Court of Appeal Calculates the Deadline for Off-Title Searches

2651171 Ontario Inc. v Brey

This was a case determined by the Ontario Court of Appeal on 17 February 2022.

It deals with the interpretation of the Title Search clause and the calculation of the deadline.

In this case, the Buyer’s lawyer submitted an off-title requisition on 26 September 2019. The Seller had sold the property as a Fourplex, but according to the City of Ottawa, it was only a Threeplex.

The Buyer’s rights would expire under the contract and they would be obligated to complete the purchase for a Threeplex if they missed the deadline. The issue is how do you calculate the deadline?

Seller                    Patrick Brey

Buyer                    2651171 Ontario Inc.

APS                      July 16, 2019

Property                469-471 Wilbrod Street in Ottawa

Type                     fourplex with two 1-bedroom units and two 3-bedroom units

Price                     $1,610,000

Deposit                 $25,000,00

Offer                     unconditional, no financing

                             Conditional upon inspection

No Clause             to permit verification of “present use”

Closing                 October 1st, 2019.

Req Date               September 16, 2019

Calculated             to be determined by the Court of Appeal

Title Search           completed by Buyer’s lawyer 16 September 2019

Off Title                same day, search of work orders etc.

                             Ottawa says, three units, not four,

26 September 2019, submitted

Issue                     3 units not 4 units

Buyer                    refused to close

Seller                    resold to second buyer for $1,575,000 on December 4, 2019

Apply Formula

The Court said you have to apply the formula:

   “ Paragraph 8 provides for a choice between the earlier of two dates under parts (i) and (ii). In properly interpreting the entirety of the paragraph, it is necessary first to ascertain “the later” of the two dates provided for in part (i), namely, October 16th (30 days from the requisition date of September 16th) and August 26th(30 days from the appellant’s waiver on July 26th).

The later date is October 16th. Moving next to part (ii), the date is “five days prior to completion” (October 1st closing date), that is, September 26th.

The earlier of October 16th and September 26th, is September 26th. September 26th is prior to the October 1st closing date.

When read in its entirety, paragraph 8 does not yield any commercial absurdity.

September 26, 2019 was the correct deadline”

When was the requisition due with respect to off title issues, namely the present use?

Let’s look at the wording in the standard form Agreement of Purchase and Sale:

8. TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. on the 16 day of September, 2019 (Requisition Date) to examine the title to the property at Buyer’s own expense and until the earlier of: (i) thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or; (ii) five days prior to completion, to satisfy Buyer that there are no outstanding works orders or deficiency notices affecting the property, and that its present use (Residential Fourplex) may be lawfully continued and that the principal building may be insured against risk of fire. (underlining by COA)

Well, that was certainly a mouthful. It’s not particularly easy to understand, so let’s set it out in appropriate paragraphs and sub paragraphs:

8. TITLE SEARCH: 

Buyer shall be allowed until 6:00 p.m. on the 16 day of September, 2019 (Requisition Date) to examine the title to the property at Buyer’s own expense and until the earlier of:

  • thirty days from the later of the Requisition Date or the date on which the conditions in this Agreement are fulfilled or otherwise waived or;
  • five days prior to completion, 

to satisfy Buyer that there are no outstanding works orders or deficiency notices affecting the property, and that its present use (Residential Fourplex) may be lawfully continued and that the principal building may be insured against risk of fire.

So, what were the relevant dates?

Requisition Date:  16 September 2019

30 days after:        16 October 2019

Conditions:           26 July 2019 (waiver or fulfillment)

30 days after:        26 August 2019

Completion:            1 October 2019

5 days prior:           26 September 2019

Step One

What is the requisition date? What date is 30 days after? When were the conditions waived or satisfied? Which is the latest date?

This means:

Requisition Date:  16 September 2019

30 days after:        16 October 2019

Conditions:           26 July 2019 (waiver or fulfillment)

Latest date:            16 October 2019

Step Two

What is the completion date? What date is 5 days earlier than the completion date?

Completion:                   1 October 2019

5 days prior:                   26 September 2019

Step Three

Which date as calculated, under Step One or Step Two is the earliest?

Step One took you to 16 October 2019. That’s actually after the closing. So, the earliest of those two dates would be 26 September, or 5 days prior to closing.

COMMENT

You can appreciate that the formula is complicated. The role of the agent in dealing with the conditions is a relevant factor as well.

Let’s assume that there were no conditions. We would still have the same calculation, namely, 26 September 2019. In fact, most of the time, 5 days prior to closing will be the result.

It is quite common to have a Requisition date, being 10 to 14 days prior to closing. If that is the case, then the off title searches would all work out to the 5 days prior to closing.

Under the Vendors and Purchasers Act, if no time limit were included, the standard would be 30 days. Again, if we undertook calculations, we would still have 5 days prior to closing for off title searches.

In situations with long closings, we may have title search periods being 60 or 90 days prior to closing. If that is the case, then, that would shorten up the off title deadline. In that regard, the date of waiver or fulfillment of conditions would be relevant. That date should be immediately communicated to the Buyer’s lawyer. If there were a significant delay in that communication, then, the agent may face liability.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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