More than one of us may feel like the Fresh Prince of Bel-Air at the moment – like our life got flipped-turned upside down – since the declaration by the WHO on March 11, 2020 that COVID-19 was a pandemic. Since then, all levels of governments, and all governing bodies have been attempting to make sense of, and find a way to continue, with aspects of life that cannot be put on hold.
One such part of life is the purchase and sale of real property in Ontario. The Ontario Real Estate Association (“OREA”) has vetted new clauses to be used in Agreements of Purchase and Sale.
Without providing any legal advice, only information, here are some thoughts regarding the clauses as vetted by OREA.
The Buyer and Seller agree and acknowledge that in the event that the Buyer or Seller to the Agreement becomes the subject of a mandatory COVID-19 virus quarantine at the time of performance hereunder that results in the parties’ inability to complete the transaction as scheduled, the closing shall be automatically extended at the request of either affected party for a period of seventeen (17) calendar days (or, if that date falls on a non-business day, then to the nearest business day thereafter), unless the parties otherwise mutually agree to extend the Completion Date further. If this clause is invoked, the Buyer and Seller shall continue to act in good faith and use their reasonable best efforts to ensure the completion of the transaction occurs on as timely a basis as possible, and will not use this as a means to delay closing in anticipation of any such quarantine or closures, or for reasons unrelated to COVID-19. Time shall remain of the essence for any extended closing date as a result of this clause.
Clause #1 seems ripe for litigation. A few questions to ask yourself:
Buyer and Seller acknowledge that due to measures taken by the Provincial Government in response to the current COVID-19 pandemic, there could possibly be a delay at land registration that would affect the actual registration date from the date herein contemplated. In such event, the Buyer and Seller hereby agree to extend the completion date of this transaction until the next possible date following the scheduled date of completion that registration could actually be affected, with no additional charges being made to the Buyer. Notwithstanding the foregoing, in the event the Buyer’s title Insurer has provided “gap coverage” to the Buyer, and all closing funds have been paid to the Seller’s Solicitor in trust, keys may be released (possession transferred) to the Buyer with title transfer and registration to take place at a later date. In such circumstances all expenses and risk related to the property shall be the responsibility of the Buyer from the date of such escrow closing.
Buyer and Seller agree that if (i) Buyer’s bank and/or mortgage lender or (ii) the applicable Land Registry Office, temporarily ceases operations, such that either party is frustrated from completing this transaction for reasons wholly outside the control of that party, then the closing date shall be automatically extended to the date that is two (2) business days following the resumption of the interrupted bank or land registry services (or sooner if the parties agree), provided that if such delay exceeds __________________(____) days from the original closing date, either party may terminate this Agreement upon notice in writing to the other party or their solicitors, whereupon this Agreement shall become null and void and the Deposit shall be returned to the Buyer forthwith, without penalty or deduction, and both Buyer and Seller agree to deliver a Mutual Release in such event.
The parties agree that the keys to the property shall be left in a lock box at the property and the code to the same is to be provided to the Buyer’s lawyer in escrow pending closing of this transaction.
Upon completion the Seller shall provide any keys to the property by leaving them in a lockbox or other secured device on the property accessible to the Buyer. Provided further that upon completion the Seller’s lawyer shall provide to the Buyer’s lawyer the device code required to access the said lockbox or other secured device.
The parties hereto consent and agree to the use of electronic signature pursuant to the Electronic Commerce Act 2000, S.O. 2000, c17 as amended from time to time, with respect to this Agreement and any other documents respecting this transaction.
The Parties acknowledge and agree that all closing documentation can be signed electronically and forwarded by email or fax in accordance with the Electronic Commerce Act, 2000, S.O.2000, c.17
Thoughts on lockboxes
Thoughts on electronic signatures
In conclusion, I would be wary of using these clauses as drafted. All real estate parties should obtain legal advice before signing any Agreement of Purchase and Sale that contained these clauses. Our lawyers are happy to assist you in attempting to navigate the purchase and sale of properties during this time.