Question:
If a purchaser agrees to assume the hot water tank in the Agreement of Purchase and Sale, however no contract was provided or shared from the Seller, what is the situation there?
The real estate agents didn’t present the contract to the seller, the real estate lawyers didn’t get the contract to the purchaser, however the purchaser didn’t request such things (first time home buyer, they assumed it would just “be transferred”).
The hot water rental company is now chasing the purchaser 12 months later with a contract, saying they assumed it on date of house purchase, however they are also presenting a backdated bill for 12 months (with a rather high monthly rental fee, for an aging hot water heater that is 15 years old).
Would the purchaser be on the hook to assume a contract a year later and pay the 12 months of rental fees at a rate that was not agreed upon or discussed before the house closing date?
Answer:
The Buyer agreed in the contract to assume the rental contract.
Everyone, including the two agents, the two lawyers and the Seller and the Buyer missed this, it was just overlooked.
This was a matter which was collateral to the main purpose of the contract. As a result, the doctrine of merger does not apply and the Buyer would still be required to assume the rental contract after closing.
This obligation would extend for two years following the closing.
The rental company would be entitled to compensation for the rental payments for the twelve month period. Without the contract assumption, the rental company can only collect from the Seller (unless there was a lien on the property). However, the Seller is entitled under the Agreement of Purchase and Sale for reimbursement of their rental payments following closing.
Brian Madigan LL.B., Broker