February 4th - 2010

“Time is of the essence” when notices given and received

One of the most significant changes made to the OREA 2010 Standard Forms was the revision of the Notices clause in Form 100, the Agreement of Purchase and Sale.

One of the most significant changes made to the OREA 2010 Standard Forms was the revision of the Notices clause in Form 100, the Agreement of Purchase and Sale. The revised clause makes it clear that the brokerage should not be legally designated as the agent for giving and receiving notices in a multiple representation situation.

It is important to understand that this clause clarifies when the notice is legally deemed to be given and received. It does not prevent the brokerage from being involved in the process of delivery. As in the past, salespeople are expected to be directly involved in personally delivering notices, waivers, etc., to their client, or faxing such notices to the fax number designated by their client, if a fax number (not the brokerage’s fax number) has been so designated. Of course, the salesperson’s responsibility may be to convey the notice to another salesperson who is working with the buyer or seller.

For all transactions, it is the duty of the salesperson to ensure that notices have been properly given and received. This is essential for the Agreement to be legally binding. Multiple representation can cause great uncertainty as to when a notice has been given and received, and since “time is of the essence” uncertainty can be fatal to a transaction.

Consider the following example: A buyer signs a waiver that must be delivered within a stipulated time period. If the brokerage has been designated for notices, when has the seller been legally notified of the waiver? When the buyer signs the waiver and gives it to the selling salesperson? When the selling salesperson brings the waiver to the brokerage office or faxes it to the office? When the selling salesperson gives or faxes the waiver to the listing salesperson? When the listing salesperson delivers the waiver in person or by fax to the seller and obtains adequate documentation that it has been delivered?

In a recent Ontario court case involving multiple representation, McKee vs. Montemarano [2008] O.J.No. 7855, Ont. S.C.J., the court ruled that a waiver had not been delivered, even though the selling salesperson was in possession of the waiver.

Brokerages representing more than one party to a transaction must ensure that the interests of each client are protected. Designating the brokerage as legal agent for notices can create confusion and unnecessary risk. Delivering notices to the parties within the required time frames eliminates this confusion and risk.

It is also important to note that the above mentioned court case resulted in a change to the OREA Standard Clauses for 2010. Each of the clauses that make reference to the giving of notice has been revised to complement the wording of the new 2010 Notices clause in the standard wording of the Agreement of Purchase and Sale. All brokers and salespeople should ensure that the revised 2010 version of the Standard Clauses is used when adding clauses to the Agreement of Purchase and Sale.

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For more information contact

Ontario Real Estate Association

Jean-Adrien Delicano

Manager, Media Relations

JeanAdrienD@orea.com

416-445-9910 ext. 246

Ontario Real Estate Association
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