Understanding The Contract – What All You Must Be Aware Of

You have won the bidding war on the home of your dreams; you have secured financing; you are all set to close and you have got one assessment left. The assessment is scheduled for the date of closing and at 3 P.M. on the day of closing, on your final walk-through of the property, you realize the stove does not work, what are the choices?

When buying a property any number of issues can take place. An appliance that was meant to be in “good working condition” does not function; the property zoning is not as promised, or the vendor rejects to complete the transaction on the set closing date. You must now find out the breach on the contract, the Agreement of Purchase and Sale (the APS) results in you being entitled to damaged, an abatement (or reduction) in the purchase cost or is the violation so bad it leads to the deal not closing as a result.

There are a lot of different elements that take place from contract law when mulling over a real estate transaction. We must find out if the problem is a Condition, a Warranty or a Representation for the reason that what we can do going forward depends on figuring this out.

• Warranty or Condition

There are a number of terms in every Agreement of Purchase and Sale, everything from price, closing date, what is included, etc. We need to figure out when a term turns out to be breached whether it is a condition or a warranty. Part of doing this signifies that we look to the intentions of the parties.

A warranty is a representation that the item being sold is as represented or assured. In general, a violation of warranty leads to damaged or an abatement. A condition is such that, the individual getting the benefit of the condition would not have entered into the contract unless he had been promised stringent performance of the condition and that this ought to have been evident to the individual making the promise. A condition is a term that a failure by the parties amounts to an agreement not successful.

It would seem then that a non-functional stove is simply a warranty and in order to bring an action for a violation of warranty, the buyer would have to finish the purchase and claim damage for the failure of the vendor to satisfy the specific term.

• Representations

Remedies may even be available if the vendor, before or at the time of the Agreement of Purchase and Sale, held out a representation. The representation must encourage the buyer to buy the property and the representation would have to be false and relied on.

There are two key kinds of representations – Innocent and Fraudulent.

Fraudulent is wrong and made with the intention to deceive. Fraudulent misrepresentation allows the wronged party to cancel the contract and to sue for damages based on his or her out-of-pocket losses, including any damages that flow directly or indirectly from the violation of the Agreement of Purchase and Sale.

An innocent representation may be entirely not guilty. If that is the case, the mistaken party is at liberty to cancel the contract and get back the deposit, but not the damages. At times, the representation is made in a manner that is negligent. This signifies that the individual making the representation did so in a manner that he or she failed to take proper care in making the representation.

An example of a negligent representation would be a state of affairs where an individual selling had a deck. The deck was constructed by the possessor prior to him. You ask for a representation that the deck was built properly with a permit and without checking the Vendor says without ever having checked, “yes, it was constructed flawlessly, with a permit”. At the time of our search, we find out that this is wrong. This would be a negligent misrepresentation.

Therefore, it is essential to hire the best real estate lawyer in Toronto – Suma Law – to talk about the Agreement of Purchase and Sale. If the real estate transaction is turning south, you must be familiar with your rights and your possible damages. Speak to the lawyer early and often. The lawyer will help you find out your rights and remedies. Or else, a stove out of order, dealt with improperly, can end up cooking your goose.

To explore more about the Agreement of Purchase and Sale of property, or anything else related to buying or selling property in Toronto, feel free to give Suma Law a call at +1 905 461 9860!