(Ontario)
Here is a swimming pool clause which many agents seem to be using:
“The Buyer and Seller acknowledge that the swimming pool was not operational at the time of inspection. The Buyer and Seller agree that the Buyer’s solicitor shall hold back the amount of $__________.00 for the payment of any repairs if needed to the pool and/or equipment. The Buyer’s solicitor shall immediately after notification by the Buyer pay the hold back or the amount thereof necessary to be paid in payment of the repairs owing. If there has been no notification to the Buyer’s solicitor as aforesaid within_____ weeks/months after the completion of this transaction, the Buyer’s solicitor may release the holdback to the Seller. The Buyer’s solicitor shall supply a personal undertaking on completion to the Buyer to evidence the foregoing.”
Do you see any problems here?
Let’s look at that clause in more detail:
The Buyer and Seller acknowledge that the swimming pool was not operational at the time of inspection.
This is simple and straightforward. So far, so good.
The Buyer and Seller agree that the Buyer’s solicitor shall holdback the amount of $__________.00 for the payment of any repairs if needed to the pool and/or equipment.
The parties will have to agree in advance about the holdback amount. Here we are talking about repairs. What if something needs to be replaced? Repairing the pump for $250.00 or replacing the pump at $700.00? Also, the old pump was only $400.00 brand new, lasts no longer than 10 years and we are at year 9. On straightline depreciation, it’s only worth $40.00.
How does one determine whether the repairs are indeed “needed”.
The Buyer’s solicitor shall immediately after notification by the Buyer pay the holdback or the amount thereof necessary to be paid in payment of the repairs owing.
In this regard, it would appear to be the Buyer’s discretion. So, the Buyer is to contact and instruct his own lawyer. And, then the Buyer’s lawyer is to pay the money to a third party.
This means that the Seller is entitled to access confidential discussions between the Buyer and his own Solicitor. That can’t be right, can it? But, that’s what it says!
If there has been no notification to the Buyer’s solicitor as aforesaid within_____ weeks/months after the completion of this transaction, the Buyer’s solicitor may release the holdback to the Seller
You would think that once the time is up, the Buyer’s lawyer MUST release the holdback, or at the very least what’s left from the holdback.
The issue of communications between the Buyer and his own solicitor is no longer confidential. This is subject to inquiry.
The Buyer’s solicitor shall supply a personal undertaking on completion to the Buyer to evidence the foregoing.
This is a good indication that we have gone over the top and we are working with a crazy clause. Here, the specification is the private dealings between the Buyer and his own lawyer, and yet we find that in an Agreement of Purchase and Sale which the lawyer never signs. Peculiar!
We need a better clause, although, the intention seems genuine.
Brian Madigan LL.B., Broker