Better Grow Op Clauses

Are you living in a former grow-op? - The Globe and Mail

Recently, the Ontario Court of Appeal in Beatty v. Wei dealt with the standard form OREA Grow House clause and concluded that it was insufficient to protect the Buyer.

The present clause reads as follows:

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

A preferable clause to protect the Buyer would read as follows:

“The Seller represents and warrants that the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction.”

An acceptable clause, but an improvement over the present standard form would be:

“The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, to be determined effective as of the date of completion, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. This warranty shall survive and not merge on the completion of this transaction.”

An alternative acceptable clause might read as follows:

“The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, to be determined effective as of the date of completion, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances.  The Seller agrees to execute and deliver a Statutory Declaration to this effect on closing. This warranty shall survive and not merge on the completion of this transaction.”

A further alternative acceptable clause might read as follows:

“The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, to be determined effective as of the date of completion, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances.  The Seller agrees to execute and deliver a Statutory Declaration to this effect on closing. This warranty shall survive and not merge on the completion of this transaction. In the event that the Seller is unable to deliver such Statutory Declaration, then the Buyer shall be entitled to rescind this Agreement, and shall be entitled to the return of the deposit immediately in full with interest (if applicable) and without deduction.”

A further alternative acceptable clause might read as follows:

“The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, to be determined effective as of the date of completion, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances.  The Seller agrees to execute and deliver a Statutory Declaration to this effect on closing. This warranty shall survive and not merge on the completion of this transaction. In the event that the Seller is unable to deliver such Statutory Declaration, then the Buyer shall be entitled to rescind this Agreement, and shall be entitled to the return of the deposit immediately in full with interest (if applicable) and without deduction.”

An alternative Seller’s acceptable clause might read as follows:

“The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller’s knowledge and belief, to be determined effective as of the date of completion, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances.  The Seller agrees to execute and deliver a Statutory Declaration to this effect on closing. This warranty shall survive and not merge on the completion of this transaction. In the event that the Seller is unable to deliver such Statutory Declaration, then the Seller shall be entitled to declare this agreement null and void and the Buyer shall be entitled to the return of the deposit immediately in full without interest or deduction.”

COMMENT

There are many other variations to these clauses. Each transaction is subject to the negotiations of the Buyer and Seller.

The above clauses are offered for the purposes of consideration and not to be used as precedents or an indication of what may or may not be acceptable or standard practice.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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