System Regulation (SSR) apply to my client’s property?

    The Sewerage System Regulation (SSR), which came into force on May 31, 2005, covers onsite wastewater systems that:

    • process a sewage flow of less than 22,700 litres per day;
    • serve single-family systems or duplexes;
    • serve different buildings on a single parcel of land; and
    • serve one or more parcels on strata lots or on a shared interest of land.

    The SSR requires that records of the construction of the onsite system, and of any subsequent alterations to it, be filed with the local health authority. This applies to all properties, including those in remote areas or unorganized territories, whether a building permit is required or not.

    What about properties with systems constructed prior to May 31, 2005?

    The SSR is not retroactive. However, the seller should be able to prove that the system was in compliance with the regulation in effect at the time the system was constructed. Permits were required for systems built prior to May 31, 2005 and should be available at the local health authority. Please keep in mind that many documents have been lost/destroyed through the years, so the lack of information at the health unit may not necessarily mean that a permit was not taken.

    Has the system been planned and installed according to the regulations?

    Owners who have constructed a new onsite wastewater treatment system on or after May 31, 2005, or whose systems have been altered or repaired since that date, must have retained the services of an authorized person to plan, install and maintain the system. An authorized person is either a professional engineer or a Registered Onsite Wastewater Practitioner (ROWP). Although systems constructed prior to May 31, 2005 are not subject to this requirement, it is highly recommended that system maintenance be performed by a ROWP.

    ROWPS are registered with the Applied Science Technologists & Technicians of British Columbia (ASTTBC), which recognizes four categories of practitioners:

    • Planners, who perform site and soil assessments, design systems, and create maintenance plans for systems,
    • Installers, who install systems according to design plans,
    • Maintenance Providers, who monitor and maintain systems, and
    • Private Inspectors, who inspect and assess existing systems.

    Before beginning construction of an onsite wastewater treatment system, the authorized person must file the system’s plans and specifications with the local health authority. Within 30 days of completing the installation of the system, the authorized person must file the following documents with the local health authority, and provide copies of all documents to the owner:

    • a letter of certification;
    • a plan of the system including an As-Built Drawing; and
    • the Operating and Maintenance Manual.

    Has the Use Changed?

    Where a new use will be made of an existing onsite wastewater treatment system previously permitted under the 1985 Wastewater Treatment Regulation (for example, a house being built to replace a temporary or seasonal dwelling), an authorized person should conduct a site evaluation and a documented inspection of the system to determine if it is suitable for the new use.

    If the system requires upgrading, all regulatory filing provisions apply, including plans, specifications and a site evaluation with report.

    Has the system been adequately maintained?

    All onsite wastewater treatment systems need regular ongoing maintenance. Once an onsite system is installed, upgraded or repaired, it is the homeowner’s responsibility to ensure that the maintenance plan is followed. If the homeowner does not maintain the wastewater treatment system properly, malfunction and possible failure of the system can result, and the homeowner may need to pay for costly repairs or replacement of the disposal system.

    The Sewerage System Regulation and the Sewerage System Standard Practice Manual (created by the Ministry of Health) stipulate who may design, install or maintain sewage systems. All work on onsite systems, such as repairs to systems, and any maintenance on systems, must be performed by an authorized person. This includes the regular monitoring and maintenance of septic tanks, treatment plants or processes and dispersal fields (which may be required up to three times per year depending on usage and other conditions that may affect performance).

    Have I obtained all required documentation for the system?

    As a licensee acting for the seller of a property with an installed onsite wastewater treatment system, you should obtain the pertinent records from the local health authority in order to verify that:

    • for a wastewater treatment system installed prior to May 2005, the appropriate permit has been issued and the system was installed with the approval and inspection of the appropriate department of the B.C. government; or
    • for any wastewater treatment system installed after May 2005, that it was installed by an authorized person as defined in the Sewerage System Regulation and a Letter of Certification was filed with the local health authority; and
    • records of any major repairs and/or upgrades to the system have been filed with the health authority.

    Wastewater treatment systems may be subject to periodic inspections by the local government or the health authority may have issued a work order for a particular system. Licensees should check with the local health authority for the existence of such work orders and inspection reports.

    Should the system be inspected?

    Inspections of a property’s onsite wastewater treatment system, which are a condition of sale by mortgage or insurance companies, or by prospective buyers, must be performed by an authorized person, either a ROWP registered as a Private Inspector or a professional engineer. ASTTBC recommends that sellers have an inspection prior to listing their property for sale in order to identify any necessary maintenance or repairs. This can simplify the disclosure to buyers and alleviate concerns.

    Allow for appropriate time line to book an inspection and to gather all the required paperwork. Accessing the required documents from health authority offices or archives may take several days. Inspections of existing onsite wastewater treatment systems can be challenging and time-consuming, as they may be buried beneath mature landscaping, making the system in some cases difficult to locate and assess, as well as to perform any necessary maintenance and repairs.

    Ensure the authorized person receives:

    • all documents from the health authority,
    • land title documents indicating the location of any reserve fields and/or any existing covenants for reserve field easements,
    • records of past maintenance done on the system.

    If the system is to be inspected, a clause such as the following should be included in the Contract of Purchase and Sale:

    Sewage System Inspection Clause

    Subject to the Buyer, at the Buyer’s expense, receiving, reviewing and being satisfied with a report from an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation (‘‘Regulation’’)) concerning the operational function and condition of the components of the wastewater treatment system on the property (‘‘System’’), and compliance of the System with the Regulation on or before (date) .

    This condition is for the sole benefit of the Buyer.

    What if the inspection reveals problems with the system?

    Existing systems that require repairs and/or replacement must be brought into compliance with the Sewerage System Regulation, with limited exceptions. In addition to determining that the system was appropriately installed, a buyer should determine whether any maintenance on the system is in compliance with the Maintenance Plan filed with the health authority.

    What disclosure is required?

    Sellers must disclose any known problems with a septic system. Typically, a record of pumping (of the septic tank) and a copy of the septic permit (if applicable) is usually sufficient for disclosure purposes. Filing with the health authority is only required if there has been a substantive change to the septic system.

    If a Seller has confirmed that an existing wastewater treatment system has been properly installed, inspected and approved, the following clause should be suggested by buyers’ agents for inclusion in an offer:

    Seller Sewage System Representation and Warranty Clause

    The Seller represents and warrants that:

    1. the wastewater treatment system on the property (‘‘System’’) was installed, inspected and approved by an authorized person as defined in the British Columbia Sewerage System Regulation; and
    2. a permit/letter of certification respecting the System is on file with the local health authority.

    If an inspection reveals that the wastewater treatment system for the property does not meet the necessary standards, the contract should provide a clause such as the following:

    The Buyer acknowledges and agrees that the onsite wastewater treatment system (“System”) does not meet the approved standards as required and defined in the British Columbia Sewerage System Regulation, and/or that a permit and/or letter of certification respecting the System is not on file with the local health authority. The Buyer acknowledges and agrees that the Seller has not made any representations nor given any express or implied warranties with respect to the System. The Buyer accepts the System, in its present condition, “as is, where is.”

    What if there’s no wastewater system on the property?

    In the case of a property without sewage services, the contract should provide a clause allowing the buyer to obtain a site assessment by an authorized person for an onsite wastewater treatment system.

    Assessing Property for Wastewater Treatment System Clause

    Subject to the Buyer, at the Buyer’s expense, having the property assessed (‘‘Assessment’’) by an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation), to determine the feasibility of installing an onsite wastewater treatment system on the property (‘‘System’’), along with the cost associated with the installation of the System, and the Buyer being satisfied with the Assessment on or before (date).

    This condition is for the sole benefit of the Buyer.

    Our thanks to the Applied Science Technologists and Technicians of BC for their review and feedback on this article.

    For Further Information

  • Sewage System Inspection Clause

    Excerpt from Trading Services | 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (i) Sewage Disposal Systems

    In BC, many homes outside major urban areas don’t have access to a public sewer system. This means wastewater must be treated on the property, in accordance with the provincial Sewerage System Regulation, using what is known as an “onsite wastewater treatment system.” 

     

    For licensees representing sellers of properties with onsite wastewater treatment systems, there are a number of details they should be familiar with, in order to provide informed and competent service to their clients.

    Licensees may wish to consider the following questions when listing a property with an onsite wastewater treatment system:

    Does the Sewage System Regulation (SSR) apply to my client’s property?

    The Sewerage System Regulation (SSR), which came into force on May 31, 2005, covers onsite wastewater systems that:

    • process a sewage flow of less than 22,700 litres per day;
    • serve single-family systems or duplexes;
    • serve different buildings on a single parcel of land; and
    • serve one or more parcels on strata lots or on a shared interest of land.

    The SSR requires that records of the construction of the onsite system, and of any subsequent alterations to it, be filed with the local health authority. This applies to all properties, including those in remote areas or unorganized territories, whether a building permit is required or not.

    What about properties with systems constructed prior to May 31, 2005?

    The SSR is not retroactive. However, the seller should be able to prove that the system was in compliance with the regulation in effect at the time the system was constructed. Permits were required for systems built prior to May 31, 2005 and should be available at the local health authority. Please keep in mind that many documents have been lost/destroyed through the years, so the lack of information at the health unit may not necessarily mean that a permit was not taken.

    Has the system been planned and installed according to the regulations?

    Owners who have constructed a new onsite wastewater treatment system on or after May 31, 2005, or whose systems have been altered or repaired since that date, must have retained the services of an authorized person to plan, install and maintain the system. An authorized person is either a professional engineer or a Registered Onsite Wastewater Practitioner (ROWP). Although systems constructed prior to May 31, 2005 are not subject to this requirement, it is highly recommended that system maintenance be performed by a ROWP.

    ROWPS are registered with the Applied Science Technologists & Technicians of British Columbia (ASTTBC), which recognizes four categories of practitioners:

    • Planners, who perform site and soil assessments, design systems, and create maintenance plans for systems,
    • Installers, who install systems according to design plans,
    • Maintenance Providers, who monitor and maintain systems, and
    • Private Inspectors, who inspect and assess existing systems.

    Before beginning construction of an onsite wastewater treatment system, the authorized person must file the system’s plans and specifications with the local health authority. Within 30 days of completing the installation of the system, the authorized person must file the following documents with the local health authority, and provide copies of all documents to the owner:

    • a letter of certification;
    • a plan of the system including an As-Built Drawing; and
    • the Operating and Maintenance Manual.

    Has the Use Changed?

    Where a new use will be made of an existing onsite wastewater treatment system previously permitted under the 1985 Wastewater Treatment Regulation (for example, a house being built to replace a temporary or seasonal dwelling), an authorized person should conduct a site evaluation and a documented inspection of the system to determine if it is suitable for the new use.

    If the system requires upgrading, all regulatory filing provisions apply, including plans, specifications and a site evaluation with report.

    Has the system been adequately maintained?

    All onsite wastewater treatment systems need regular ongoing maintenance. Once an onsite system is installed, upgraded or repaired, it is the homeowner’s responsibility to ensure that the maintenance plan is followed. If the homeowner does not maintain the wastewater treatment system properly, malfunction and possible failure of the system can result, and the homeowner may need to pay for costly repairs or replacement of the disposal system.

    The Sewerage System Regulation and the Sewerage System Standard Practice Manual (created by the Ministry of Health) stipulate who may design, install or maintain sewage systems. All work on onsite systems, such as repairs to systems, and any maintenance on systems, must be performed by an authorized person. This includes the regular monitoring and maintenance of septic tanks, treatment plants or processes and dispersal fields (which may be required up to three times per year depending on usage and other conditions that may affect performance).

    Have I obtained all required documentation for the system?

    As a licensee acting for the seller of a property with an installed onsite wastewater treatment system, you should obtain the pertinent records from the local health authority in order to verify that:

    • for a wastewater treatment system installed prior to May 2005, the appropriate permit has been issued and the system was installed with the approval and inspection of the appropriate department of the B.C. government; or
    • for any wastewater treatment system installed after May 2005, that it was installed by an authorized person as defined in the Sewerage System Regulation and a Letter of Certification was filed with the local health authority; and
    • records of any major repairs and/or upgrades to the system have been filed with the health authority.

    Wastewater treatment systems may be subject to periodic inspections by the local government or the health authority may have issued a work order for a particular system. Licensees should check with the local health authority for the existence of such work orders and inspection reports.

    Should the system be inspected?

    Inspections of a property’s onsite wastewater treatment system, which are a condition of sale by mortgage or insurance companies, or by prospective buyers, must be performed by an authorized person, either a ROWP registered as a Private Inspector or a professional engineer. ASTTBC recommends that sellers have an inspection prior to listing their property for sale in order to identify any necessary maintenance or repairs. This can simplify the disclosure to buyers and alleviate concerns.

    Allow for appropriate time line to book an inspection and to gather all the required paperwork. Accessing the required documents from health authority offices or archives may take several days. Inspections of existing onsite wastewater treatment systems can be challenging and time-consuming, as they may be buried beneath mature landscaping, making the system in some cases difficult to locate and assess, as well as to perform any necessary maintenance and repairs.

    Ensure the authorized person receives:

    • all documents from the health authority,
    • land title documents indicating the location of any reserve fields and/or any existing covenants for reserve field easements,
    • records of past maintenance done on the system.

    If the system is to be inspected, a clause such as the following should be included in the Contract of Purchase and Sale:

    Sewage System Inspection Clause

    Subject to the Buyer, at the Buyer’s expense, receiving, reviewing and being satisfied with a report from an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation (‘‘Regulation’’)) concerning the operational function and condition of the components of the wastewater treatment system on the property (‘‘System’’), and compliance of the System with the Regulation on or before (date) .

    This condition is for the sole benefit of the Buyer.

    What if the inspection reveals problems with the system?

    Existing systems that require repairs and/or replacement must be brought into compliance with the Sewerage System Regulation, with limited exceptions. In addition to determining that the system was appropriately installed, a buyer should determine whether any maintenance on the system is in compliance with the Maintenance Plan filed with the health authority.

    What disclosure is required?

    Sellers must disclose any known problems with a septic system. Typically, a record of pumping (of the septic tank) and a copy of the septic permit (if applicable) is usually sufficient for disclosure purposes. Filing with the health authority is only required if there has been a substantive change to the septic system.

    If a Seller has confirmed that an existing wastewater treatment system has been properly installed, inspected and approved, the following clause should be suggested by buyers’ agents for inclusion in an offer:

    Seller Sewage System Representation and Warranty Clause

    The Seller represents and warrants that:

    1. the wastewater treatment system on the property (‘‘System’’) was installed, inspected and approved by an authorized person as defined in the British Columbia Sewerage System Regulation; and
    2. a permit/letter of certification respecting the System is on file with the local health authority.

    If an inspection reveals that the wastewater treatment system for the property does not meet the necessary standards, the contract should provide a clause such as the following:

    The Buyer acknowledges and agrees that the onsite wastewater treatment system (“System”) does not meet the approved standards as required and defined in the British Columbia Sewerage System Regulation, and/or that a permit and/or letter of certification respecting the System is not on file with the local health authority. The Buyer acknowledges and agrees that the Seller has not made any representations nor given any express or implied warranties with respect to the System. The Buyer accepts the System, in its present condition, “as is, where is.”

    What if there’s no wastewater system on the property?

    In the case of a property without sewage services, the contract should provide a clause allowing the buyer to obtain a site assessment by an authorized person for an onsite wastewater treatment system.

    Assessing Property for Wastewater Treatment System Clause

    Subject to the Buyer, at the Buyer’s expense, having the property assessed (‘‘Assessment’’) by an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation), to determine the feasibility of installing an onsite wastewater treatment system on the property (‘‘System’’), along with the cost associated with the installation of the System, and the Buyer being satisfied with the Assessment on or before (date).

    This condition is for the sole benefit of the Buyer.

    Our thanks to the Applied Science Technologists and Technicians of BC for their review and feedback on this article.

    For Further Information

  • Wastewater Treatment System Does Not Meet Standards Clause

    Excerpt from Trading Services | 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (i) Sewage Disposal Systems

    In BC, many homes outside major urban areas don’t have access to a public sewer system. This means wastewater must be treated on the property, in accordance with the provincial Sewerage System Regulation, using what is known as an “onsite wastewater treatment system.” 

     

    For licensees representing sellers of properties with onsite wastewater treatment systems, there are a number of details they should be familiar with, in order to provide informed and competent service to their clients.

    Licensees may wish to consider the following questions when listing a property with an onsite wastewater treatment system:

    Does the Sewage System Regulation (SSR) apply to my client’s property?

    The Sewerage System Regulation (SSR), which came into force on May 31, 2005, covers onsite wastewater systems that:

    • process a sewage flow of less than 22,700 litres per day;
    • serve single-family systems or duplexes;
    • serve different buildings on a single parcel of land; and
    • serve one or more parcels on strata lots or on a shared interest of land.

    The SSR requires that records of the construction of the onsite system, and of any subsequent alterations to it, be filed with the local health authority. This applies to all properties, including those in remote areas or unorganized territories, whether a building permit is required or not.

    What about properties with systems constructed prior to May 31, 2005?

    The SSR is not retroactive. However, the seller should be able to prove that the system was in compliance with the regulation in effect at the time the system was constructed. Permits were required for systems built prior to May 31, 2005 and should be available at the local health authority. Please keep in mind that many documents have been lost/destroyed through the years, so the lack of information at the health unit may not necessarily mean that a permit was not taken.

    Has the system been planned and installed according to the regulations?

    Owners who have constructed a new onsite wastewater treatment system on or after May 31, 2005, or whose systems have been altered or repaired since that date, must have retained the services of an authorized person to plan, install and maintain the system. An authorized person is either a professional engineer or a Registered Onsite Wastewater Practitioner (ROWP). Although systems constructed prior to May 31, 2005 are not subject to this requirement, it is highly recommended that system maintenance be performed by a ROWP.

    ROWPS are registered with the Applied Science Technologists & Technicians of British Columbia (ASTTBC), which recognizes four categories of practitioners:

    • Planners, who perform site and soil assessments, design systems, and create maintenance plans for systems,
    • Installers, who install systems according to design plans,
    • Maintenance Providers, who monitor and maintain systems, and
    • Private Inspectors, who inspect and assess existing systems.

    Before beginning construction of an onsite wastewater treatment system, the authorized person must file the system’s plans and specifications with the local health authority. Within 30 days of completing the installation of the system, the authorized person must file the following documents with the local health authority, and provide copies of all documents to the owner:

    • a letter of certification;
    • a plan of the system including an As-Built Drawing; and
    • the Operating and Maintenance Manual.

    Has the Use Changed?

    Where a new use will be made of an existing onsite wastewater treatment system previously permitted under the 1985 Wastewater Treatment Regulation (for example, a house being built to replace a temporary or seasonal dwelling), an authorized person should conduct a site evaluation and a documented inspection of the system to determine if it is suitable for the new use.

    If the system requires upgrading, all regulatory filing provisions apply, including plans, specifications and a site evaluation with report.

    Has the system been adequately maintained?

    All onsite wastewater treatment systems need regular ongoing maintenance. Once an onsite system is installed, upgraded or repaired, it is the homeowner’s responsibility to ensure that the maintenance plan is followed. If the homeowner does not maintain the wastewater treatment system properly, malfunction and possible failure of the system can result, and the homeowner may need to pay for costly repairs or replacement of the disposal system.

    The Sewerage System Regulation and the Sewerage System Standard Practice Manual (created by the Ministry of Health) stipulate who may design, install or maintain sewage systems. All work on onsite systems, such as repairs to systems, and any maintenance on systems, must be performed by an authorized person. This includes the regular monitoring and maintenance of septic tanks, treatment plants or processes and dispersal fields (which may be required up to three times per year depending on usage and other conditions that may affect performance).

    Have I obtained all required documentation for the system?

    As a licensee acting for the seller of a property with an installed onsite wastewater treatment system, you should obtain the pertinent records from the local health authority in order to verify that:

    • for a wastewater treatment system installed prior to May 2005, the appropriate permit has been issued and the system was installed with the approval and inspection of the appropriate department of the B.C. government; or
    • for any wastewater treatment system installed after May 2005, that it was installed by an authorized person as defined in the Sewerage System Regulation and a Letter of Certification was filed with the local health authority; and
    • records of any major repairs and/or upgrades to the system have been filed with the health authority.

    Wastewater treatment systems may be subject to periodic inspections by the local government or the health authority may have issued a work order for a particular system. Licensees should check with the local health authority for the existence of such work orders and inspection reports.

    Should the system be inspected?

    Inspections of a property’s onsite wastewater treatment system, which are a condition of sale by mortgage or insurance companies, or by prospective buyers, must be performed by an authorized person, either a ROWP registered as a Private Inspector or a professional engineer. ASTTBC recommends that sellers have an inspection prior to listing their property for sale in order to identify any necessary maintenance or repairs. This can simplify the disclosure to buyers and alleviate concerns.

    Allow for appropriate time line to book an inspection and to gather all the required paperwork. Accessing the required documents from health authority offices or archives may take several days. Inspections of existing onsite wastewater treatment systems can be challenging and time-consuming, as they may be buried beneath mature landscaping, making the system in some cases difficult to locate and assess, as well as to perform any necessary maintenance and repairs.

    Ensure the authorized person receives:

    • all documents from the health authority,
    • land title documents indicating the location of any reserve fields and/or any existing covenants for reserve field easements,
    • records of past maintenance done on the system.

    If the system is to be inspected, a clause such as the following should be included in the Contract of Purchase and Sale:

    Sewage System Inspection Clause

    Subject to the Buyer, at the Buyer’s expense, receiving, reviewing and being satisfied with a report from an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation (‘‘Regulation’’)) concerning the operational function and condition of the components of the wastewater treatment system on the property (‘‘System’’), and compliance of the System with the Regulation on or before (date) .

    This condition is for the sole benefit of the Buyer.

    What if the inspection reveals problems with the system?

    Existing systems that require repairs and/or replacement must be brought into compliance with the Sewerage System Regulation, with limited exceptions. In addition to determining that the system was appropriately installed, a buyer should determine whether any maintenance on the system is in compliance with the Maintenance Plan filed with the health authority.

    What disclosure is required?

    Sellers must disclose any known problems with a septic system. Typically, a record of pumping (of the septic tank) and a copy of the septic permit (if applicable) is usually sufficient for disclosure purposes. Filing with the health authority is only required if there has been a substantive change to the septic system.

    If a Seller has confirmed that an existing wastewater treatment system has been properly installed, inspected and approved, the following clause should be suggested by buyers’ agents for inclusion in an offer:

    Seller Sewage System Representation and Warranty Clause

    The Seller represents and warrants that:

    1. the wastewater treatment system on the property (‘‘System’’) was installed, inspected and approved by an authorized person as defined in the British Columbia Sewerage System Regulation; and
    2. a permit/letter of certification respecting the System is on file with the local health authority.

    If an inspection reveals that the wastewater treatment system for the property does not meet the necessary standards, the contract should provide a clause such as the following:

    The Buyer acknowledges and agrees that the onsite wastewater treatment system (“System”) does not meet the approved standards as required and defined in the British Columbia Sewerage System Regulation, and/or that a permit and/or letter of certification respecting the System is not on file with the local health authority. The Buyer acknowledges and agrees that the Seller has not made any representations nor given any express or implied warranties with respect to the System. The Buyer accepts the System, in its present condition, “as is, where is.”

    What if there’s no wastewater system on the property?

    In the case of a property without sewage services, the contract should provide a clause allowing the buyer to obtain a site assessment by an authorized person for an onsite wastewater treatment system.

    Assessing Property for Wastewater Treatment System Clause

    Subject to the Buyer, at the Buyer’s expense, having the property assessed (‘‘Assessment’’) by an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation), to determine the feasibility of installing an onsite wastewater treatment system on the property (‘‘System’’), along with the cost associated with the installation of the System, and the Buyer being satisfied with the Assessment on or before (date).

    This condition is for the sole benefit of the Buyer.

    Our thanks to the Applied Science Technologists and Technicians of BC for their review and feedback on this article.

    For Further Information

Strata

  • Additional Fees Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (ix) Strata Fees and Related Items

    In addition to collecting strata fees for a strata lot’s contribution to the operating fund and the contingency reserve fund, some strata corporations/sections charge user fees (sometimes called rent) for parking, storage facilities, or other services. In instances where there are charges in excess of the monthly strata fees, licensees should include the following clause in the Contract of Purchase and Sale:

    Additional Fees Clause

    The Buyer is also aware that the strata corporation (or the section if applicable) charges an additional (monthly, yearly, etc.) fee(s) for

    (parking, storage, etc.) in the amount of $ (amount).

  • Buyer's Approval of Property Disclosure Statement—Strata Title Properties Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (iii) Property Disclosure Statement

    Often the first document that licensees working with buyers see regarding the condition of a property is the Property Disclosure Statement (PDS). This document is useful as a starting point for buyers to begin their due diligence process.

    A buyer’s agent should always recommend to the buyer that the PDS be incorporated into the Contract of Purchase and Sale. A buyer’s legal remedies are severely curtailed if the buyer does NOT make the PDS part of the contract.

    Merely attaching a PDS to a Contract of Purchase and Sale does NOT incorporate the PDS into the contract. Clear evidence must exist that all of the parties intend to make the PDS part of the contractual obligations between them. To clearly state that the PDS is incorporated into the Contract of Purchase and Sale, the following clause must be inserted into the contract:

    Property Disclosure Statement — Strata Title Properties Clause

    The attached Property Disclosure Statement — Strata Title Properties dated (date) is incorporated into and forms part of this contract.

    If the Property Disclosure Statement — Strata Title Properties has not been attached to the offer at the time it was written, the licensee must use a subject clause to allow for approval of the Property Disclosure Statement — Strata Title Properties, as follows:

    Buyer’s Approval of Property Disclosure Statement — Strata Title Properties Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement — Strata Title Properties, with respect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential.

    This condition is for the sole benefit of the Buyer.

    If approved such statement will be incorporated into and form part of this contract.

    A buyer’s agent should still recommend a property inspection, even where there is a PDS that is incorporated into the Contract of Purchase and Sale. A buyer’s agent should also recommend that the buyer carefully discuss the Property Disclosure Statement with the buyer’s property inspector.

  • Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    a) written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    a) the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • Nature of the Parking Stall(s)/Storage Locker Needs To Be Verified Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (b) Obtaining Information - View Entire Section

    (ii) Strata Documents - View Subsection

    (1) Form B Information Certificate - View Sub-subsection

    (ii) Parking Stalls and Storage Lockers

    It is important to remember that, the use of parking stalls or storage lockers by the seller does not necessarily mean that they will be available for the purchaser. Unless it is clear that the parking stall/storage locker will be available to be used by the purchaser, the parking stall /storage locker should not be included on the listing.

    Effective January 1, 2014, the Form B is required to indicate the designation of parking stalls and storage lockers and must indicate whether they are part of a strata lot, a separate strata lot, limited common property or common property. If the designation is common property, the Form B must also identify how the use is administered. The Form B must indicate whether the Strata Council has given approval for the use, whether the parking stall or storage locker is rented on a monthly basis and if so, the amount of the rent or alternatively, whether the parking stall or storage locker has been allocated by an assignment from the owner developer.

    Following is an explanation of the various designations that may be identified on a Form B, and the significance to the seller and buyer.

    • Strata Lot or Part of a Strata Lot

    Some strata plans designate parking stalls/storage lockers as part of a strata lot or, in some very rare cases, as a separate strata lot. Although such designations are rare, the Form B will indicate the designation. If the parking stall/storage locker is part of a strata lot, the new purchaser will automatically own and therefore have the use of the area when the strata lot is purchased. The listing for the strata lot can identify the parking stall/storage locker by reference to its stall or locker number. It is not necessary to list the parking stall/storage locker separately. No further action is required by the buyer to ensure that the buyer will have the use of the parking stall/storage locker.

    In some cases, parking spaces may be designated as a separate strata lot. If the seller is selling both the residential/commercial strata lot and the parking strata lot, both must be listed for sale and separately transferred to the buyer.

    • Limited Common Property (LCP)

    If a parking stall/storage locker is designated as LCP, whether by the developer, or by the owners at a later time, the parking stall/storage locker is automatically available for use by the owner of the strata lot to which the parking stall/storage locker is designated.

    When listing a strata lot to which the exclusive use of a LCP parking stall/storage locker is designated the listing should indicate that the parking stall/storage locker is LCP. The numbers of the parking stall(s)/storage locker(s) can be shown on the listing as being the parking space(s)/storage locker(s) number that the buyer will be entitled to use. No further action is required by the buyer to ensure that the buyer will have the use of the parking stall/storage locker.

    • Common Property

    If the parking stall/storage locker is designated on the strata plan as common property, it is within the control of the Strata Council, except in cases where there is a developer’s lease, which is discussed below.

    Common property is owned by all owners as tenants in common. The Strata Council has the authority under the Strata Property Act to permit an owner or a tenant to use common property. If the parking stalls/storage lockers are common property, owners or tenants are entitled to use a particular area as a result of the Strata Council’s grant of exclusive use to that owner or tenant. The Form B will indicate whether the parking stall/storage locker is available for use as a consequence of an allocation of use by the Strata Council. In some cases, the permission to use the parking stall/storage locker may have been given many years ago. Some owners may not even realize that they are using their parking stall/storage locker as a result of the permission granted by the Strata Council. It may even be that the permission to use the parking stall/storage locker was originally given by the developer during the time the developer was acting as the strata council.  

    The provision of the Strata Property Act that authorizes the Strata Council to grant permission to an owner or tenant to use common property limits the period of time for which permission can be given to one year. The permission may be subject to conditions. The permission may be renewed and may be made subject to the same or different conditions. Additionally, the permission for the exclusive use of common property may be cancelled on reasonable notice.

    Because the allocation of the use of common property is within the control of the Strata Council and can change, when listing a strata lot where the parking stall/storage locker is common property, the seller should not promise a buyer that the buyer will be entitled to use any of the common property. Rather, the seller should refer the buyer to the information on the Form B.

    The buyer can rely on the Form B to indicate which parking stall/storage locker is allocated to the strata lot being purchased, however the buyer’s agent should clearly point out the statement on the Form B that indicates that where the designation of the parking stall/storage locker is common property, the allocation is subject to section 76 of the Strata Property Act and may be subject to change in the future. If the Form B is incomplete, or the information conflicts with the information provided by the vendor, the licensee should recommend that their client seek legal advice.

    • Developer’s Leases

    In a number of developments the developer has entered into a lease of the common property parking stalls/storage lockers to itself or to a company related to the developer. After leasing the common property, the developer then enters into agreements with purchasers in which the developer subleases and assigns one or more parking stalls/storage lockers to a purchaser. The developer may charge for all subleases, or it may charge for only additional parking stalls/storage lockers.

    Although the lease and sublease agreements vary, generally, the sublease provides that the owner must assign the sublease to a new purchaser at the time the strata lot is sold.

    Leases of common property parking and storage areas are seldom registered on title, however, the Form B is required to indicate whether such a lease is likely in place.

    Although the seller may not recall whether there was a sublease agreement, the information about the sublease may be contained on the contract of purchase and sale that was prepared when the seller bought the strata lot. If the information about the lease and sublease is not available, the seller should rely on the Form B as the indication that a lease/sublease arrangement is likely to exist. However, without specific information about the sublease, and particularly which parking stall/storage locker was leased, the seller is unable to provide the purchaser with any definitive information regarding the purchaser’s ability to use the parking stall/storage locker other than the information contained on the Form B. If the seller requires more information on the parking stall/storage locker that was assigned as part of the sublease, the seller may need to obtain legal advice. If the seller has a copy of the sublease of a parking stall/storage locker from the developer, the listing licensee can include reference to the parking stall/storage locker when listing the strata lot for sale. The listing should indicate that the area in question is common property and that the seller has a sublease to a specific parking stall/storage locker. The number of the parking stall/storage locker can be shown on the listing. Without a copy of the sublease, the listing should only indicate the information contained on the Form B. A reference to a specific parking stall/storage locker should not be included on the listing agreement.

    If the seller has a copy of the sublease, the buyer’s agent should obtain a copy and advise the buyer to read the sublease, or obtain legal advice, to ensure that the sublease can be assigned to the buyer. If the seller does not have a copy of the sublease, the buyer’s agent should recommend that the buyer obtain legal advice to ensure that the buyer will be entitled to the use of the parking stall(s)/storage locker(s) that are used by the seller. In such cases, a buyer’s agent should insert the following clause

    Nature of the Parking Stall(s)/Storage Locker needs to be Verified Clause

    Subject to the Buyer verifying on or before (date) that the parking stall(s)/storage locker. associated with the strata lot, which are # ____ is (are) designated under a lease between ____, as landlord, and ____, as tenant, or under a licence agreement between ____, as licensor [the person who gives the licence] and ____, as licensee [the person who takes the benefit of the licence], etc.).

    This condition is for the sole benefit of the Buyer.

    • Claims the Parking Stall/Storage Locker was Purchased

    In a number of cases, sellers of strata lots insist that the listing should include the parking stall/storage locker because the seller believes they bought the parking stall/storage locker from the developer. The payment may have occurred in conjunction with a sublease of the parking area, or it may have been required by the developer in order to permit the allocation of common property. Notwithstanding any claims by sellers that they paid for a parking stall/storage locker and thus own the parking stall/storage locker, the designations as set out on the Form B are the designations that must be considered when determining how to represent parking stalls/storage lockers on the listing and when considering what a purchaser will be entitled to use after the strata lot is purchased.

  • No Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    Excerpt from Trading Services | Section 2. Acting For Sellers

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    (n) Disclosure of Illegal Activities

    [December 2018: The following section was revised in the Professional Standards Manual]

    If real estate has been used for the illegal production of substances, such as illegal cannabis growth operations or as a methamphetamine laboratory, and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards or structural damage that cannot be discovered on a reasonable examination of the property. 

    If no disclosure has been made by the seller in this regard, RECBC recommends that licensees acting for buyers encourage including the following clause in the contract of purchase and sale to confirm that the property has not been used to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Seller represents and warrants that, during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for the illegal growth  of  any substances or growth or manufacture of any illegal substances.  This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, the property and the buildings and structures thereon have never been used for the illegal growth of any substance, or growth or manufacture of illegal substances.

    If, however, the property has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that

    a) written disclosure of the property use be made to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with non-strata properties)

    The Buyer acknowledges that the property and the buildings and structures thereon may have been used for the illegal growth of substances, or for the growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises. The Buyer accepts the property and the buildings and structures thereon in their present state, and in an ‘‘as is’’ condition.

    § NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including illegal cannabis growth operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

     

    [December 2018: The following section was added to the Professional Standards Manual]

    In the sale of a strata lot, except perhaps where the strata lot is part of a bare land strata corporation, a seller cannot be expected to have the knowledge about the property implied in the above clause.

    Licensees may find the following adapted versions of the clauses useful in the sale of strata lots.

    RECBC recommends that licensees use the following clause to confirm that the strata lot has not been used to illegally grow any substances, or to grow or manufacture illegal substances:

    No Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Seller represents and warrants that, during the time the Seller has owned the strata lot, neither the strata lot nor any limited common property associated with the strata lot has been used for the illegal growth of any substances, or for the growth or manufacture of any illegal substances. This warranty shall survive and not merge on the completion of this transaction. Further, the Seller represents that, to the best of the Seller’s knowledge and belief, neither the strata lot nor any limited common property associated with the strata lot has ever been used for the illegal growth of any substances, or growth or manufacture of illegal substances.

    If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that:

    a) the seller make a written disclosure to the buyer in a form separate from the Contract of Purchase and Sale; and

    b) the following clause be included in the Contract:

     

    Illegal Growth of Substances, or Growth or Manufacture of Illegal Substances Clause (for use with strata lots)

    The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. The Buyer accepts the strata lot in its present state, and in an ‘‘as is’’ condition.

    §NOTE: The use of this or a similar clause in the Contract of Purchase and Sale does not replace the requirement to have made such a disclosure on a separate document prior to the offer being accepted.

    Licensees should also be aware that many financial institutions have lending restrictions they may apply to properties that have been used for illegal cannabis growth operations or the manufacture of illegal substances.

    Licensees should also be aware that home warranty insurance may be void if it is found that illegal activity has occurred in the premises. The Homeowner Protection Act  — will open in a new tab provides for certain permitted exclusions from warranty coverage due to, among other items, non-residential use, illegal activity (including cannabis growing operations) and failure to properly maintain the premises. Under some home warranty programs, current or subsequent owners may be impacted by exclusions from warranty coverage that are permitted by the Homeowner Protection Act and thus could void warranty insurance.

  • Notification of Changes in Bylaws or Rules Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (xi) Mixed Use

    To more effectively enforce a quiet lifestyle in a mixed-use development, a strata corporation may amend its bylaws to restrict the activities of certain businesses that might operate in a non-residential strata lot. For instance, a bylaw may prohibit the owner of a non-residential strata lot from operating a nightclub or prevent operating a commercial business after 7:00 p.m.

    If the strata corporation does not have a bylaw that limits the types of business or their activities that operate in the non-residential strata lots, a buyer’s agent should point this out to the buyer. It is also a good idea to obtain a copy of the relevant zoning bylaw that shows what kinds of activities are permissible in the area in question and give it to the buyer.

    In situations where the buyer wishes to make an offer conditional upon receiving a copy of the zoning bylaw and being satisfied with permitted activities, the following clause should be inserted in the Contract of Purchase and Sale.

    Receipt of Zoning Bylaw Clause

    Subject to the Buyer receiving a copy of the relevant zoning bylaw for the property and approving the uses permitted by (date).

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Change in Bylaws

    The possibility exists that changes may be made in a strata corporation’s bylaws between the date of acceptance of an offer and the completion date, particularly following annual general meetings or extraordinary meetings.

    As outlined previously, licensees should obtain the minutes of the strata corporation’s last Annual General Meeting, and any strata council meetings held in the interim, and deliver them to the buyers along with the amended bylaws. These minutes may contain changes in bylaws or a notice of motion to change bylaws that would be significant to the buyers’ decision to purchase.

    Notification of Changes in Bylaws or Rules Clause

    The Seller will notify the Buyer before the completion date of any notice of a resolution to amend the bylaws or rules of the strata corporation, or the bylaws or rules of a section to which the strata lot belongs, or any amendment to such bylaws or rules, that the Seller has not previously disclosed to the Buyer. The Seller will promptly deliver a copy of the relevant resolution or notice of resolution to the Buyer.

    Ώ Where such notification is provided to buyers, licensees should advise buyers to seek legal advice.

  • Properties without a Strata Council Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (a) Strata Developments – The Basics - View Entire Section

    (iii) Strata Governance and Compliance

    The Strata Property Act regulates the creation and operation of strata corporations. A strata corporation is a unique form of real estate development that permits multi-unit developments, each with an individual title, to be created on a single parcel of land. Strata plans may be filed to create multi-unit developments ranging in size from two to hundreds of units. The units may be for residential, commercial, industrial, or recreational use or some combination of these various uses. When a strata plan is filed in the Land Title Office, a strata corporation is created. Thus, a two unit duplex may be a strata corporation.

    The Strata Property Act and Regulation govern the operation of all strata corporations created in British Columbia. Some of the operational requirements are that every strata corporation must have bylaws, it must hold annual general meetings and keep minutes of the meetings, it must retain records relating to the strata corporation, the owners must approve a budget annually and the strata corporation must maintain operating and contingency reserve funds.

    Regardless of the size or way in which the units are to be used, the Strata Property Act and the Regulation apply to govern the strata corporation’s operation. Although provincial legislation applies to all strata corporations, there is no government body that enforces the legislation to ensure that strata corporations comply with the legislative requirements. As a result, some strata corporations will comply diligently with the governance requirements, while others will consider the legislation as a noncompulsory guide and others, particularly smaller strata corporations, may ignore the legislative requirements completely.

    A strata corporation that retains a third party management company to assist in the management is more likely to comply with the legislative requirements, however there are many self-managed strata corporations that are well informed regarding the requirements of the legislation and are diligent in their efforts to comply. Small strata corporations tend to be less familiar with the requirements of the legislation, and in some cases may deny that the legislative provisions are applicable. It is not uncommon, for example, for duplex owners to deny that they are part of a strata corporation and thus fail to hold general meetings, approve budgets and maintain operating and contingency reserve funds. Some owners even believe that the legislation exempts smaller strata corporations from the need to comply with the legislation. Others believe that the Strata Property Act does not apply to strata developments used for commercial or industrial purposes. Such beliefs are incorrect. Neither the Strata Property Act nor the Regulation contains exemptions from the governance requirements for any strata corporation.  

    Some licensees refer to strata corporations that do not hold meetings, or maintain the necessary operating and contingency reserve funds as “non-compliant.” In such strata corporations, meeting minutes, budgets, and/or financial statements may not exist. To ensure that sellers will not be held liable by buyers for the strata corporation’s failure to comply with the legislation and will not be liable to produce documentation that does not exist, listing licensees should insure that any subject clauses requiring the production of documents (other than the request for insurance documents which is discussed below) are deleted. Additionally, listing licensees may wish to include the following clause in the Contract of Purchase and Sale when selling these properties but care must be taken to ensure the strata corporation is “non-compliant” prior to using the following clauses or some variation thereof.

    Properties without a Strata Council Clause

    The Buyer acknowledges that this strata corporation has not been run in compliance with the Strata Property Act and, in particular, there is no active strata council, there have been no strata meetings, there is no budget, no strata fees have been collected, and there is no operating or contingency reserve fund or financial records.

    In such cases, buyer’s agents should recommend that buyers obtain legal advice before becoming committed to buy and may wish to include the following clause making the contract subject to obtaining legal advice.

    Subject to the (select either Buyer or Seller) obtaining legal advice satisfactory to the Buyer or Seller concerning (select easement, builders’ lien, financing or define applicable issue) _________ by (date).

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale refer to ‘‘Contracts under Seal” ….

    However, notwithstanding general non-compliance by the strata corporation with the legislative requirements, a buyer’s agent should obtain a copy of the strata plan and related schedules (if any) from the land title office and the agent should insist on obtaining a copy of the strata corporation insurance documents. The Strata Property Act requires every strata corporation to maintain property insurance on the buildings on a strata plan and to maintain liability insurance. This means that the insurance policy should be in the strata corporation’s name, i.e., The Owners Strata Plan (alpha/numeric sequence identifying the strata corporation). Owners in smaller strata corporations and particularly duplex owners may believe that obtaining personal insurance is sufficient; however, such insurance does not meet the requirements of the Strata Property Act and may mean that the property is NOT insured.

  • Property Disclosure Statement — Strata Title Properties Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (iii) Property Disclosure Statement

    Often the first document that licensees working with buyers see regarding the condition of a property is the Property Disclosure Statement (PDS). This document is useful as a starting point for buyers to begin their due diligence process.

    A buyer’s agent should always recommend to the buyer that the PDS be incorporated into the Contract of Purchase and Sale. A buyer’s legal remedies are severely curtailed if the buyer does NOT make the PDS part of the contract.

    Merely attaching a PDS to a Contract of Purchase and Sale does NOT incorporate the PDS into the contract. Clear evidence must exist that all of the parties intend to make the PDS part of the contractual obligations between them. To clearly state that the PDS is incorporated into the Contract of Purchase and Sale, the following clause must be inserted into the contract:

    Property Disclosure Statement — Strata Title Properties Clause

    The attached Property Disclosure Statement — Strata Title Properties dated (date) is incorporated into and forms part of this contract.

    If the Property Disclosure Statement — Strata Title Properties has not been attached to the offer at the time it was written, the licensee must use a subject clause to allow for approval of the Property Disclosure Statement — Strata Title Properties, as follows:

    Buyer’s Approval of Property Disclosure Statement — Strata Title Properties Clause

    Subject to the Buyer on or before (date) obtaining and approving a Property Disclosure Statement — Strata Title Properties, with respect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential.

    This condition is for the sole benefit of the Buyer.

     

    If approved such statement will be incorporated into and form part of this contract.

    A buyer’s agent should still recommend a property inspection, even where there is a PDS that is incorporated into the Contract of Purchase and Sale. A buyer’s agent should also recommend that the buyer carefully discuss the Property Disclosure Statement with the buyer’s property inspector.

  • Receipt of Strata Documentation Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (vii) Buyer has Reviewed the Documentation

    Licensees are encouraged to use the Receipt of Strata Corporation Documentation Form, which can be downloaded from RECBC’s Forms web page, when providing copies of documents to interested buyers or their agents. For details, see Documents to Request and Their Significance.

    Whether or not licensees have used the Receipt of Strata Corporation Documentation form, they are encouraged to use the following form of acknowledgement clause. Documents listed should include those documents itemized in the Receipt of Strata Corporation Documentation form.

    Receipt of Strata Documentation Clause

    The Buyer acknowledges having received and being satisfied with:

    A Form “B” Information Certificate from the strata corporation dated (date), attaching the strata corporation’s rules, current budget, the developer’s Rental Disclosure Statement (if any), and the most recent depreciation report obtained by the strata corporation (if any).

    If relevant, a Form “B” Information Certificate from the section dated (date), attaching the section’s rules, current budget, the developer’s Rental Disclosure Statement (if any), and the most recent depreciation report obtained by the strata corporation (if any).

    A copy of the registered strata plan, any amendments to the strata plan, and any resolutions dealing with changes to common property.

    The current bylaws and financial statements of the strata corporation, and any section to which the strata lot belongs.

    The minutes of any meetings held between the period from (date) to (date) by the strata council, and by the members in annual or special general meetings, and by the members or the executive of any section to which the strata lot belongs.

    The current insurance cover note explaining the strata corporation’s insurance coverage and deductibles.

    (*)

    (*)

    (*) Add all other documentation actually received.

  • Recovery of Proceeds Payable to Strata Corporation Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (d) Additional Issues for Listing Licensees - View Entire Section

    (i) Recovery of Special Levies or Proceeds Payable to the Strata Corporation

    Where a strata corporation has passed a special levy and the amount collected exceeds the amount required, the Strata Property Act requires that the strata corporation return the excess funds to the owners. Because “owner” is defined as the person shown on the title, if the seller has sold the strata lot prior to the repayment of the excess special levy, the funds will be repaid to the buyer who is the “owner” of the strata lot at the time the refund is paid.

    In addition, in some circumstances, strata corporations are receiving funds to offset costs they have incurred in relation to defective construction and/or water penetration. These funds might be the result of judgments, insurance/warranty claims, or settlements. When such funds are received a strata corporation may decide that some or all of these funds are to be returned to the owners. By the time the recovery is realized, the owner who paid the special levy to repair the building or fund the litigation may no longer be the registered owner. Although the Strata Property Act does not address the repayment of such funds, many strata corporations will pay out the funds to the current owner as if the funds were a repayment of an excess special levy. In other cases, a strata corporation may require the consent of the former owner and the current owner before funds are paid out.

    When licensees list strata units for sale, they should determine from the seller whether there have been any special levies for which there may be an excess. Additionally, licensees should determine whether insurance or warranty claims have been filed. Licensees should also know whether there is any litigation under way or pending that may result in a financial recovery.

    As with all real estate transactions, licensees must be careful in conducting transactions involving strata properties located in market areas that are unfamiliar to them. Information regarding particular strata properties that may be known to licensees working in a particular area may not be common knowledge outside that area.

    Where there is an indication of the possible future recovery of funds, the seller should be made aware that typically the assets and liabilities of the strata corporation flow with the registered owners as shown on title at the time of disbursement and proportionate to their unit entitlement. If the seller expresses a desire to retain certain rights or benefits (e.g., the right to recover funds payable after completion of a sale, the right to vote on future decisions with respect to the possible recovery, etc.), the seller should be made aware that retaining these rights or benefits should be negotiated with a prospective buyer. As a result, the seller should seek legal advice from a lawyer familiar with strata property issues prior to entertaining offers.

    In situations where the possibility of future recovery of funds is uncertain, the least complicated approach may be to ensure that both the seller and buyer are aware of the current status of any anticipated recovery and related expenses. With that knowledge the end price negotiated will reflect how the parties have valued the possibility and uncertainty of future recovery and related expenses, knowing that if there is a recovery, any funds disbursed will be payable to the registered owner at the time of disbursement.

    If the seller and/or buyer wish to negotiate an agreement that involves the seller receiving the repayment of funds in the future, each should be advised to seek independent legal advice, prior to entering into an unconditional contract of purchase and sale, from a lawyer who is familiar with strata property matters. Licensees should be cautious about drafting clauses in these circumstances, given the uncertainty of future events and the difficulty in identifying issues that may or may not be readily apparent or foreseeable.

    If a seller or buyer asks to make the contract subject to entering such an agreement, the contract of purchase and sale should include a subject clause, as follows:

    Recovery of Proceeds Payable to Strata Corporation Clause

    Subject to the Buyer and Seller entering into a written contract prepared by the Seller’s lawyer on or before (date) that provides for the assignment from the Buyer to the Seller for nominal consideration of all the Buyer’s right, title and interest in any funds payable by the strata corporation to the Buyer as a result of (Enter the reason for the payment such as the return of money assessed by a special levy between _________certain dates).

    This condition is for the sole benefit of the Seller. (Buyer)

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Discipline Record — Failure to Advise Sellers

    Sellers of a strata lot complained to RECBC that the listing representative did not advise them that they would not be entitled to the recovery of litigation proceeds and other such funds and that such funds would be paid to the buyer.

    The Consent Order entered into between RECBC and the licensee provided that the licensee

    • failed to inform the sellers that recovery is expected to flow to the owners as shown on the title at the time of recovery;
    • failed to advise the sellers to negotiate with the buyers the right to share in the recovery; and
    • failed to advise the sellers to obtain independent legal advice before entering into the Contract of Purchase and Sale.

    RECBC suspended the licensee for 30 days and ordered the licensee to enroll in and attend Condo 202 Advanced Strata Law for Realtors, and Legal Update. The licensee was also required to pay costs.

  • Seller Agrees to Hold Back to Pay for Special Levy Approved Before Completion Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (xii) Special Levies

    Generally

    Owners are personally responsible for the contribution due from their strata lot for a special levy (formerly called a special assessment) which may be payable in one lump sum or by installments as set out in the ¾ Vote Resolution authorizing the special levy.

    Before the completion date, the seller is the owner and is responsible for the contribution due from their strata lot. The buyer becomes the owner on the date the seller conveys his or her interest in the strata lot to the buyer. The conveyance marks the transition where the buyer becomes the owner who is responsible for the contribution due from the strata lot. Section 109 of the Strata Property Act states:

    If a special levy is approved before a strata lot is conveyed to a purchaser,

    (a) the person who is the owner of the strata lot immediately before the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable before the date the strata lot is conveyed, and

    (b) the person who is the owner of the strata lot immediately after the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable on or after the date the strata lot is conveyed.

    Special Levy Clauses

    Sometimes the buyer may want protection against paying any portion of a special levy due after the completion date. These matters are often the subject of negotiation. Some sample clauses are shown below.

    Where a special levy will likely be approved before the completion date, a licensee may use one of the following two clauses:

    Seller Agrees to Hold Back to Pay for Special Levy Approved Before Completion Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with the entire portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Seller and Buyer Negotiate the Portion of the Special Levy Due After Completion that the Seller Will Pay Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with __% of the portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Where a special levy will likely be approved after the completion date or the licensee is uncertain whether the special levy will be considered for approval before or after the completion date, the licensee should use the following holdback clause:

    Seller Agrees to Hold Back a Portion of the Purchase Price Where There is the Possibility of a Special Levy being Assessed in the Near Future Clause

    A portion of the purchase price in the amount of $____, (the “Holdback”) will be held by the lawyer or notary public acting for the Buyer in an interest bearing account until ____, 20__ (the “End Date”). The lawyer or notary public acting for the Buyer will pay to the strata corporation out of the Holdback and accrued interest any special levies (or similar levies charged by the strata corporation) that are levied and due and payable before the End Date. On the first business day after the End Date the lawyer or notary public acting for the Buyer will pay any remaining balance of the Holdback plus accrued interest to the Seller.

    Ώ NOTE: Licensees should be aware that there are situations where the potential for levies arises and should advise their clients to seek legal advice as to the possible ramifications. Sellers should consult with their lawyer should they wish the buyers to appoint them as proxy on votes relating to a special levy resolution occurring after completion.

  • Seller and Buyer Negotiate the Portion of the Special Levy Due after Completion that the Seller Will Pay Clause

    Excerpt from Trading Services | Section 5. Strata Sales

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    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (xii) Special Levies

    Generally

    Owners are personally responsible for the contribution due from their strata lot for a special levy (formerly called a special assessment) which may be payable in one lump sum or by installments as set out in the ¾ Vote Resolution authorizing the special levy.

    Before the completion date, the seller is the owner and is responsible for the contribution due from their strata lot. The buyer becomes the owner on the date the seller conveys his or her interest in the strata lot to the buyer. The conveyance marks the transition where the buyer becomes the owner who is responsible for the contribution due from the strata lot. Section 109 of the Strata Property Act states:

    If a special levy is approved before a strata lot is conveyed to a purchaser,

    (a) the person who is the owner of the strata lot immediately before the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable before the date the strata lot is conveyed, and

    (b) the person who is the owner of the strata lot immediately after the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable on or after the date the strata lot is conveyed.

    Special Levy Clauses

    Sometimes the buyer may want protection against paying any portion of a special levy due after the completion date. These matters are often the subject of negotiation. Some sample clauses are shown below.

    Where a special levy will likely be approved before the completion date, a licensee may use one of the following two clauses:

    Seller Agrees to Hold Back to Pay for Special Levy Approved Before Completion Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with the entire portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Seller and Buyer Negotiate the Portion of the Special Levy Due After Completion that the Seller Will Pay Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with __% of the portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Where a special levy will likely be approved after the completion date or the licensee is uncertain whether the special levy will be considered for approval before or after the completion date, the licensee should use the following holdback clause:

    Seller Agrees to Hold Back a Portion of the Purchase Price Where There is the Possibility of a Special Levy being Assessed in the Near Future Clause

    A portion of the purchase price in the amount of $____, (the “Holdback”) will be held by the lawyer or notary public acting for the Buyer in an interest bearing account until ____, 20__ (the “End Date”). The lawyer or notary public acting for the Buyer will pay to the strata corporation out of the Holdback and accrued interest any special levies (or similar levies charged by the strata corporation) that are levied and due and payable before the End Date. On the first business day after the End Date the lawyer or notary public acting for the Buyer will pay any remaining balance of the Holdback plus accrued interest to the Seller.

    Ώ NOTE: Licensees should be aware that there are situations where the potential for levies arises and should advise their clients to seek legal advice as to the possible ramifications. Sellers should consult with their lawyer should they wish the buyers to appoint them as proxy on votes relating to a special levy resolution occurring after completion.
  • Seller Agrees to Hold Back a Portion of the Purchase Price Where There is the Possibility of a Special Levy Being Assessed in the Near Future Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (xii) Special Levies

    Generally

    Owners are personally responsible for the contribution due from their strata lot for a special levy (formerly called a special assessment) which may be payable in one lump sum or by installments as set out in the ¾ Vote Resolution authorizing the special levy.

    Before the completion date, the seller is the owner and is responsible for the contribution due from their strata lot. The buyer becomes the owner on the date the seller conveys his or her interest in the strata lot to the buyer. The conveyance marks the transition where the buyer becomes the owner who is responsible for the contribution due from the strata lot. Section 109 of the Strata Property Act states:

    If a special levy is approved before a strata lot is conveyed to a purchaser,

    (a) the person who is the owner of the strata lot immediately before the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable before the date the strata lot is conveyed, and

    (b) the person who is the owner of the strata lot immediately after the date the strata lot is conveyed owes the strata corporation the portion of the levy that is payable on or after the date the strata lot is conveyed.

    Special Levy Clauses

    Sometimes the buyer may want protection against paying any portion of a special levy due after the completion date. These matters are often the subject of negotiation. Some sample clauses are shown below.

    Where a special levy will likely be approved before the completion date, a licensee may use one of the following two clauses:

    Seller Agrees to Hold Back to Pay for Special Levy Approved Before Completion Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with the entire portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Seller and Buyer Negotiate the Portion of the Special Levy Due After Completion that the Seller Will Pay Clause

    If a special levy is approved before the completion date, the Seller shall credit the Buyer with __% of the portion of the special levy that the Buyer is obligated to pay under the Strata Property Act and the Seller hereby directs the Buyer’s lawyer or notary public to hold back such credit from the sale proceeds and to remit it to the strata corporation.

    Where a special levy will likely be approved after the completion date or the licensee is uncertain whether the special levy will be considered for approval before or after the completion date, the licensee should use the following holdback clause:

    Seller Agrees to Hold Back a Portion of the Purchase Price Where There is the Possibility of a Special Levy being Assessed in the Near Future Clause

    A portion of the purchase price in the amount of $____, (the “Holdback”) will be held by the lawyer or notary public acting for the Buyer in an interest bearing account until ____, 20__ (the “End Date”). The lawyer or notary public acting for the Buyer will pay to the strata corporation out of the Holdback and accrued interest any special levies (or similar levies charged by the strata corporation) that are levied and due and payable before the End Date. On the first business day after the End Date the lawyer or notary public acting for the Buyer will pay any remaining balance of the Holdback plus accrued interest to the Seller.

    Ώ NOTE: Licensees should be aware that there are situations where the potential for levies arises and should advise their clients to seek legal advice as to the possible ramifications. Sellers should consult with their lawyer should they wish the buyers to appoint them as proxy on votes relating to a special levy resolution occurring after completion.
  • Strata Plan Not Registered at the Time Contract Signed Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (ii) Strata Plan not Registered at the Time the Contract is Signed

    A strata lot does not exist until the strata plan is deposited at the Land Title Office. In the event that a strata plan has not been registered at the time that a sales contract is executed, licensees should include in the contract a clause such as the following:

    Strata Plan not Registered at the Time Contract Signed Clause

    It is a fundamental term of this contract that a strata plan for the property, in the form provided to the Buyers at the time of signing this contract and attached as addendum, is fully registered in the appropriate Land Title Office on or before the Completion Date.

    If the strata plan is not filed when a licensee prepares an offer for a proposed strata lot, any deposit must be paid into trust pending the filing of the strata plan at the Land Title Office, the readiness of the unit for occupancy, and the registration of the buyer’s interest in the property. Whether the deposit is held in the licensee’s brokerage trust account, or with the developer’s lawyer or notary, section 18 of the Real Estate Development Marketing Act requires that the person holding the deposit holds it for the developer and the purchaser, and not as an agent for either of them. For details, see the section on deposits under the heading Real Estate Development Marketing Act.

  • Strata Documentation to Be Provided Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (viii) Buyer has not Received or Reviewed the Documentation

    Sections 36(3) and 59(1) of the Strata Property Act and section 25 of the Interpretation Act effectively give the strata corporation eight days, following a request, to deliver a Form B – and up to 15 days to provide copies of the other records referred to in the following clause. Additionally, Under the Strata Property Act, unless a request for documents is personally presented to a strata council member, the strata corporation is deemed not to have received the request for 4 days. Therefore the 8 and 15 day periods do not start until 4 days after the request was faxed, mailed or emailed to the strata corporation or strata manager. Licensees should recommend a subject removal date that allows enough time for the strata corporation or strata manager to receive and respond to a request and for buyers to review the records provided by the strata corporation. Where the listing licensee has not already obtained the documents, such that the listing licensee must now request them from the strata corporation, it may take up to 18 days for subject removal. However, a prudent listing licensee will ensure that most, if not all, of the documents referred to in the clauses below are obtained at the time of taking a listing. This may enable buyers to shorten the due diligence period if there is no change in the information contained in these documents since the time of taking the listing. Licensees should add or delete documents from the list if they have already been reviewed or if they do not apply.

    Strata Documentation to be Provided Clause

    Subject to the Buyer, on or before (date) * receiving and approving the following documents with respect to information that reasonably may adversely affect the use or value of the strata lot, including any bylaw, item of repair or maintenance, special levy, judgment or other liability, whether actual or potential:

    A Form ‘‘B’’ Information Certificate from the strata corporation, attaching the strata corporation’s rules, current budget, the developer’s Rental Disclosure Statement (if any), and the most recent depreciation report obtained by the strata corporation (if any);

    If relevant, a Form ‘‘B’’ Information Certificate from the section, attaching the section’s rules, current budget, the developer’s Rental Disclosure Statement (if any), and the most recent depreciation report obtained by the strata corporation (if any);

    a copy of the registered strata plan, any amendments to the strata plan, and any resolutions dealing with changes to common property;

    the current bylaws and financial statements of the strata corporation, and any section to which the strata corporation lot belongs;

    the minutes of any meeting held between the period from (date) to (date) ** by the strata council, and by the members in annual or special general meetings, and by the members or the executive of any section to which the strata lot belongs; and

    the current insurance cover note explaining the strata corporation’s insurance coverage and deductibles.

    [Include any other information, document, record or report the Buyer needs before being committed to buy.]

    Immediately upon acceptance of this offer or counter-offer, the Seller will authorize the (Seller’s/Buyer’s) agent, to request***, at the (Seller’s/Buyer’s)† expense, complete copies of the documents listed above from the strata corporation or other source and to immediately, upon receipt, deliver the documents to the Buyer (or the Buyer’s agent).

    This condition is for the sole benefit of the Buyer.

    *When an owner asks a strata corporation for one of the strata records listed here, in most cases section 36(3) of the Strata Property Act, when read together with section 25 of the Interpretation Act, and section 63(2) of the Strata Property Act, which deems that the request for documents is not received by a strata corporation until 4 days after they are received,   permits the strata corporation up to 19 days to deliver the relevant records to the owner. If the listing licensee already has all of the records listed above, choose a reasonably short subject removal date. If the records are not available, allow up to 22 days from the date the offer is accepted. The 22 days represent four days to allow the strata corporation to receive the request, 15 days for the statutory delivery period plus three days for the buyer to review the documents.

    **RECBC recommends two years, but cautions licensees that this is just the beginning of the investigation. Any indication of issues regarding the finances or physical condition of the strata corporation or building may necessitate the further investigation of minutes beyond the two-year requirement.

    ***Use an authorization form such as the “Authorization to Agent to Obtain/Deliver Documentation” for this purpose.

    † The wording of this clause allows for the parties to negotiate who will pay for the cost of obtaining these documents.

Subject to Selling / Buying

  • Confirmation of the Sale of Buyer's Property Clause

    Excerpt from Trading Services | Section 3. Acting For Buyers

    Go To

    (m) Sale of the Buyer’s Property

    In some cases, it may be necessary to include in the Contract of Purchase and Sale, a subject clause which permits the buyer to sell their own property.

    The following clause may be used:

    Sale of the Buyer’s Property Clause

    Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address) on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the buyer has entered into a Contract of Purchase and Sale, the following subject clause may be used to allow time for the contract to become unconditional:

    Confirmation of the Sale of Buyer’s Property Clause

    Subject to the sale of the Buyer’s property at (address)becoming unconditional on or before (date). 

    This condition is for the sole benefit of the buyer.

  • Sale of the Buyer's Property, with Time Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    (h) Offers - View Entire Section

    (xiv) Time Clauses

    Time clauses should be inserted for the protection of the seller when an offer is written or received containing a subject to the sale of clause.

    It is important to ensure that the time period is precisely defined (e.g., 72 hours).

    Terms such as ‘‘banking days’’, ‘‘working days’’, ‘‘business days’’, etc., should be avoided.

    Sale of the Buyer’s Property, with Time Clause

    Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address) on or before (date) .

    However, the Seller may, (select either “at any time” or “upon receipt of another acceptable offer”) deliver a written notice to the Buyer* or to (name of his or her representing real estate company) requiring the Buyer to remove all conditions from the contract within (number) hours** of the delivery of the notice, not to include Sundays and Statutory Holidays. Should the Buyer fail to remove all the conditions before the expiry of the notice period, the contract will terminate.

    This condition is for the sole benefit of the Buyer.

     

    * See sample following.

    ** The period usually ranges from 24 to 72 hours, depending on market conditions.

    NOTE: This time clause may be adapted to fit other similar circumstances where the subject to clause is really an option. Examples include allowing time to obtain zoning approval, feasibility studies, engineering reports, etc. This clause protects both parties because the property is never completely off the market except for the designated number of hours between the invocation of the time clause and its deadline.

    A clause such as the following should be used when a seller wishes to have the buyer with the first accepted offer remove all conditions or withdraw in order for an accepted back-up offer to move into first position. The circumstances for invocation will depend on how the time clause was written in the first offer, with either ‘‘at any time’’ or ‘‘upon receipt of another acceptable offer’’ being the reference to allow invocation.

    Notice Invoking the Time Clause (for use with preceding time clause)

    This document constitutes written notice from the Seller to the Buyer requiring the removal of (select either all conditions or the condition) from this contract within (number of hours) hours* not including Sunday or Statutory Holidays, or this contract will terminate at the end of the (number of hours)-hour period and the deposit will be returned to the Buyer.

    This Time Clause will start running on delivery of this Notice to the Buyer or to (his or her representing brokerage) which will be at (time of delivery of notice) o’clock (select either a.m. or p.m.) on (date). Therefore, the (number of hours) hours will expire at (time) o’clock (select either a.m. or p.m.) on (date).

    * Fill in the same number of hours as in preceding clause.

    NOTE: When there is a time clause in the first offer and in the second offer, if the offers are not handled carefully, the Seller could lose both offers.

    NOTE: The licensee should obtain evidence of the time of delivery as it may be necessary to prove this in the event of a dispute.
  • Sale of the Buyer's Property Clause

    Excerpt from Trading Services | Section 3. Acting For Buyers

    Go To

    (m) Sale of the Buyer’s Property

    In some cases, it may be necessary to include in the Contract of Purchase and Sale, a subject clause which permits the buyer to sell their own property.

    The following clause may be used:

    Sale of the Buyer’s Property Clause

    Subject to the Buyer entering into an unconditional agreement to sell the Buyer’s property at (address) on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    If the buyer has entered into a Contract of Purchase and Sale, the following subject clause may be used to allow time for the contract to become unconditional:

    Confirmation of the Sale of Buyer’s Property Clause

    Subject to the sale of the Buyer’s property at (address)becoming unconditional on or before (date). 

    This condition is for the sole benefit of the buyer.

  • Subject to Seller Purchasing Residence Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xviii) Miscellaneous Clauses

    Seller Purchasing Residence Clause

    Subject to the Seller entering into an unconditional agreement on or before (date) to purchase another residence.

    This condition is for the sole benefit of the Seller.

    NOTE: This subject clause is to give a seller the opportunity to acquire a new home before being committed to sell and vacate his or her existing home. From the buyer’s perspective, the subject removal period should be as short as possible.

    Friend/Relative Approval (for Buyer or Seller) Clause

    Subject to approval of the (select either purchase or sale) by (name) on or before (date) .

    This condition is for the sole benefit of the Buyer/Seller.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’.

Title Searches

  • Acknowledgement of Title Clause A

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    It is essential that licensees obtain a search of title on all listings. Some real estate boards/associations provide a surface search to the listing brokerage on MLS® listings. If a surface search is not available from this source, one may be obtained online through the Land Title and Survey Authority, by registering for a myLTSA account  — will open in a new tab or directly from the appropriate Land Title Office  — will open in a new tab, at a cost. An alternative to a surface search is to obtain a State of Title Certificate from the Land Title Office.

    The following title search clause should be used to enable a buyer to search for any charges or other features.

    Title Search Clause

    Subject to the Buyer, on or before(date) searching and approving title to the property against the presence of any charge or other feature, whether registered or pending, that reasonably may affect the property’s use or value.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    It is important to realize that the title search will reveal only those charges that are on title. It will not provide any information as to the terms and conditions of those charges. If there are charges such as covenants, easements, rights-of-way, etc., it may be necessary to obtain a full search of title to determine the impact they may have on the property. Full searches of title may be obtained through title search companies, a lawyer or notary, or from the appropriate Land Title Office.

    Any physical encumbrance noted on the title should be described in adequate detail on the Contract of Purchase and Sale, notwithstanding the boilerplate of the Contract of Purchase and Sale. Legally Speaking, column #267, (April 1997) describes what can happen when such details are not investigated adequately. It is advisable for a licensee to use a ‘‘subject to’’ clause to allow the buyer time to research the encumbrance adequately. Since most charges on title are complex legal documents, it is prudent practice to have Contracts of Purchase and Sale conditional upon the buyer obtaining satisfactory independent advice as to the charges registered against title.

    Physical encumbrances are covered by Clause 9; however, it is wise for a licensee to disclose in writing and provide a copy of the details to the buyer. Any physical encumbrances (i.e., non-financial) not covered by Clause 9 need to be spelled out in the contract itself. This would include, but would not be restricted to, issues such as private easements for shared driveways and private roads encroaching on a neighbour’s land through a friendly agreement which may not pass with the title. Legally Speaking, column #267, describes a case where failure to provide details resulted in a serious outcome for all concerned:

    Legally Speaking, #267, April 1997

    A decision involved section one of the Contract of Purchase and Sale, which allowed a buyer to avoid completing the purchase of a $1,223,000 property because the seller was unable to provide title clear of a restrictive covenant in favour of the Canadian Pacific Railway. The 1945 restriction required approval of the architectural and site designs by the CPR. The CPR had agreed to provide a release, but it was unavailable for registration on the closing date.

    The conclusion reached by the judge was that the CPR, at least in respect of this particular restrictive covenant, was not a utility. Therefore, it did not fall within the restrictive covenants in favour of utilities and public authorities, which are permitted by section one to remain on title.

    The seller had argued that this was a minor defect of title, which would not seriously interfere with the buyer’s use and enjoyment of the property. The judge disagreed and using the analysis discussed in column #245 (of ‘‘Legally Speaking’’), stated that any restrictive covenant requiring the approval of a third party as to how and what to build is neither minor nor insubstantial. He placed the onus squarely upon the seller to know his own title and to know what needed to be cleared from it.

    The reasons for judgment do not indicate whether a real estate licensee was involved in the sale of the property. If a licensee is acting in these circumstances and has searched the title, it would be prudent for the licensee to draw to the seller’s attention the existence of encumbrances which need to be cleared from title.

    Chen v. Hsu, S.C.B.C., Reasons for Judgment, February 29, 1997

    (Cited with the kind permission of Gerry Neely, B.A., LL.B., Pearlman & Lindholm, Victoria, B.C.)

    The standard Contract of Purchase and Sale requires the seller to deliver title to the buyer clear of all encumbrances except those permitted by the agreement. This is informally called the seller’s obligation to deliver clear title.

    Though the seller can remove financial charges like mortgages, judgments and liens, non-financial charges usually stay on title despite changes of ownership. Many of these non-financial charges affect how an owner can use the property. Statutory rights-of-way, easements, and building schemes are good examples.

    The standard Contract of Purchase and Sale automatically takes account of some exceptions to a seller’s obligation to provide clear title. The contract reads, in part:

    The Buyer agrees to purchase the Property from the Seller on the following terms and subject to the following conditions:

    9. TITLE: Free and clear of all encumbrances except substituting conditions, provisos, restrictions, exceptions and reservations, including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants and rights-of-way in favour of utilities and public authorities, existing tenancies set out in Clause 5, if any, and except as other wise set out herein.

    Notice that the preprinted wording in the Contract of Purchase and Sale does not except easements or building schemes and such from the seller’s obligation to deliver clear title. If the title contains non-financial charges which are not caught by the exceptions in the standard contract, the licensee must ‘‘otherwise set out’’ those charges in the agreement.

    A convenient way to otherwise set out charges in the contract is to attach a current title search printout to the agreement and use the following clause:

    Acknowledgement of Title Clause A

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract, any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    Sometimes, a utility with a registered charge against the seller’s title may assign an interest in the utility’s charge as security for the payment of a loan or the performance of some other financial obligation payable by the utility. For example, this occurs where a utility with a right-of-way gives a mortgage of its right-of-way to a lender. In that case, the lender will register the mortgage of the right-of-way against title to the property. In this case, in addition to providing, as an exception to clear title, that the buyer will receive title containing the utility’s right-of-way, the contract should also record the utility’s mortgage of its right-of-way, being a financial charge payable by the utility. In a case where a utility that owns a non-financial charge has assigned its charge to secure a loan or some other financial obligation, a licensee may attach a current copy of the title search results to the Contract of Purchase and Sale and use the following clause:

    Acknowledgement of Title Clause B

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract:

    1. Any non-financial charge, and

    2. Any financial charge payable by a utility on its right-of-way restrictive covenant, easement or other interest

    set out in the copy of the title search results that is attached to and forms part of this contract.

    Buyer’s Approval of Title Search To Be Incorporated into Contract Clause

    Subject to the Buyer on or before (date) obtaining and approving a copy of the title search results against the presence of any charge or other feature, whether registered or pending, that reasonably may adversely affect the property’s use or value.

    If this condition is waived or declared fulfilled, the copy of the title search result will be incorporated into and form part of this contract and the Buyer acknowledges and accepts, despite any other provision in this contract, that upon completion the Buyer will receive title containing any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    This condition is for the sole benefit of the Buyer.

    The following clause should be used when the buyer wants a lawyer to look at the physical encumbrances and explain the consequences of them:

  • Acknowledgement of Title Clause B

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    It is essential that licensees obtain a search of title on all listings. Some real estate boards/associations provide a surface search to the listing brokerage on MLS® listings. If a surface search is not available from this source, one may be obtained online through the Land Title and Survey Authority, by registering for a myLTSA account  — will open in a new tab or directly from the appropriate Land Title Office  — will open in a new tab, at a cost. An alternative to a surface search is to obtain a State of Title Certificate from the Land Title Office.

    The following title search clause should be used to enable a buyer to search for any charges or other features.

    Title Search Clause

    Subject to the Buyer, on or before(date) searching and approving title to the property against the presence of any charge or other feature, whether registered or pending, that reasonably may affect the property’s use or value.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    It is important to realize that the title search will reveal only those charges that are on title. It will not provide any information as to the terms and conditions of those charges. If there are charges such as covenants, easements, rights-of-way, etc., it may be necessary to obtain a full search of title to determine the impact they may have on the property. Full searches of title may be obtained through title search companies, a lawyer or notary, or from the appropriate Land Title Office.

    Any physical encumbrance noted on the title should be described in adequate detail on the Contract of Purchase and Sale, notwithstanding the boilerplate of the Contract of Purchase and Sale. Legally Speaking, column #267, (April 1997) describes what can happen when such details are not investigated adequately. It is advisable for a licensee to use a ‘‘subject to’’ clause to allow the buyer time to research the encumbrance adequately. Since most charges on title are complex legal documents, it is prudent practice to have Contracts of Purchase and Sale conditional upon the buyer obtaining satisfactory independent advice as to the charges registered against title.

    Physical encumbrances are covered by Clause 9; however, it is wise for a licensee to disclose in writing and provide a copy of the details to the buyer. Any physical encumbrances (i.e., non-financial) not covered by Clause 9 need to be spelled out in the contract itself. This would include, but would not be restricted to, issues such as private easements for shared driveways and private roads encroaching on a neighbour’s land through a friendly agreement which may not pass with the title. Legally Speaking, column #267, describes a case where failure to provide details resulted in a serious outcome for all concerned:

    Legally Speaking, #267, April 1997

    A decision involved section one of the Contract of Purchase and Sale, which allowed a buyer to avoid completing the purchase of a $1,223,000 property because the seller was unable to provide title clear of a restrictive covenant in favour of the Canadian Pacific Railway. The 1945 restriction required approval of the architectural and site designs by the CPR. The CPR had agreed to provide a release, but it was unavailable for registration on the closing date.

    The conclusion reached by the judge was that the CPR, at least in respect of this particular restrictive covenant, was not a utility. Therefore, it did not fall within the restrictive covenants in favour of utilities and public authorities, which are permitted by section one to remain on title.

    The seller had argued that this was a minor defect of title, which would not seriously interfere with the buyer’s use and enjoyment of the property. The judge disagreed and using the analysis discussed in column #245 (of ‘‘Legally Speaking’’), stated that any restrictive covenant requiring the approval of a third party as to how and what to build is neither minor nor insubstantial. He placed the onus squarely upon the seller to know his own title and to know what needed to be cleared from it.

    The reasons for judgment do not indicate whether a real estate licensee was involved in the sale of the property. If a licensee is acting in these circumstances and has searched the title, it would be prudent for the licensee to draw to the seller’s attention the existence of encumbrances which need to be cleared from title.

    Chen v. Hsu, S.C.B.C., Reasons for Judgment, February 29, 1997

    (Cited with the kind permission of Gerry Neely, B.A., LL.B., Pearlman & Lindholm, Victoria, B.C.)

    The standard Contract of Purchase and Sale requires the seller to deliver title to the buyer clear of all encumbrances except those permitted by the agreement. This is informally called the seller’s obligation to deliver clear title.

    Though the seller can remove financial charges like mortgages, judgments and liens, non-financial charges usually stay on title despite changes of ownership. Many of these non-financial charges affect how an owner can use the property. Statutory rights-of-way, easements, and building schemes are good examples.

    The standard Contract of Purchase and Sale automatically takes account of some exceptions to a seller’s obligation to provide clear title. The contract reads, in part:

    The Buyer agrees to purchase the Property from the Seller on the following terms and subject to the following conditions:

    9. TITLE: Free and clear of all encumbrances except substituting conditions, provisos, restrictions, exceptions and reservations, including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants and rights-of-way in favour of utilities and public authorities, existing tenancies set out in Clause 5, if any, and except as other wise set out herein.

    Notice that the preprinted wording in the Contract of Purchase and Sale does not except easements or building schemes and such from the seller’s obligation to deliver clear title. If the title contains non-financial charges which are not caught by the exceptions in the standard contract, the licensee must ‘‘otherwise set out’’ those charges in the agreement.

    A convenient way to otherwise set out charges in the contract is to attach a current title search printout to the agreement and use the following clause:

    Acknowledgement of Title Clause A

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract, any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    Sometimes, a utility with a registered charge against the seller’s title may assign an interest in the utility’s charge as security for the payment of a loan or the performance of some other financial obligation payable by the utility. For example, this occurs where a utility with a right-of-way gives a mortgage of its right-of-way to a lender. In that case, the lender will register the mortgage of the right-of-way against title to the property. In this case, in addition to providing, as an exception to clear title, that the buyer will receive title containing the utility’s right-of-way, the contract should also record the utility’s mortgage of its right-of-way, being a financial charge payable by the utility. In a case where a utility that owns a non-financial charge has assigned its charge to secure a loan or some other financial obligation, a licensee may attach a current copy of the title search results to the Contract of Purchase and Sale and use the following clause:

    Acknowledgement of Title Clause B

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract:

    1. Any non-financial charge, and

    2. Any financial charge payable by a utility on its right-of-way restrictive covenant, easement or other interest

    set out in the copy of the title search results that is attached to and forms part of this contract.

    Buyer’s Approval of Title Search To Be Incorporated into Contract Clause

    Subject to the Buyer on or before (date) obtaining and approving a copy of the title search results against the presence of any charge or other feature, whether registered or pending, that reasonably may adversely affect the property’s use or value.

    If this condition is waived or declared fulfilled, the copy of the title search result will be incorporated into and form part of this contract and the Buyer acknowledges and accepts, despite any other provision in this contract, that upon completion the Buyer will receive title containing any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    This condition is for the sole benefit of the Buyer.

    The following clause should be used when the buyer wants a lawyer to look at the physical encumbrances and explain the consequences of them:

  • Buyer's Approval of Title and Title Search to Be Incorporated into Contract Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    It is essential that licensees obtain a search of title on all listings. Some real estate boards/associations provide a surface search to the listing brokerage on MLS® listings. If a surface search is not available from this source, one may be obtained online through the Land Title and Survey Authority, by registering for a myLTSA account  — will open in a new tab or directly from the appropriate Land Title Office  — will open in a new tab, at a cost. An alternative to a surface search is to obtain a State of Title Certificate from the Land Title Office.

    The following title search clause should be used to enable a buyer to search for any charges or other features.

    Title Search Clause

    Subject to the Buyer, on or before(date) searching and approving title to the property against the presence of any charge or other feature, whether registered or pending, that reasonably may affect the property’s use or value.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    It is important to realize that the title search will reveal only those charges that are on title. It will not provide any information as to the terms and conditions of those charges. If there are charges such as covenants, easements, rights-of-way, etc., it may be necessary to obtain a full search of title to determine the impact they may have on the property. Full searches of title may be obtained through title search companies, a lawyer or notary, or from the appropriate Land Title Office.

    Any physical encumbrance noted on the title should be described in adequate detail on the Contract of Purchase and Sale, notwithstanding the boilerplate of the Contract of Purchase and Sale. Legally Speaking, column #267, (April 1997) describes what can happen when such details are not investigated adequately. It is advisable for a licensee to use a ‘‘subject to’’ clause to allow the buyer time to research the encumbrance adequately. Since most charges on title are complex legal documents, it is prudent practice to have Contracts of Purchase and Sale conditional upon the buyer obtaining satisfactory independent advice as to the charges registered against title.

    Physical encumbrances are covered by Clause 9; however, it is wise for a licensee to disclose in writing and provide a copy of the details to the buyer. Any physical encumbrances (i.e., non-financial) not covered by Clause 9 need to be spelled out in the contract itself. This would include, but would not be restricted to, issues such as private easements for shared driveways and private roads encroaching on a neighbour’s land through a friendly agreement which may not pass with the title. Legally Speaking, column #267, describes a case where failure to provide details resulted in a serious outcome for all concerned:

    Legally Speaking, #267, April 1997

    A decision involved section one of the Contract of Purchase and Sale, which allowed a buyer to avoid completing the purchase of a $1,223,000 property because the seller was unable to provide title clear of a restrictive covenant in favour of the Canadian Pacific Railway. The 1945 restriction required approval of the architectural and site designs by the CPR. The CPR had agreed to provide a release, but it was unavailable for registration on the closing date.

    The conclusion reached by the judge was that the CPR, at least in respect of this particular restrictive covenant, was not a utility. Therefore, it did not fall within the restrictive covenants in favour of utilities and public authorities, which are permitted by section one to remain on title.

    The seller had argued that this was a minor defect of title, which would not seriously interfere with the buyer’s use and enjoyment of the property. The judge disagreed and using the analysis discussed in column #245 (of ‘‘Legally Speaking’’), stated that any restrictive covenant requiring the approval of a third party as to how and what to build is neither minor nor insubstantial. He placed the onus squarely upon the seller to know his own title and to know what needed to be cleared from it.

    The reasons for judgment do not indicate whether a real estate licensee was involved in the sale of the property. If a licensee is acting in these circumstances and has searched the title, it would be prudent for the licensee to draw to the seller’s attention the existence of encumbrances which need to be cleared from title.

    Chen v. Hsu, S.C.B.C., Reasons for Judgment, February 29, 1997

    (Cited with the kind permission of Gerry Neely, B.A., LL.B., Pearlman & Lindholm, Victoria, B.C.)

    The standard Contract of Purchase and Sale requires the seller to deliver title to the buyer clear of all encumbrances except those permitted by the agreement. This is informally called the seller’s obligation to deliver clear title.

    Though the seller can remove financial charges like mortgages, judgments and liens, non-financial charges usually stay on title despite changes of ownership. Many of these non-financial charges affect how an owner can use the property. Statutory rights-of-way, easements, and building schemes are good examples.

    The standard Contract of Purchase and Sale automatically takes account of some exceptions to a seller’s obligation to provide clear title. The contract reads, in part:

    The Buyer agrees to purchase the Property from the Seller on the following terms and subject to the following conditions:

    9. TITLE: Free and clear of all encumbrances except substituting conditions, provisos, restrictions, exceptions and reservations, including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants and rights-of-way in favour of utilities and public authorities, existing tenancies set out in Clause 5, if any, and except as other wise set out herein.

    Notice that the preprinted wording in the Contract of Purchase and Sale does not except easements or building schemes and such from the seller’s obligation to deliver clear title. If the title contains non-financial charges which are not caught by the exceptions in the standard contract, the licensee must ‘‘otherwise set out’’ those charges in the agreement.

    A convenient way to otherwise set out charges in the contract is to attach a current title search printout to the agreement and use the following clause:

    Acknowledgement of Title Clause A

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract, any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    Sometimes, a utility with a registered charge against the seller’s title may assign an interest in the utility’s charge as security for the payment of a loan or the performance of some other financial obligation payable by the utility. For example, this occurs where a utility with a right-of-way gives a mortgage of its right-of-way to a lender. In that case, the lender will register the mortgage of the right-of-way against title to the property. In this case, in addition to providing, as an exception to clear title, that the buyer will receive title containing the utility’s right-of-way, the contract should also record the utility’s mortgage of its right-of-way, being a financial charge payable by the utility. In a case where a utility that owns a non-financial charge has assigned its charge to secure a loan or some other financial obligation, a licensee may attach a current copy of the title search results to the Contract of Purchase and Sale and use the following clause:

    Acknowledgement of Title Clause B

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract:

    1. Any non-financial charge, and

    2. Any financial charge payable by a utility on its right-of-way restrictive covenant, easement or other interest

    set out in the copy of the title search results that is attached to and forms part of this contract.

    Buyer’s Approval of Title Search To Be Incorporated into Contract Clause

    Subject to the Buyer on or before (date) obtaining and approving a copy of the title search results against the presence of any charge or other feature, whether registered or pending, that reasonably may adversely affect the property’s use or value.

    If this condition is waived or declared fulfilled, the copy of the title search result will be incorporated into and form part of this contract and the Buyer acknowledges and accepts, despite any other provision in this contract, that upon completion the Buyer will receive title containing any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    This condition is for the sole benefit of the Buyer.

    The following clause should be used when the buyer wants a lawyer to look at the physical encumbrances and explain the consequences of them:

  • Title Search Clause

    Excerpt from Trading Services | Section 2. Acting For Sellers

    Go To

    It is essential that licensees obtain a search of title on all listings. Some real estate boards/associations provide a surface search to the listing brokerage on MLS® listings. If a surface search is not available from this source, one may be obtained online through the Land Title and Survey Authority, by registering for a myLTSA account  — will open in a new tab or directly from the appropriate Land Title Office  — will open in a new tab, at a cost. An alternative to a surface search is to obtain a State of Title Certificate from the Land Title Office.

    The following title search clause should be used to enable a buyer to search for any charges or other features.

    Title Search Clause

    Subject to the Buyer, on or before(date) searching and approving title to the property against the presence of any charge or other feature, whether registered or pending, that reasonably may affect the property’s use or value.

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal’’.

    It is important to realize that the title search will reveal only those charges that are on title. It will not provide any information as to the terms and conditions of those charges. If there are charges such as covenants, easements, rights-of-way, etc., it may be necessary to obtain a full search of title to determine the impact they may have on the property. Full searches of title may be obtained through title search companies, a lawyer or notary, or from the appropriate Land Title Office.

    Any physical encumbrance noted on the title should be described in adequate detail on the Contract of Purchase and Sale, notwithstanding the boilerplate of the Contract of Purchase and Sale. Legally Speaking, column #267, (April 1997) describes what can happen when such details are not investigated adequately. It is advisable for a licensee to use a ‘‘subject to’’ clause to allow the buyer time to research the encumbrance adequately. Since most charges on title are complex legal documents, it is prudent practice to have Contracts of Purchase and Sale conditional upon the buyer obtaining satisfactory independent advice as to the charges registered against title.

    Physical encumbrances are covered by Clause 9; however, it is wise for a licensee to disclose in writing and provide a copy of the details to the buyer. Any physical encumbrances (i.e., non-financial) not covered by Clause 9 need to be spelled out in the contract itself. This would include, but would not be restricted to, issues such as private easements for shared driveways and private roads encroaching on a neighbour’s land through a friendly agreement which may not pass with the title. Legally Speaking, column #267, describes a case where failure to provide details resulted in a serious outcome for all concerned:

    Legally Speaking, #267, April 1997

    A decision involved section one of the Contract of Purchase and Sale, which allowed a buyer to avoid completing the purchase of a $1,223,000 property because the seller was unable to provide title clear of a restrictive covenant in favour of the Canadian Pacific Railway. The 1945 restriction required approval of the architectural and site designs by the CPR. The CPR had agreed to provide a release, but it was unavailable for registration on the closing date.

    The conclusion reached by the judge was that the CPR, at least in respect of this particular restrictive covenant, was not a utility. Therefore, it did not fall within the restrictive covenants in favour of utilities and public authorities, which are permitted by section one to remain on title.

    The seller had argued that this was a minor defect of title, which would not seriously interfere with the buyer’s use and enjoyment of the property. The judge disagreed and using the analysis discussed in column #245 (of ‘‘Legally Speaking’’), stated that any restrictive covenant requiring the approval of a third party as to how and what to build is neither minor nor insubstantial. He placed the onus squarely upon the seller to know his own title and to know what needed to be cleared from it.

    The reasons for judgment do not indicate whether a real estate licensee was involved in the sale of the property. If a licensee is acting in these circumstances and has searched the title, it would be prudent for the licensee to draw to the seller’s attention the existence of encumbrances which need to be cleared from title.

    Chen v. Hsu, S.C.B.C., Reasons for Judgment, February 29, 1997

    (Cited with the kind permission of Gerry Neely, B.A., LL.B., Pearlman & Lindholm, Victoria, B.C.)

    The standard Contract of Purchase and Sale requires the seller to deliver title to the buyer clear of all encumbrances except those permitted by the agreement. This is informally called the seller’s obligation to deliver clear title.

    Though the seller can remove financial charges like mortgages, judgments and liens, non-financial charges usually stay on title despite changes of ownership. Many of these non-financial charges affect how an owner can use the property. Statutory rights-of-way, easements, and building schemes are good examples.

    The standard Contract of Purchase and Sale automatically takes account of some exceptions to a seller’s obligation to provide clear title. The contract reads, in part:

    The Buyer agrees to purchase the Property from the Seller on the following terms and subject to the following conditions:

    9. TITLE: Free and clear of all encumbrances except substituting conditions, provisos, restrictions, exceptions and reservations, including royalties, contained in the original grant or contained in any other grant or disposition from the Crown, registered or pending restrictive covenants and rights-of-way in favour of utilities and public authorities, existing tenancies set out in Clause 5, if any, and except as other wise set out herein.

    Notice that the preprinted wording in the Contract of Purchase and Sale does not except easements or building schemes and such from the seller’s obligation to deliver clear title. If the title contains non-financial charges which are not caught by the exceptions in the standard contract, the licensee must ‘‘otherwise set out’’ those charges in the agreement.

    A convenient way to otherwise set out charges in the contract is to attach a current title search printout to the agreement and use the following clause:

    Acknowledgement of Title Clause A

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract, any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    Sometimes, a utility with a registered charge against the seller’s title may assign an interest in the utility’s charge as security for the payment of a loan or the performance of some other financial obligation payable by the utility. For example, this occurs where a utility with a right-of-way gives a mortgage of its right-of-way to a lender. In that case, the lender will register the mortgage of the right-of-way against title to the property. In this case, in addition to providing, as an exception to clear title, that the buyer will receive title containing the utility’s right-of-way, the contract should also record the utility’s mortgage of its right-of-way, being a financial charge payable by the utility. In a case where a utility that owns a non-financial charge has assigned its charge to secure a loan or some other financial obligation, a licensee may attach a current copy of the title search results to the Contract of Purchase and Sale and use the following clause:

    Acknowledgement of Title Clause B

    The Buyer acknowledges and accepts that on Completion the Buyer will receive title containing, in addition to any encumbrance referred to in Clause 9 (TITLE) of this contract:

    1. Any non-financial charge, and

    2. Any financial charge payable by a utility on its right-of-way restrictive covenant, easement or other interest

    set out in the copy of the title search results that is attached to and forms part of this contract.

    Buyer’s Approval of Title Search To Be Incorporated into Contract Clause

    Subject to the Buyer on or before (date) obtaining and approving a copy of the title search results against the presence of any charge or other feature, whether registered or pending, that reasonably may adversely affect the property’s use or value.

    If this condition is waived or declared fulfilled, the copy of the title search result will be incorporated into and form part of this contract and the Buyer acknowledges and accepts, despite any other provision in this contract, that upon completion the Buyer will receive title containing any non-financial charge set out in the copy of the title search results that is attached to and forms part of this contract.

    This condition is for the sole benefit of the Buyer.

    The following clause should be used when the buyer wants a lawyer to look at the physical encumbrances and explain the consequences of them:

Water

  • Water Potability Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (ii) Water Supply

    In the case of unproven water supply from either an existing or a new source, the buyer will be concerned not only with quality but also with quantity.

    When a property is connected to a municipal or community water supply, water is often taken for granted. The rural experience is often quite different — water conservation practices being the rule rather than the exception. When the water supply expected by the buyer disappears, the consequences can be disastrous.

    During examinations for discovery in an Alberta case, the plaintiff buyers testified that the water supply was much less than capable of meeting their family’s needs. As a result, a number of extraordinary measures were required. Two members of the family showered in the morning and the other members showered in the evening. They could not do any watering in the yard and they flushed the toilets only when absolutely necessary. That sort of evidence has the potential to generate considerable sympathy at trial.

    What should a licensee do when he or she is asked a question with respect to the well? Many buyers do not know the proper questions to ask of the sellers or the buyer’s agent to make an informed decision to purchase a rural property. The water quality and quantity is crucial to a buyer in deciding to purchase a property and a buyer may not be aware of the importance of water quality and quantity.

    Licensees have an obligation to avoid error, misrepresentation or concealment of pertinent facts. Therefore, licensees must take reasonable steps to discover the facts pertaining to every property they may list or sell.

    When someone says, ‘‘I want the water tested’’, a licensee should be clear what tests the client wants conducted on the water and a condition should be included in the offer to purchase to meet those standards to the buyer’s satisfaction. The test for mortgage approval may be at a lower standard than is satisfactory to the buyer’s personal needs for water quantity and quality. The buyer needs to determine the quality and quantity of water to meet his or her personal needs and then request water tests that will determine if the water meets those standards.

    When sellers state that they had enough water quantity for their needs, what does that mean for the buyer? The water needs for each family may be significantly different as a result of the number and age of people living in the house, laundry washed, cattle or horses to water, etc. Does the buyer need the water to be of the quality that babies or individuals with heart conditions can consume?

    To minimize potential liability in rural well cases, a listing agent might consider the following practices as a minimum:

    • Secure any representations by the seller concerning the well in writing so as to eliminate any doubt at a later time as to what was said.
    • Does the seller have a well report that verifies his or her information? Have you obtained a copy? Is the well report current? Does it test at the levels necessary to satisfy the buyer’s needs?
    • If a representation based on a well report is to be set out in the listing information, set out the fact that the information comes from a well report and the date of that report. Has the seller experienced any problems with the water supply, on a seasonal or other basis?
    • Are there any restrictions on the use of water by the seller’s household? When acting as agent for a prospective buyer, your duty is to assist the buyer in determining his or her water quality and quantity needs having a regard for all of the inquiries above and also considering the following:
      • If there is no well report or no current well report, recommend as a condition of the sale that the well be tested and approved by the buyer.
      • Determine whether your buyer had any prior experience with wells. If not, ensure that your client understands that the water supply cannot be guaranteed, that a good well can go dry with little or no warning and that even a good well may be subject to seasonal fluctuations.
      • Do not make representations to your client about the sufficiency of the water supply. One family of four people may be able to get by on a two gallon per minute well while another family may need two or three times that amount of water.

    Because of the obvious importance of water supply and quality to any rural transaction, prudent licensees will be careful in documenting their files to reflect all of the discussions between them and their client about the water supply and quality.

    If necessary, a clause such as the following should be included in the Contract of Purchase and Sale.

    Water Quality and Supply Clause

    Subject to the Buyer, at the Buyer’s expense, receiving and being satisfied with a report from (name of source of report) concerning the quantity and quality of the water supply on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Water Potability Clause

    Subject to the Buyer receiving and approving a water potability test report done by (name of service) on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    In situations where the existing services were not approved or the site cannot be approved for new services, the prudent licensee should protect the parties to the transaction by noting the same in the contract.

    Approval Uncertain Clause

    The Buyer acknowledges and accepts that the property may not receive approval for an onsite sewage system and that no representations to the contrary have been made by either the Seller or his or her agent.

    In some circumstances, where the property is not serviced by municipal water and sewer services, mortgage lenders may require appropriate certificates regarding water potability and the septic system. Also, a well driller’s certificate confirming adequate water flow may be required.

    To meet the Canada Mortgage and Housing Corporation’s (CMHC) requirements, water potability must meet the provincial standard, or in the absence of such standard, Health Canada’s Guide on Canadian Drinking Water.

    CMHC advises that it will not delay approval of any insured mortgage application pending lender receipt of a potability certificate. The approved lender is responsible for obtaining the required certificates prior to advancing funds. Copies of all certificates must be retained in the approved lender’s file. For further information, contact CMHC at 1-888-463-6454 or visit www.cmhc-schl.gc.ca  — will open in a new tab.

  • Water Quality and Supply Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xxv) Health and Environmental Concerns - View Subsection

    (3) Special Concerns with Rural Land - View Sub-subsection

    (ii) Water Supply

    In the case of unproven water supply from either an existing or a new source, the buyer will be concerned not only with quality but also with quantity.

    When a property is connected to a municipal or community water supply, water is often taken for granted. The rural experience is often quite different — water conservation practices being the rule rather than the exception. When the water supply expected by the buyer disappears, the consequences can be disastrous.

    During examinations for discovery in an Alberta case, the plaintiff buyers testified that the water supply was much less than capable of meeting their family’s needs. As a result, a number of extraordinary measures were required. Two members of the family showered in the morning and the other members showered in the evening. They could not do any watering in the yard and they flushed the toilets only when absolutely necessary. That sort of evidence has the potential to generate considerable sympathy at trial.

    What should a licensee do when he or she is asked a question with respect to the well? Many buyers do not know the proper questions to ask of the sellers or the buyer’s agent to make an informed decision to purchase a rural property. The water quality and quantity is crucial to a buyer in deciding to purchase a property and a buyer may not be aware of the importance of water quality and quantity.

    Licensees have an obligation to avoid error, misrepresentation or concealment of pertinent facts. Therefore, licensees must take reasonable steps to discover the facts pertaining to every property they may list or sell.

    When someone says, ‘‘I want the water tested’’, a licensee should be clear what tests the client wants conducted on the water and a condition should be included in the offer to purchase to meet those standards to the buyer’s satisfaction. The test for mortgage approval may be at a lower standard than is satisfactory to the buyer’s personal needs for water quantity and quality. The buyer needs to determine the quality and quantity of water to meet his or her personal needs and then request water tests that will determine if the water meets those standards.

    When sellers state that they had enough water quantity for their needs, what does that mean for the buyer? The water needs for each family may be significantly different as a result of the number and age of people living in the house, laundry washed, cattle or horses to water, etc. Does the buyer need the water to be of the quality that babies or individuals with heart conditions can consume?

    To minimize potential liability in rural well cases, a listing agent might consider the following practices as a minimum:

    • Secure any representations by the seller concerning the well in writing so as to eliminate any doubt at a later time as to what was said.
    • Does the seller have a well report that verifies his or her information? Have you obtained a copy? Is the well report current? Does it test at the levels necessary to satisfy the buyer’s needs?
    • If a representation based on a well report is to be set out in the listing information, set out the fact that the information comes from a well report and the date of that report. Has the seller experienced any problems with the water supply, on a seasonal or other basis?
    • Are there any restrictions on the use of water by the seller’s household? When acting as agent for a prospective buyer, your duty is to assist the buyer in determining his or her water quality and quantity needs having a regard for all of the inquiries above and also considering the following:
      • If there is no well report or no current well report, recommend as a condition of the sale that the well be tested and approved by the buyer.
      • Determine whether your buyer had any prior experience with wells. If not, ensure that your client understands that the water supply cannot be guaranteed, that a good well can go dry with little or no warning and that even a good well may be subject to seasonal fluctuations.
      • Do not make representations to your client about the sufficiency of the water supply. One family of four people may be able to get by on a two gallon per minute well while another family may need two or three times that amount of water.

    Because of the obvious importance of water supply and quality to any rural transaction, prudent licensees will be careful in documenting their files to reflect all of the discussions between them and their client about the water supply and quality.

    If necessary, a clause such as the following should be included in the Contract of Purchase and Sale.

    Water Quality and Supply Clause

    Subject to the Buyer, at the Buyer’s expense, receiving and being satisfied with a report from (name of source of report) concerning the quantity and quality of the water supply on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Water Potability Clause

    Subject to the Buyer receiving and approving a water potability test report done by (name of service) on or before (date) .

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    In situations where the existing services were not approved or the site cannot be approved for new services, the prudent licensee should protect the parties to the transaction by noting the same in the contract.

    Approval Uncertain Clause

    The Buyer acknowledges and accepts that the property may not receive approval for an onsite sewage system and that no representations to the contrary have been made by either the Seller or his or her agent.

    In some circumstances, where the property is not serviced by municipal water and sewer services, mortgage lenders may require appropriate certificates regarding water potability and the septic system. Also, a well driller’s certificate confirming adequate water flow may be required.

    To meet the Canada Mortgage and Housing Corporation’s (CMHC) requirements, water potability must meet the provincial standard, or in the absence of such standard, Health Canada’s Guide on Canadian Drinking Water.

    CMHC advises that it will not delay approval of any insured mortgage application pending lender receipt of a potability certificate. The approved lender is responsible for obtaining the required certificates prior to advancing funds. Copies of all certificates must be retained in the approved lender’s file. For further information, contact CMHC at 1-888-463-6454 or visit www.cmhc-schl.gc.ca  — will open in a new tab.

Zoning

  • Change of Zoning Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xix) Zoning Approval

    Confirmation of Zoning Clause

    Subject to the Buyer confirming on or before (date) that zoning for the Property is (indicate desired zoning) .

    This condition is for the sole benefit of the Buyer.

    This clause may be adapted for other situations where confirmation of specific information is required by the buyer.

    Change of Zoning Clause

    Subject to the Buyer, at the Buyer’s expense, obtaining final approval of zoning change from (current zoning) to (desired zoning) on or before (date) . The Seller will co-operate with the Buyer in the zoning application process.

    This condition is for the sole benefit of the Buyer.

  • Confirmation of Zoning Clause

    Excerpt from Trading Services | Section 4. General Information

    Go To

    (a) Contract Clauses - View Entire Section

    (xix) Zoning Approval

    Confirmation of Zoning Clause

    Subject to the Buyer confirming on or before (date) that zoning for the Property is (indicate desired zoning) .

    This condition is for the sole benefit of the Buyer.

    This clause may be adapted for other situations where confirmation of specific information is required by the buyer.

    Change of Zoning Clause

    Subject to the Buyer, at the Buyer’s expense, obtaining final approval of zoning change from (current zoning) to (desired zoning) on or before (date) . The Seller will co-operate with the Buyer in the zoning application process.

    This condition is for the sole benefit of the Buyer.

  • Receipt of Zoning Bylaw Clause

    Excerpt from Trading Services | Section 5. Strata Sales

    Go To

    (e) Additional Issues for Buyer’s Agents - View Entire Section

    (xi) Mixed Use

    To more effectively enforce a quiet lifestyle in a mixed-use development, a strata corporation may amend its bylaws to restrict the activities of certain businesses that might operate in a non-residential strata lot. For instance, a bylaw may prohibit the owner of a non-residential strata lot from operating a nightclub or prevent operating a commercial business after 7:00 p.m.

    If the strata corporation does not have a bylaw that limits the types of business or their activities that operate in the non-residential strata lots, a buyer’s agent should point this out to the buyer. It is also a good idea to obtain a copy of the relevant zoning bylaw that shows what kinds of activities are permissible in the area in question and give it to the buyer.

    In situations where the buyer wishes to make an offer conditional upon receiving a copy of the zoning bylaw and being satisfied with permitted activities, the following clause should be inserted in the Contract of Purchase and Sale.

    Receipt of Zoning Bylaw Clause

    Subject to the Buyer receiving a copy of the relevant zoning bylaw for the property and approving the uses permitted by (date).

    This condition is for the sole benefit of the Buyer.

    Ω If not using the standard form Contract of Purchase and Sale, refer to ‘‘Contracts under Seal

    Change in Bylaws

    The possibility exists that changes may be made in a strata corporation’s bylaws between the date of acceptance of an offer and the completion date, particularly following annual general meetings or extraordinary meetings.

    As outlined previously, licensees should obtain the minutes of the strata corporation’s last Annual General Meeting, and any strata council meetings held in the interim, and deliver them to the buyers along with the amended bylaws. These minutes may contain changes in bylaws or a notice of motion to change bylaws that would be significant to the buyers’ decision to purchase.

    Notification of Changes in Bylaws or Rules Clause

    The Seller will notify the Buyer before the completion date of any notice of a resolution to amend the bylaws or rules of the strata corporation, or the bylaws or rules of a section to which the strata lot belongs, or any amendment to such bylaws or rules, that the Seller has not previously disclosed to the Buyer. The Seller will promptly deliver a copy of the relevant resolution or notice of resolution to the Buyer.

    Ώ Where such notification is provided to buyers, licensees should advise buyers to seek legal advice.