When we look at an Agreement of Purchase and Sale, this is what it says about the property and the description of it:
REAL PROPERTY:
Address …………………………………………………………………………………………………………………….
fronting on the …………………………………………side of………………………………………….
in the…………………………………………………………………………………………………………….
and having a frontage of ……………….. more or less by a depth of …………………. more or less
and legally described as ……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………. (the “property”)
(Legal description of land including easements not described elsewhere)
There is a potential problem and that is the risk that the property is misdescribed.
If this is the case, then, we have no contract, since that is one of the essential elements of a contract.
The Information Required
Municipal Address: 123 Main Street
Name of Street: Main Street
Municipality: Mississauga
Frontage: 100 ft
Depth: 200 ft
Legal Description: Lot 7, Plan 727
Issues
The above information is very tight and specific. Does it accurately describe the property and does it make it clear that it’s not the property next door?
What if the accurate address were 123 “A” Main Street, then this would be wrong.
What about the dimensions of the property. Was there ever any transfer of a small strip, like 10 ft. to a neighbour or the municipality? Or, was there any loss or acquisition of property by adverse possession? What about any encroachments or easements?
Is it truly Lot 7, that is “all” of Lot 7? Or, might it just be part of Lot 7?
Double Check
The legal description of the property appears on the Title documents, which could be the Deed (in the Registry system), the Transfer (in the Land Titles system) or the Transfer/Deed (since 1984).
The legal description can be checked in MPAC and with GeoWarehouse. These resources are available for free. In addition, it might be wise to obtain the Property Parcel Register for a nominal fee of about $30.00.
This will disclose any registered easements as well.
Problem with Just Numbers
A property in Muskoka just had a recent survey. There was an island about 15 ft. wide at the widest part and was about 85 ft. long. Then, at the top of the hill was a cottage on a 1 acre lot.
Two parcels of property both registered on title on a Reference Plan, as Part 1 (the island) and Part 2 (the cottage). That was also the way it was described in the Listing.
The Buyer’s agent makes a slight mistake. The Offer only states Part 1 on the Reference Plan. When the matter goes before the Judge, the conclusion is quite straightforward.
Judge: You bought Part 1.
Buyer: But, no, I also bought Part 2.
Judge: Sorry, it doesn’t say anything about Part 2, you just get Part 1.
Buyer: But, I paid $1 million for both of them.
Judge: No, sorry you paid $1 million for Part 1.
The Agreement is required to be in writing to comply with the Statute of Frauds. There is a provision that states that there’s nothing else going along with the deal, no side agreements, no verbal agreements, nothing. That’s the “entire agreement” clause.
There is also a “parol evidence rule” which bars extrinsic evidence, including prior or contemporaneous oral agreements and prior or contemporaneous written agreements, that contradict or create a variation of a term in writing that the parties intended to be completely integrated.
This means that you cannot introduce any evidence in Court along these lines. It’s simply inadmissible.
Alternative or Expanded Description
Prior to the current practice of “just numbers”, Buyer and Sellers were provided a greater opportunity to describe the property. There were several lines and someone might say “… a detached house with a separate garage, swimming pool backing onto a ravine, known as 123 Main St. etc….”.
Or, in the case of the cottage with the island, you could describe it as “…. a large 2,500 sq. ft. cottage at the top of the hill overlooking Lake Muskoka, including its own island retreat, known as Part 1 Reference Plan XXX.”
Now, here we actually made the same mistake. In fact, precisely the same mistake that was previously made. But, now we can get around the parol evidence rule and lead evidence about the cottage. The actual “cottage” was referenced in the description. It just doesn’t line up with the numbers.
Accordingly, the Buyer should seek “rectification of the contract” to seek changing it, to properly reflect the agreement between the parties. The Judge would be able to hear this evidence and conclude the deal was for the cottage and the island for $1 million and then decide I am going to add in “Part 2” on the Reference Plan because that’s what the parties intended to do.
Schedule “A”
Those extra lines on the first page are now gone. That doesn’t mean that you cannot add them in Schedule “A”. In fact, that’s specifically what you are supposed to do. Don’t just assume that you have run out of room and there is nothing that you can do. That doesn’t make any sense.
Add a line saying: “… a detached house with a separate garage, swimming pool backing onto a ravine, known as 123 Main St. etc….”. That would be perfect!
Schedule “C”
In the case of a 7 page “metes and bounds” description, this should be added as a separate Schedule in its entirety.
Conclusion
Be careful about just using numbers and numbers alone. If they are correct, then that’s fine, but if they are not, then, you have a problem!
Brian Madigan LL.B., Broker