CONTRACT OF PURCHASE AND SALE

a contract of purchase or sale of land which contains the obligations of the vendor and purchaser with respect to the purchase and sale

CONTRACT OF PURCHASE AND SALE

-the British Columbia Real Estate Association and the Canadian Bar Association (BC Branch) created the standard form contract

-A licensee should always use the most up to date version of the standard form contract.

-It ensures that no legal fundamentals are overlooked.

-In addition, there are situations where the common law dictates certain legal consequences unless the parties agree otherwise. The standard form contract anticipates some of those situations by using language that avoids the default consequences at common law

-A licensee should not encourage a seller or buyer to strike out, or otherwise alter any of the pre-printed wording in the standard form of contract without first obtaining legal advice.

-The licensee must ensure that every party, or the party’s duly authorized legal representative, signs the contract of purchase and sale

-if the contract of purchase and sale was continued on another form, it had to be incorporated by reference into the original agreement in order to comply with that statute → This may be done by numbering each page of the contract, including the addendum, out of the total number of pages

Technical Requirements for an Enforceable Agreement

-The most obvious requirement is that the agreement can be read; the contract of purchase and sale and any amendments or schedules to it should be printed.

-all the essential ingredients of the contract must be sufficiently certain

-three P’s: the parties, the property and the price.

Names and Occupations of the Parties

-must include the full names and occupations of the purchasers

-also a good idea to ask how the purchasers want to hold title to the property (i.e., as tenants in common or as joint tenants).

-Where there is a court-ordered sale, as in a foreclosure proceeding, the court-approved purchaser is not changeable without another application for further court approval and amendment of the original court order.

Description of the Property Being Sold

-must contain a complete and accurate description of the property to be sold.

-two descriptions:

1. the street address (which is also known as the “civic address”) and

2. the legal description.

-When the purchaser is buying a piece of property that has not yet been subdivided from a larger parcel, the specific property being purchased should be described by “metes and bounds“ (i.e. informal description based on unsurveyed measurement which should include written reference to some clear landmarks)

-an express term for chattels and fixtures should be included

Description of the Price and Related Financing

-must describe the purchase price and related financing arrangements with certainty.

-two major ways to obtain financing: mortgage or agreement for sale.

→ mortgage: the purchaser obtains a loan for some portion of the purchase price. Upon completion of the contract of purchase and sale the purchaser becomes the “owner” of the property subject to a charge, for the mortgage’s value, against the title. If the purchaser does not make the required loan payments, the lender can eventually take over the property.

→ agreement for sale: the vendor “lends” the purchaser some portion of the purchase price but remains the owner of the property. The purchaser repays this amount to the vendor, usually by instalments over three to five years. The vendor transfers title to the purchaser when the entire amount has been repaid.

-to have a binding contract, there must be consensus on all essential terms at the time the agreement is made.

-many of the problems associated with unclear or vague wording can be overcome by using the clauses and phrases published in the British Columbia Financial Services Authority’s Knowledge Base which is accessible online.