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Sale and Purchase of Real Estate

ON

A complete matter management solution for practitioners running a busy conveyancing practice in Ontario.

2 Matter Plans

Overview

The sale and purchase of real estate commentaries cover all the common and less frequent issues that arise in conveyancing matters. Each step of the transaction is outlined in sequential order, with all required precedents conveniently located, along with links to the relevant sections of the comprehensive commentary.

The Reference materials folder includes guidance on electronic signing and remote witnessing, and the Getting the matter underway folder contains essential compliance and client engagement documents. The comprehensive Retainer Instructions ensure that all necessary information is gathered from the client at the outset of the matter.

Precedents in this publication include:

  • A full suite of letters to:
    • clients;
    • real estate agents; and
    • lenders.
  • Library of additional clauses;
  • Declaration of trust for a purchaser;
  • Mutual termination agreement.
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2 Matter Plans Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Sale of Real Estate (ON)
  • Folder icon Reference materials
    • Item icon AI Prompts
    • Item icon Electronic Signing and Remote Witnessing
    • Item icon Further information
  • Item icon Overview
    The purpose of a real estate transaction is to transfer the title and use of real property from one party to another. Despite the trend toward making it so, the purchase and sale of real estate is not adversarial. This is due mainly to warranties and the practice of satisfying all enquiries on ...

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  • Item icon Summary of the process
    The usual steps in a sale of real property matter are:

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Sale of real estate
    • Item icon To do list - Sale of real estate
    • Item icon First steps
    • Item icon Client details, verification, and source of funds
    • Item icon Retainer instructions - Sale of real estate
    • Item icon Conflict of interest check
    • Item icon Initial letter to client enclosing retainer agreement and authority
    • Item icon Initial letter to client enclosing retainer agreement and authority precontract
    • Item icon Retainer agreement - Ontario
    • Item icon Scope of work - Sale of real estate
    • Item icon Authority for records
    • Item icon Affidavit - Identification by video conferencing
    • Item icon Time and costs estimates
    • Folder icon If required - Costs disclosure update and a non-engagement letter
      • Item icon Letter to client updating costs disclosure
      • Item icon Non-engagement letter
    • Folder icon General deeds, agreements, execution clauses, and statutory declarations
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Confidentiality deed
        • Item icon Deed for general use
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon General deed of indemnity
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements and contracts
        • Item icon Execution clauses - Deeds
      • Folder icon Statutory declaration
        • Item icon Statutory declaration
      • Item icon Standard annexure note for documents
  • Folder icon B. Agreement of purchase and sale
    • Item icon Contract considerations
      The contract between a vendor and purchaser is the primary document setting out the parties’ obligations. It is an executory document, meaning it establishes the rights and obligations of the parties. Most contracts for the sale of property in Ontario use an Ontario Real Estate Association (OREA) ...

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    • Item icon Considerations for commercial properties
      Building condition assessment A building condition assessment is usually done as part of due diligence before finalizing the transaction. It assesses the property's general condition, including structural and non-structural components and electrical and plumbing systems. This allows a purchaser to ...

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    • Item icon Tax considerations
      The tax consequences need to be considered with each sale.

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    • Item icon Property
      Identification Those who cannot imagine a mistake in this area easily overlook the need to identify the property. It may seem inconceivable that a contract can relate to a property other than the one inspected by the purchaser, but it has happened.

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    • Item icon Title
      The title to property is covered by the Land Titles Act 1990, the Registry Act 1990, the Condominium Act 1998, or is leasehold title. The Registry Act 1990 provides for the registration of instruments relating to and affecting the title to land. Instruments include transfers, charges, encumbrances, ...

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    • Item icon Condominium title
      In Ontario, the three main Acts governing the establishment and regulation of condominiums are:

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    • Item icon Harmonized sales tax
      On July 1, 2010, the goods and services tax (GST) and provincial sales tax (PST) in Ontario were replaced by the harmonized sales tax (HST) of 13%, consisting of the 5% federal and 8% provincial parts. HST is imposed on every sale of property or services in Ontario. HST applies to the sale of ...

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    • Item icon Forming the contract
      Form of contract While the form of contract is not prescribed by law, various requirements are. There are implied conditions for entering an enforceable contract. Provided the contract complies with these various conditions and the other formality requirements, the contract will be valid and ...

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    • Item icon Ontario Real Estate Association - Agreement of Purchase and Sale - Residential
    • Item icon Ontario Real Estate Association - Agreement of Purchase and Sale - Commercial
    • Item icon Representations and warranties
      The OREA Agreement of Purchase and Sale contains representations and warranties by the vendor, which include that:

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    • Item icon Inclusions
      This is often an area which leads to disputes. All chattels and fixtures included in the purchase should be listed, as well as any items that a purchaser might consider included but are not identified as exclusions. Improvements encompass all things attached to the land and the buildings. A ...

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    • Item icon Terms and conditions
      A Library of special conditions is included on the matter plan to deal with the many less common issues that might be relevant.

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    • Item icon Initial letter to purchaser's lawyer enclosing property survey
    • Item icon Initial letter to purchaser's lawyer seeking amendment to agreement
    • Item icon Execution including electronic signatures and power of attorney
      The Statute of Frauds 1990 requires contracts to be signed by the parties or their duly authorized agents. Electronic contracts and electronic signatures are acceptable: Electronic Commerce Act 2000.

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    • Folder icon If required - Power of Attorney
      • Item icon Continuing power of attorney for property for client 1
      • Item icon Continuing power of attorney for property for client 2
      • Item icon General power of attorney for client 1
      • Item icon General power of attorney for client 2
    • Item icon Letter to client requesting appointment to sign agreement and bring loan number
    • Item icon Deposit
      The OREA agreements provide for the deposit to be paid to the deposit holder within 24 hours of acceptance of the offer to purchase, or at the time of offer, or according to some other arrangement spelled out in the agreement. The deposit is held in a non-interest-bearing trust account. Often, ...

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    • Item icon Method of offering and accepting contract
      In person, by courier, fax, or email Offering and accepting a contract can be effected personally, by courier, fax, or email, as is common when the parties’ lawyers or realtors are distant. The lawyers or realtors email each other copies of the executed contract, refer to any special conditions, ...

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    • Item icon Letter to purchaser's lawyer enclosing signed agreement
    • Folder icon If required - Corporate resolutions
      • Item icon Corporate resolution for vendor - Commercial real estate sale
    • Folder icon If required - Library of additional clauses
      • Item icon Development clauses
      • Item icon Board approvals
      • Item icon Competition Act approval
      • Item icon Estoppel certificate
      • Item icon Planning Act consents
      • Item icon Representations and warranties
      • Item icon Rezoning condition
      • Item icon Severance condition
    • Folder icon Library of other agreements
      • Item icon Agreement to assign contracts
      • Item icon Agreement to assign due diligence material
      • Item icon Agreement to assign encumbrances
      • Item icon Agreement to assign leases
      • Item icon Agreement to assign rights and warranties
      • Item icon Agreement to assume existing agreements
      • Item icon Agreement to assign agreement of purchase and sale
      • Item icon Agreement to amend agreement of purchase and sale
      • Item icon Assumption of covenant
      • Item icon Consent to assignment of agreement
      • Item icon Non-merger agreement
      • Item icon Realty tax agreement
      • Item icon Reconveyance agreement
      • Item icon Restrictive covenant agreement
      • Item icon Agreement for sale of chattels and fixtures
    • Item icon Auctions, pre-construction, in family transfers, partition, and liens
      Auction contract Auction contracts are no different from any other type of contract. Until a party signs the contract, it is not enforceable against that party.

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    • Item icon Home builder liability
      Tarion and the Home Construction Regulatory Authority The Home Construction Regulatory Authority has responsibility for all registration, licensing, and regulation of companies and people who build and sell new homes in Ontario, replacing Tarion’s responsibility for these functions.

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    • Folder icon If required - Options
      • Item icon Options
        Option or right of first refusal An owner of land may grant an option to purchase, a right of first refusal, or a right of pre-emption. A right of first refusal and a right of pre-emption differ from an option. These rights are principally contractual and frequently appear in leases. Such rights ...

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      • Item icon Put and call option agreement
      • Item icon Option to purchase agreement
      • Item icon Option notice
      • Item icon Nomination notice
  • Folder icon C. Mid transaction
    • Item icon Notice and cautions
      The cornerstone of the Torrens system is the principle of indefeasibility of title. The government guarantees that the register is accurate, and the registered owner has the title shown, subject to the encumbrances registered on title and certain qualifications set out in legislation. The register ...

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    • Item icon Notices under s 71 of the Land Titles Act 1990
      Section 71 deals with protecting unregistered estates. By registration of a compliant notice, the registered owner and persons dealing through them are put on notice of the unregistered estate. Annexure B to form 16 highlights some interests that can be protected.

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    • Item icon Teraview
    • Item icon Cautions
      The Land Titles Act 1990 provides a procedure by which the holder of an unregistered interest can protect that interest from defeat by lodging a caution. The caution’s purpose is to prohibit the registration of an opposing dealing. If the registered owner disputes the caution, they may apply to the ...

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    • Item icon Vendor's authorization to government authorities to provide information
    • Folder icon If required - Discharge of mortgage
      • Item icon Arranging discharge of encumbrances
        It is standard procedure to write to mortgagees to arrange the discharge of their mortgages, which they are obliged to comply with as they cannot clog the equity of redemption. The OREA agreements allow the purchaser to accept the undertaking of the vendor’s lawyer to obtain, out of the closing ...

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      • Item icon Letter to lender requesting mortgage statement for discharge
      • Item icon Assignment of mortgage
    • Item icon Requisitions and replies
      Requisitions are written requests by the purchaser to the vendor about the property. An objection is an assertion by the purchaser that they cannot complete the contract due to a defect. Requisitions and objections should be made within a reasonable time.

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    • Item icon Letter to purchaser's lawyer replying to requisitions
    • Item icon Insurance and risk
      Historically, the common law held that risk passed on signature of the agreement of purchase and sale, and that while the vendor was in the position of a trustee for the purchaser during the contract period, the risk of any deterioration to the property during that period fell on the purchaser. The ...

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    • Item icon Variations, nomination, assignment, novation, and default by nominee
      Variation of contract Parties to a contract may agree to vary or amend the contract. They might also authorize an agent, for example, their lawyer, to agree to a contract variation. Any representative seeking to vary a contract must exercise caution as the authority may not extend to the variation ...

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    • Folder icon If required - Disposition of taxable Canadian property by non-residents
      • Item icon Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property
  • Folder icon D. Claims and disputes
    • Item icon Right to rescind and consequences of rescission
      A purchaser may rescind the contract by serving notice during any conditional or rescission periods stipulated in the purchase contract, or at law, for example, when purchasing a new residential condominium unit from a builder. The purchaser is entitled to a refund of the deposit paid.

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    • Item icon Claims and disputes
      Right to rescind and consequences of rescission A purchaser may rescind the contract by serving notice during any conditional or rescission periods stipulated in the purchase contract, or at law, for example, when purchasing a new residential condominium unit from a builder. The purchaser is ...

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    • Item icon Deterioration
      A residential purchase contract is an executory contract, meaning that the parties will complete the contract some time after the agreement is made. This is contrasted with an agreement of sale of an ice cream, which is completed when the agreement is made. This time delay creates the possibility ...

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    • Item icon Notices
      Ownership of land requires the owner to have a relationship with many other people and organizations in relation to the land, for instance, neighbours, and local and other authorities. These relationships may result in these third parties taking a particular interest in the property and may even ...

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    • Item icon Letter to other side with notice of waiver or satisfaction of condition
    • Item icon Letter to other side giving notice of termination
    • Item icon Mutual termination agreement
  • Folder icon E. Through to closing
    • Item icon Closing documents
      Vendor’s documents The following documents are provided by the vendor at closing:

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    • Item icon Adjustments
      The usual adjustments in residential transactions are made for property taxes, and in the case of condominium properties, monthly common expenses. Sometimes, there will be adjustments for tenant rent, oil, and flat-rate water. The vendor pays for these costs up to closing, and the purchaser is ...

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    • Item icon Statement of Adjustments
    • Item icon Letter to client enclosing statement of adjustments
    • Item icon Transfer or Deed of Land
    • Item icon Discharge of Charge or Mortgage
    • Item icon Document General
    • Item icon Document registration agreement (two-party) - Law Society
    • Item icon Vendor Document Package
    • Item icon Consent to Joint Retainer
    • Item icon Authorization and Direction re Transfer
    • Item icon Vendor's Warranties and Bill of Sale
    • Item icon Vendor's Undertaking
    • Item icon Vendor's Declaration re HST
    • Item icon Vendor's Declaration re Possession
    • Item icon Direction Re Funds
    • Item icon Statutory Declaration - Vacancy Tax Toronto
    • Item icon Undertaking to Discharge
    • Item icon Direction by vendor regarding proceeds of sale
    • Item icon Letter to client enclosing closing documents for signing
    • Item icon Letter to other side's lawyer confirming extension of closing date
    • Folder icon Closing
      • Item icon Closing process
        Pre-closing inspection Usually, the agreement of purchase and sale includes a provision allowing the purchaser a limited number of visits to view the property before closing to arrange for bank appraisals, to take measurements, or generally check that the property is in the same condition as at the ...

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      • Item icon Closing instructions - Sale
      • Item icon Direction for payment of funds and undertaking
      • Item icon Electronic registration
        ServiceOntario has produced the Electronic Registration Procedures Guide. Documents are created, submitted, registered, filed, and maintained in an electronic environment using the Teraview e-reg™ system. Instead of relying on signatures, security is maintained through controlled access to the ...

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      • Item icon Teraview
      • Item icon Escrow closings
        All e-reg™ closings are escrow closings. However, when the purchasers are moving on the closing day, an extension of time does not solve the problem, as against an escrow agreement, which allows the purchaser to occupy the property. A written escrow agreement is preferable to a verbal one. It ...

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      • Item icon Delayed closing escrow agreement
      • Item icon Holdback agreement
      • Item icon Letter to purchaser's lawyer enclosing closing package
    • Item icon Completion and merger
      The common law doctrine of merger grew out of the principle that when a lesser estate was vested in the same person as a greater estate, the lesser estate merged into the greater estate and was extinguished. A common example of this principle is where the dominant and servient tenements in an ...

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    • Item icon Post-closing and reporting
      The client is given information about discharge of the mortgage, payment of commission, tax or utility adjustments, and details of the funds deposited into their account. The municipal office and all utility companies must be advised of the change of ownership with the new owner's name as ...

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    • Folder icon Post closing letters
      • Item icon Acknowledgement - Receipt of closing funds
      • Item icon Letter to real estate broker after closing to account for deposit
      • Item icon Letter to purchaser's lawyer confirming discharge of mortgage registered
      • Item icon Letter to bank enclosing cheque deposit
      • Item icon Letter to lender following up discharge of mortgage
      • Item icon Letter to lender enclosing mortgage payout
      • Item icon Letter to municipal office advising change of ownership
      • Item icon Letter to tenant with notification of sale
  • Folder icon F. Finalizing the matter
    • Item icon Letter to client finalizing the matter
    • Item icon Invoice recital - Sale of real estate
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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