This particular paragraph is a little bit confusing so we’re going to have to pick it apart line by line.
However, before we do, you have to understand that there are essentially three categories of matters that fall within the concept of requisitions (the “requests” made by the purchaser’s solicitor concerning matters which must be satisfied prior to closing). Those categories are:
1) matters going to the root of title,
2) matters of title, and
3) matters of conveyance.
The requisition date concerns matters of title only. It does not affect either #1 or #2. We’ll have to look at a few examples. Matters going to the root of title basically means “no title at all”. Here, there was no Planning Act severance or the developer still is the owner of the lot and the builder doesn’t own the property. The law is tough, but not that tough! If you’re not getting anything at all for your money, you don’t have to go through with the deal. And, missing the requisition date is of no consequence.
The next item is matters of conveyance. These are mortgages, liens, charges and encumbrances that can be discharged (as a matter of right) by reason of the payment of a sum of money. So, the first mortgage in favour of a bank? Yes, you can miss this requisition date too, and the discharge still has to be obtained.
So, let’s go back to what’s leftover. That is what this clause is essentially about. It includes all other title related issues, easements, restrictive covenants, subdivision agreements etc. that are outstanding. It also includes matters of conveyance that were at one time overlooked so that now they have become title problems. For example, a mortgage is obtained 20 years ago. Five years later it is paid off. No discharge is registered. The mortgagee sends the mortgagor a signed receipt and then moves to another continent. The old mortgage is still on title. The solution is a Court Order to discharge the mortgage together with a $ 3,000 to $ 5,000 legal bill. This particular clause will tell us who has to pay!
So, now let’s look at that clause and assume the following:
1) 15 June 2005, the date of the agreement
2) 10 July 2005, the date of the expiration of the conditions,
3) 15 August 2005, the requisition date, and
4) 10 September 2005, the closing date.
The Buyer shall be allowed until 6:00 pm on 15 July 2005 to examine the title. This means the “request” for the discharge of that 20 year old mortgage (and of course any other title issue) must be made by that time. The request has to be sufficient to identify that particular mortgage. It cannot be a general request saying “any and all mortgages” it has to refer to this particular mortgage by its registration number.
What are the consequences for failure to meet the 6:00 pm deadline? Well, it was the vendor’s problem until 6, now it’s the purchaser’s problem. The legal fee to finance the Court application falls to the purchaser. And, this is where the law gets tough!
That’s all it says about title. That’s the whole thing. You should also look at paragraph 10 to see what’s included in the definition of title and certain transferable risks.
Now, we come to the second part of the clause. It’s not dealing with the issue of title at all, but since it also deals with the concept of a “request”, this is where it is placed in the agreement.
It says “and until the earlier of:
1) thirty days from the later of
a) the requisition date,
b) the date on which the conditions are fulfilled or waived.
2) 5 days prior to completion.
So, in this example, the requisition date was 15 August and the conditions were waived on 10 July. So, here you select 30 days after the requisition date or 14 September.
Now, you go to the second part “the 5 days”. The deal is to close on the 10th. Here, the requests have to be in 5 days before completion or 5 September.
The next issue is what particular requests are we talking about:
1) outstanding work orders,
2) deficiency notices,
3) present use (that is the present “zoning”), may be lawfully continued, and
4) principal building may be insured.
Brian Madigan LL.B., Broker