Real estate, by its very nature, is all black and white: you either do things or you don’t.
There is no gray area in Real Estate, which one can otherwise find in trade and commerce. For example, letters of intent that are used much before and during negotiations between corporations or between individuals and corporations have no place in the world of real estate, where the only subject of commerce is the exchange of property rights in land. for money. It is not possible to stipulate today to contract in the future and expect that the stipulation will be maintained, unless such agreement is contained in a contract drawn up and accepted today and is in the form of an option.
In essence, a stipulation to hire at a later date is a void contract, meaning that no such provision exists under real estate law because there never was a contract in the first place. Therefore, the parties to the stipulation should return to their original negotiating positions to the extent possible in practice. This is also the case in the situation where both parties want the stipulation to continue, an impossibility since no contract exists between them in the present tense.
This principle was recently reaffirmed in the British Columbia Supreme Court in a case involving a private transaction between a prospective Buyer and a prospective Seller. In this case, there was a document executed between the parties, which clearly stated the legal description of the real estate to be exchanged, as well as the purchase price: 580,000 CAD. The document also stated that there would be a $10,000 deposit held by the buyer’s attorney in escrow, that the deposit would be applied to the purchase price and that it would be returned to the buyer if the sale was not completed.
Although on cursory examination this document looked very much like a purchase and sale contract, however, one critical element was completely missing: the completion date. As an end date had not yet been agreed upon, a paragraph was inserted in its place which read as follows:
“The Contract for the Purchase and Sale of the Property will be prepared by the Buyer’s lawyers with terms and conditions, and the date of completion of the Property will be agreed upon by the Seller and the Buyer.“.
The parties later effectively agreed on a completion date, which was set for March 3, 2005. On February 24, Buyer’s attorney forwarded to Seller’s attorney the documents necessary to complete the transfer. However, on March 3, 2003, the completion date established in the document, the seller refused to complete, arguing that there was only an agreement to agree in the future to buy and sell the property in question.
The Court agreed with the Seller. In reaching his conclusion, the Judge of First Instance gave the following opinion:
“Here the wording of the executed document is clear. The parties have said that a contract will be prepared with terms and conditions to be agreed upon by the seller and the buyer. “To be agreed” means that some additional agreement is necessary in the future. […] this is a circumstance in which “performance of the additional contract is a condition or term of the deal“.
In other words, when the parties have stated that the terms and conditions must be agreed upon, it cannot be said that the document is the mere expression of the will of the parties regarding the way in which the transaction already agreed upon will be in fact. cross.
The deposit was ordered to finance the Buyer immediately.
Louis Frascati
