Amendment: Meaning when it’s not Used Properly

Buyer has an accepted offer conditional on the following 3 conditions:

1) Inspection,

2) Mortgage Financing, and

3) Environmental Assessment.

With the first 2 conditions the Buyer submits an amendment to the Seller which Seller ignores and allows the time to pass. The third condition is fulfilled on time and the Buyer submits a Notice of Fulfillment covering all three conditions.

Is the deal dead because the first 2 conditions were not fulfilled on time despite the deal at the time still being conditional on a future condition?

Amendment Wording

The Buyer and Seller herein agree to the following amendment(s) to the aforementioned Agreement:

Delete:

This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer’s expense, and the obtaining of a report satisfactory to the Buyer in the Buyer’s sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller personally or in accordance with any other provisions for the delivery of notice in this Agreement of Purchase and Sale or any Schedule thereto not later than ________ on the ______ day of ________________ , (a.m./p.m.) 20 _____ , that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer’s sole option by notice in writing to the Seller as aforesaid within the time period stated herein.

                                                          (BOLD Print mine)

Similar language appears in the next two conditions.

Choices

Effectively, in the transaction there are three ways to deal with these conditions as they become due:

• Amendment
• Notice of Fulfillment
• Waiver

Certainly, it would be best on the part of the Buyer to submit a Notice of Fulfillment or Waiver, since that was a “one person” document.

The Amendment requires the signature of the Seller. Unfortunately, there was also an irrevocable time. That could simply have been left “open”.

The Amendment provision is often used with some sort of condition, like a price reduction. In this case, it simply called for the deletion of the clause.

The clause itself goes on to say if there’s no notice (fulfillment) in time, then the “Offer shall be null and void”.

Although there is an option to use a Waiver, there is no similar reference to the failure resulting in the “Offer shall be null and void”. In fact, it’s odd that the reference is made to an Offer, since this is indeed an actual Agreement of Purchase and Sale with some conditions. Once accepted the Offer became an Agreement.

Obviously, the intent concerning the Waiver was that this would preclude the document becoming “null and void”.

Use of the Amendment

While this might be uncommon, the choice is nevertheless available. The problem is simply that the Seller did not sign it.

Nevertheless, is it a “notice” which would preclude the triggering of the “null and void” scenario?

So, the Buyer submits a document calling for the deletion of the Inspection condition, the Seller fails to sign “on time” and now argues that it was the Buyer who failed to send the notice within the time.

I would certainly think that at the very least, the Amendment itself would constitute a NOTICE as require by that clause.

Although it’s unusual to use it for such a purpose it would appear to meet the “notice” test.

Also, since the Seller has (like the Buyer) and obligation of good faith contractual performance, I would expect that they should have signed the Amendment.

Easily, a Court could conclude that the Buyer intended to remove the condition when the Amendment was sent, and that at the very least, that document constituted a “notice”.  Courts will deal with the issue of “intention” once there is a contract in place, but not during the negotiating period.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com