After conditions have been removed, but before completion, additional offers may be accepted as back-ups in sequence by the seller. The end result may be a collapsed transaction, the buyer’s deposit may be at risk, and the seller may suffer losses as a result of the transaction not proceeding. records of any major repairs and/or upgrades to the system have been filed with the health authority. failed to advise the sellers to obtain independent legal advice before entering into the Contract of Purchase and Sale. ”Subject to sale” clauses used to be commonplace in property transactions a few decades ago - in fact, when we spoke to John Ross of The Professionals, he recalled a situation from the 80’s with a ‘chain’ situation involving five individual property deals, each connected through consecutive buyers having to sell their current home before they could buy their desired home. Notice to Seller Regarding Assignment Terms If you are acting for a buyer and you are aware that an offer to be presented to the seller: you must notify the seller’s licensee (or the seller, if the seller is unrepresented) using the Notice to Seller Regarding Assignment Terms form, available on RECBC’s Forms page under the subheading “Disclosure Forms”. Licensees must keep in mind that trading services includes offering real estate for rent or lease. The Buyer acknowledges that this strata corporation has not been run in compliance with the Strata Property Act and, in particular, there is no active strata council, there have been no strata meetings, there is no budget, no strata fees have been collected, and there is no operating or contingency reserve fund or financial records. The following clause should be inserted into the contract for this purpose. a permit/letter of certification respecting the System is on file with the local health authority. When a strata plan is filed in the Land Title Office, a strata corporation is created. Although provincial legislation applies to all strata corporations, there is no government body that enforces the legislation to ensure that strata corporations comply with the legislative requirements. The Seller covenants to maintain the underlying mortgage in good standing and to pay and satisfy in full when due or when the Agreement for Sale is paid off, and on any failure to do so, the Buyer may pay the underlying mortgage directly, and deduct such payment from amounts owing to the Seller under the Agreement for Sale. An associate of a brokerage can be a company in which a director of the brokerage is entitled to not less than 5% of the profits. Licensees should discuss the progress of construction with the builder before inserting the Completion Date in the Contract of Purchase and Sale in order to allow enough time to completely finish the house. It’s not overly common but what it means is that you’ll buy someone’s house on the condition that you sell yours. any provisions for renewal do not extend the total lease period beyond one year. Licensees may wish to consider the following questions when listing a property with an onsite wastewater treatment system: The Sewerage System Regulation (SSR), which came into force on May 31, 2005, covers onsite wastewater systems that: The SSR requires that records of the construction of the onsite system, and of any subsequent alterations to it, be filed with the local health authority. If the seller does not have a copy of the sublease, the buyer’s agent should recommend that the buyer obtain legal advice to ensure that the buyer will be entitled to the use of the parking stall(s)/storage locker(s) that are used by the seller. All monies paid pursuant to this section (Deposit) will be delivered in trust to the Seller’s lawyer, Joe Smith. The benefit to the Buyer is that they can put their existing home on the market, comfortable that they know where they will be moving to. Ω If not using the standard form Contract of Purchase and Sale refer to ‘‘Contracts under Seal” …. Ώ Where such notification is provided to buyers, licensees should advise buyers to seek legal advice. Before making a referral, licensees should, ensure the individual is properly licensed, consider the inspector’s experience and credentials and also what insurance coverage the inspector carries, such as errors and omissions insurance, liability insurance and worker’s compensation coverage. ** This is the ‘‘market ’ rate (i.e., what the Lender wants). Should the Buyer fail to remove all the conditions before the expiry of the notice period, the contract will terminate. In the event there is any question whether the sale price is sufficient to cover financial encumbrances and real estate commission, licensees should protect the seller (and themselves) by use of the following clause in the contract: Subject to the Seller’s confirmation and satisfaction with the arrangement of financial affairs, on or before (date), which enable the Seller to proceed with this sale. Buyer will assume obligations on an assigned portion under the existing first mortgage held by (name of mortgage lender) registered against the property at (address) with an outstanding balance on the assigned portion of approximately $(amount) at an interest rate of ___% per annum, calculated (frequency), not in advance, with an original (number of years)-year amortization and a ‘‘balance due” term date of (date), with blended payments of $ (amount) per month including principal and interest. NOTE: Licensees are advised that the timing requirements for builders lien holdbacks is a complex area of law and they are well advised to have their clients seek legal advice in situations involving new or recent construction. Normally we would write the offer for a 60 day closing (the longest we can lock an interest rate) and a subject to sale clause of 4-5 weeks. Subject sales can be complex, but smart contract-writing can help to smooth out the process. The Buyer agrees to do all things reasonably necessary to ensure that completion of the said sale takes place by the stipulated time and in the event that the said sale is not completed by the stipulated time through no fault of the Buyer, the Contract … (a) a watercourse, whether it usually contains water or not; (c) a ditch, spring or wetland that is connected by surface flow to something referred to in paragraph (a) or (b); GST over purchase price; rebate to buyer; and. If the strata plan is not filed when a licensee prepares an offer for a proposed strata lot, any deposit must be paid into trust pending the filing of the strata plan at the Land Title Office, the readiness of the unit for occupancy, and the registration of the buyer’s interest in the property. Looking for a clause to include in a Contract of Purchase and Sale? Excerpt from Trading Services | Section 2. It is advisable for the licensee to provide, on the contract, a deadline by which the seller will provide the appropriate PDS and a slightly later deadline by which the buyer will approve or reject it. The following characteristics of many life leases should also be considered. The Builders Lien Act allows contractors, sub-contractors, workers and suppliers to file a lien against the title to properties where they supply work or materials. A sale that is “subject to finance” can fail To demonstrate, Randy Ready is licensed with ABC Randy Realty, which has entered into an agreement with ABC Big Realty to provide trust accounting services for ABC Randy Realty. In any case, the parties should be referred to their respective legal advisers if such a dispute arises. All onsite wastewater treatment systems need regular ongoing maintenance. Licensees must seek competent advice in drafting and always recommend in writing, if not as a ‘‘subject to’’ clause of the contract, that the parties seek independent legal and appraisal advice. When it is represented that there is a warranty in existence, a copy of that warranty, with the date and the name of the warranting company, should be given to the buyer for review, as is done with other documents. The Parties will, immediately after completion of the walk-through inspection, complete a deficiency list of mutually agreed upon items that are to be remedied by the Seller (the “Deficiency List”). General Information. Whether or not licensees have used the Receipt of Strata Corporation Documentation form, they are encouraged to use the following form of acknowledgement clause. If the Buyer is not entitled to the Rebate for any reason, he or she shall immediately remit the amount claimed to Canada Revenue Agency, and/or indemnify the Seller for the loss of the Rebate. The Superintendent’s office has prepared a number of Policy Statements which set out the requirements for the Disclosure Statement for each type of development property. The form requires the licensee to indicate the purpose for which the licensee or the licensee’s associate is acquiring the property and, in the case of an acquisition, the amount of remuneration earned and who will receive the remuneration. The insurer may then accept, surcharge or refuse the application. If builders liens are filed against the title to the property, the builder’s liens holdback funds can be used as part of the process of clearing the lien off title. Subject to the Buyer arranging financing with (name of existing mortgagee) and to (name of existing mortgagee) providing the Seller with written confirmation on or before (date), that upon completion the Seller shall be released, without penalty or cost, from its covenants under the existing mortgage. Deposit To Be Held Pursuant to the Real Estate Development Marketing Act, When the trade involves a development unit, as defined under the Real Estate Development Marketing Act  — will open in a new tab, section 18  — will open in a new tab of that legislation applies. Such a clause would need to be signed as a part of a separate document from the Contract of Purchase and Sale before the offer is presented. If the title contains non-financial charges which are not caught by the exceptions in the standard contract, the licensee must ‘‘otherwise set out’’ those charges in the agreement. As a licensee acting for the seller of a property with an installed onsite wastewater treatment system, you should obtain the pertinent records from the local health authority in order to verify that: Wastewater treatment systems may be subject to periodic inspections by the local government or the health authority may have issued a work order for a particular system. If there is no cash, how will the commission be paid? Licensees should therefore be very cautious when relying on title information provided by a party that the licensee does not know or trust and should advise buyers to rely only on documents from a reliable source such as the buyer’s agent or lawyer. Licensees should confirm such a recommendation to the seller or buyer by inserting one of the following clauses into the Contract of Purchase and Sale: (name of Seller or Buyer) hereby acknowledges that (name of licensee) has advised them to obtain independent legal advice before signing or accepting this contract with respect to the arrangements for holding the deposit money in this transaction. The purchase price to (select either include/not include) GST. The Real Estate Development Marketing Act requires that a developer file a Disclosure Statement before marketing a leasehold unit of a term of three years or more in a development property containing five or more residential leasehold units. Subject to the Buyer receiving, perusing and being satisfied with: Subject to the Buyer receiving and approving the list of assets on or before (date) . Once an onsite system is installed, upgraded or repaired, it is the homeowner’s responsibility to ensure that the maintenance plan is followed. In such cases, a buyer’s agent should insert the following clause. The Sewerage System Regulation and the Sewerage System Standard Practice Manual (created by the Ministry of Health) stipulate who may design, install or maintain sewage systems. The approved lender is responsible for obtaining the required certificates prior to advancing funds. [December 2018: The following section was added to the Professional Standards Manual]. This Time Clause will start running on delivery of this Notice to the Buyer or to (his or her representing brokerage) which will be at (time of delivery of notice) o’clock (select either a.m. or p.m.) on (date). 11.2 Subject to clause 11.1, Daibola?s total aggregate liability under this agreement and in relation to anything which Daibola has done or not done in connection with this agreement (and whether the liability arises because of breach of contract, negligence or for any other reason) shall be limited an amount equal to 125% of the total amount of the ordered ware value (sum of prices). The buyer can rely on the Form B to indicate which parking stall/storage locker is allocated to the strata lot being purchased, however the buyer’s agent should clearly point out the statement on the Form B that indicates that where the designation of the parking stall/storage locker is common property, the allocation is subject to section 76 of the Strata Property Act and may be subject to change in the future. Such beliefs are incorrect. Each offering of a leasehold interest, including a life lease, requires that a current Disclosure Statement, which has been filed with the Superintendent of Real Estate, be provided to the lessee. The buyer is paying the property inspector for professional advice with respect to the condition of the property he or she is considering purchasing. A strata lot does not exist until the strata plan is deposited at the Land Title Office. The Buyer hereby consents to the Seller obtaining a credit report on the Buyer. Licensees have an obligation to avoid error, misrepresentation or concealment of pertinent facts. Our thanks to the Applied Science Technologists and Technicians of BC for their review and feedback on this article. In such cases, buyer’s agents should recommend that buyers obtain legal advice before becoming committed to buy and may wish to include the following clause making the contract subject to obtaining legal advice. In the case of real estate being offered in trade, it is strongly recommended that one Contract of Purchase and Sale be used for each property involved because of the preprinted aspects contained in the standard Contract of Purchase and Sale. The Buyer will assume all obligations under the existing (rank)mortgage held by (name of lender) with an outstanding balance of approximately $ (amount B) at an interest rate of % per annum calculated (select either half-yearly or monthly)not in advance, with a ‘‘balance due’’ term date of (date)with blended payments of $ (payment amount)per month including principal and interest (plus 1/12 of the annual taxes, if required by mortgagee). process a sewage flow of less than 22,700 litres per day; serve different buildings on a single parcel of land; and. The representation regarding infestation was not false at the time they made it. There are cases where the lender won’t be able to enforce the ‘due on sale’ clause, such as ‘Subject to’ cases involving the transfer of property between family members and former spouses. The Buyer will occupy the premises. This condition is for the benefit of both the Buyer and the Seller. The Buyer confirms that he or she is purchasing the property for use as a principal residence or that of a qualified relative, and hereby is entitled to the GST New Housing Rebate. Section 36 of the Law and Equity Act  — will open in a new tabprovides that the seller’s consent to the assignment is not required, provided that notice in writing of the assignment is given to the seller. A Mortgage Verification letter asking for details should be sent to the lender and kept on file for consultation during the offer presentation to ensure the seller’s status is protected. Licensees should be aware of the B.C. If a holdback is not negotiated into the contract of purchase and sale or building contract, the builder has no obligation to allow a holdback and typically will not consent to such a holdback later. to determine a Streamside Protection and Enhancement Area (SPEA), which is defined as a setback that protects degradation of fish habitat. Regardless of whether the transaction involves a developer or a single unit resale, licensees should be knowledge- able with respect to the proportion of the share capital acquired by the purchaser, the allocation of ongoing maintenance and operating costs, the presence of any other assets or liabilities that the cooperative association may have, the terms of the agreement which restricts an owner to using only a portion of the land that the cooperative association owns, the applicability of the homeowner’s grant and property transfer tax, and the particulars of the cooperative association’s share capital, such as provisions related to voting rights or restrictions on transfer. If a seller or buyer asks to make the contract subject to entering such an agreement, the contract of purchase and sale should include a subject clause, as follows: Subject to the Buyer and Seller entering into a written contract prepared by the Seller’s lawyer on or before (date) that provides for the assignment from the Buyer to the Seller for nominal consideration of all the Buyer’s right, title and interest in any funds payable by the strata corporation to the Buyer as a result of (Enter the reason for the payment such as the return of money assessed by a special levy between _________certain dates). Under RESA, the need for disclosure includes: The need for disclosure arises whenever a licensee is disposing of real estate, regardless of whether the licensee has personally listed the property for sale. The amounts of these sorts of financial obligations can be very substantial and, when combined with commissions payable, may create a circumstance where the seller has no practical remedy and the transaction collapses, leaving the buyer, the seller and the licensees involved all in regrettable positions with potential legal implications. Some sample clauses are shown below. More detailed enquiries may require up to two weeks. For further information, visit www.consumerprotectionbc.ca  — will open in a new tab. Seller will deliver leasehold interest free and clear of all financial encumbrances. If the records are not available, allow up to 22 days from the date the offer is accepted. If the sale of the other property does not go through in the agreed upon time frame, the contract is no longer valid. For people who are forced to try the ‘Subject to’ method for financial reasons, this clause seems to represent a potential disaster. Land, time shares, vehicles, boats, and jewellery may be offered and considered. Subject to the Buyer’s(select either lawyer or accountant) approving the form of the documentation on or before (date). This document constitutes written notice from the Seller to the Buyer requiring the removal of (select either all conditions or the condition) from this contract within (number of hours) hours* not including Sunday or Statutory Holidays, or this contract will terminate at the end of the (number of hours)-hour period and the deposit will be returned to the Buyer. The Deficiency List, which will form part of the contract will identify the deficiencies and include a mutually agreed upon value for each of the deficiencies to be remedied. If a development unit is not exempted, section 14  — will open in a new tab of the Real Estate Development Marketing Act requires that before marketing a development unit, the developer must prepare and file a Disclosure Statement with the Superintendent of Real Estate. Any error or omission or attempted interpretation of the documentation which misled the buyer could lead to serious consequences for the licensee. For further clarification, especially regarding spouses owning property, licensees are directed to the policy entitled ‘‘Indemnity Plan’’, available through the Real Estate Errors and Omissions Insurance Corporation  — will open in a new tab website. If, however, the strata lot has been used to grow cannabis or manufacture illegal substances, and the buyer is prepared to accept the condition of the property on an “as is” basis, RECBC recommends that: The Buyer acknowledges that the strata lot or limited common property associated with the strata lot has been used for the illegal growth of any substances, or growth or manufacture of illegal substances, and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the strata lot or the limited common property associated with the strata lot. If a representation based on a well report is to be set out in the listing information, set out the fact that the information comes from a well report and the date of that report. Subject to the Buyer, at the Buyer’s expense, having the property assessed (‘‘Assessment’’) by an appropriate authorized person (as defined in the British Columbia Sewerage System Regulation), to determine the feasibility of installing an onsite wastewater treatment system on the property (‘‘System’’), along with the cost associated with the installation of the System, and the Buyer being satisfied with the Assessment on or before (date). At common law, a seller, and correspondingly, a seller’s agent, must disclose all known material latent defects. The principal balance may be paid at any time, in whole or in part, without notice, bonus, or penalty. If the seller is uncertain about any of the terms in the contract they should be advised to seek legal advice. If the ‘‘standard form’’ Contract of Purchase and Sale is used for a trade related to a development unit that is subject to the provisions of the Real Estate Development Marketing Act, the phrase in the deposit clause shown in scenarios 1 and 2 above that states the deposit will be ‘‘… held in trust in accordance with the provisions of the Real Estate Services Act’’ essentially means the deposit must be held in accordance with the Real Estate Development Marketing Act. It is a fundamental term of this contract that the mandatory warranty insurance coverage required pursuant to the Homeowner Protection Act be provided. For instance, a bylaw may prohibit the owner of a non-residential strata lot from operating a nightclub or prevent operating a commercial business after 7:00 p.m. With respect to the Contract of Purchase and Sale dated(‘‘Contract’’) in respect of the Property, the Seller and Buyer agree that(‘‘Licensee’’), is not required to deliver monies received from the Buyer or Seller pursuant to the Contract to the Brokerage pursuant to section 27(1) of the Real Estate Services Act nor is the Brokerage required to deposit those monies in its brokerage trust account pursuant to section 27(2) of the Real Estate Services Act but that the monies will be delivered to(‘‘Holding Brokerage’’) for deposit in a trust account established by the Holding Brokerage. A clause such as the following should be used when a seller wishes to have the buyer with the first accepted offer remove all conditions or withdraw in order for an accepted back-up offer to move into first position. This warranty shall survive and not merge on the completion of this transaction. The full GST New Housing Rebate for the GST applies only to properties with a value of $350,000 or less. The following clause may be used by a buyer’s licensee to protect the buyer’s interests when appliances are included in the purchase: The Seller warrants that the appliances included in the purchase of this property will be in proper working order as of the Possession Date. This money is to be held by you until completion on the following trust conditions: 1. you will hold this money as a stakeholder pursuant to the provisions of the Real Estate Services Act and not on behalf of any of the principals to the transaction; 2. upon completion you will disburse the money as provided in the Contract of Purchase and Sale and, should the sale not complete, you will, upon request, repay the money to us in trust as stakeholder; and. RECBC suspended the licensee for 30 days and ordered the licensee to enroll in and attend Condo 202 Advanced Strata Law for Realtors, and Legal Update. This subject locks up your property under contract and you could be in a situation where it takes months for that buyer to sell … The following are suggested clauses for use with respect to new-construction warranties where the seller is not an owner-builder: Subject to the Buyer confirming on or before (date) that the Seller is duly licensed pursuant to the Homeowner Protection Act and that the mandatory warranty insurance pursuant to that Act is in place.

subject to sale clause

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