Appraisal Less than Purchase Price

Question:

The Agreement of Purchase and Sale contains the following clause:

“The Seller and the Listing Agent agree to co-operate in providing access to the property up until the closing day herein for the purpose of an appraisal to be conducted by the Buyer’s Lender if required. If the appraisal report decreases the value of the property then the Seller agrees to re-negotiate the sale according to the appraisal.”

Answer:

This Agreement is voidable for uncertainty. It lacks one of the essential elements to make an agreement enforceable, namely price.

An agreement to agree to something in the future or to negotiate is no agreement at all.

It is possible to include a clause which would permit the calculation or ascertainment of the altered purchase price. This particular clause is insufficient, but a better clause would work.

Comments about the inappropriate and “bad wording” aside, how would a Listing agent allow this clause to creep into the agreement?

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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