Question:
I just came across this clause in a Schedule “B” inserted by the Listing Agent. What do you think?
“THE PARTIES HEREIN ACKNOWLEDGE, COVENANT AND AGREE that should any of the conditions and obligations contained herein and as specifically outlined in this Agreement of Purchase and Sale, not be met and/or fulfilled by the respective Parties, within the time allotted, this Agreement shall be deemed to be terminated and be mutually released by both parties with written verification, in the form of a Mutual Release, executed by both Buyer and Seller within 24 hours of such notice that the transaction has failed. The said Mutual Release will release both Parties and the Brokerage(s) named, from all liabilities, covenants, obligations, claims and sums of money arising out of the Agreement of Purchase and Sale.”
Answer:
This is complete negligence on the part of the Listing Agent. The Seller is giving up their legal rights and they don’t know anything about it.
Actually, the Seller probably gets the right to sue their own Brokerage directly. RECO’s insurer wouldn’t be happy with this!
Again, the only way this provision could creep into the Agreement would be based on the full and complete ignorance of the law by the Listing Agent.
But, otherwise, I suppose it’s OK! Actually, not really, what if you acted for the Buyer and wished to have some enforceable rights under the contract.
At best, this amounts to an option to purchase, however, it’s not really enforceable against the other party.
For example, the Buyer fails to show up on closing with the money. The Seller has no rights whatsoever!
Or, the Seller fails on closing to deliver the Transfer/Deed. The Buyer has no rights whatsoever!.
Brian Madigan LL.B., Broker