What should be the normal periods? What’s fair and reasonable? What makes sense from the Buyer’s perspective? What makes sense from the Seller’s point of view?
Let’s start out with the rules!
You can find the default provisions under the Vendors and Purchasers Act.
Terms of agreement of sale and purchase
4Every contract for the sale and purchase of land shall, unless otherwise stipulated, be deemed to provide that,
(b) the purchaser shall search the title at the purchaser’s own expense and shall make any objections thereto in writing within thirty days from the making of the contract;
It is rather clear that the Buyer has 30 days from the “making” of the agreement. That means acceptance. If there are conditions running, that doesn’t matter. There’s 30 days to search.
The count is straightforward. The date of acceptance is Day 0, the next day is Day 1 and so on. The 30th day is included until the end of that day.
Requisitions / Objections by Buyer
If anything is wrong, that means an “objection”, then they need to be identified, and made in writing. The time limit is 30 days.
Removal of Objections by Seller
How long does the Seller have to respond? Let’s look back at the Act, again, s.4:
(c) the vendor has thirty days in which to remove any objection made to the title, but if the vendor is unable or unwilling to remove any objection that the purchaser is not willing to waive, the vendor may cancel the contract and return any deposit made but is not otherwise liable to the purchaser;
The next 30 days is to enable the Seller to respond. That will make the closing date at least 60 days out. This is reasonable since once the Buyer submits a list of objections the Seller needs to have time to investigate, verify and respond. Then, of course, if they are valid, the Seller needs to come up with some solutions.
Then, the next step, is the “back and forth”. If it can’t be solved, will the Buyer waive it? And, if the Buyer won’t waive it, then the Seller may cancel the agreement.
The time periods are simple and straightforward, they make sense and there is sufficient time for both parties to the agreement. And, there was just one requisition date.
OREA Standard Form
The Ontario Real Estate Association has a slightly different view. It uses two requisition dates. The attempt is to ensure that Buyers do not pay any money out unless they are really going to go ahead with the purchase. So, the date is often long delayed, and well after the conditions are fulfilled, satisfied or waived.
So, we can have an extended period of time at the outset where nothing essentially is being done. Next, the final requisition date is set at no later than 5 days before closing. That’s not much time for a Seller to investigate, verify and solve a problem.
The delayed start saves the Buyer some money, if the transaction were not otherwise to proceed. The “late date” if selected by a Buyer again would not be helpful. The Vendors and Purchasers Act envisioned that the Seller would have 30 days to fix a problem…… not five.
The delayed requisition dates are not problematic at all for the Buyer.
It’s the Seller who is placed at a distinct disadvantage. Without time to find a solution, the deal will simply fail.
So, a better date for the Seller would always be no closer than 30 days to the closing date. That would be reasonable.
If the Seller under the Agreement has:
- No time to respond, or
- An unreasonably short time to respond,
then, this can constitute negligence on the part of the agent.
The consequence could be a failed deal or increased costs (usually in terms of legal fees) to save the deal.
Let me mention that if dates are too short, then Seller’s solicitors will have to bring a Motion on short notice to the Courts. If they were going to charge $5,000.00 to fix the problem, it will now be $15,000.00 because of the urgency and short notice.
So, who is going to pay the extra fees?
Brian Madigan LL.B., Broker