Purchase Agreement S. 3.1 (i) – Independent Advice and Property Measurements

s. 3.1 (i) - Independent Advice and Property Measurements

Clause 3.1 (i) of the Purchase Contract reads:

(i) The buyer may get independent inspections or advice on items such as land title, registrations on title, RPR, current and future use, buildings and mechanical systems, property insurance, title insurance, size of the land and buildings, interior and exterior measurements and other items important to the buyer;

This is a very important clause in the contract which unfortunately is neglected often. In our view, this is an extension of the legal principal of caveat emptor (http://agahilaw.com/Blog/LatentDefect). This clause arguably removes any liability from the shoulders of the Seller in regards to any of the mentioned categories.

Having said that, this clause is easily reconcilable with some other clauses of the contract, such as 10.2 (which obligates the Seller to provide an RPR to the buyer “showing the current improvements on the Property…” within a reasonable time before the Completion Day.

So if the seller is obligated to provide such an RPR prior to closing for the buyer to review, why would the buyer be required to have the RPR reviewed before signing the agreement? And re the timing of provision of the RPR, does the seller have to provide a copy of the RPR before the documents are signed or after the signing and within a reasonable time before closing?

Another example of such confusion is the buyer’s responsibility to have the property measured (interior and exterior) for what we can assume to be verification of the MLS measurements. However, Real Estate Council of Alberta (RECA) (which is the governing body for Alberta’s real estate brokerage, mortgage brokerage, etc.) has established standards for “Residential Measurements” (can be found online at https://www.reca.ca/professionals-learners/tools-resources/residential-measurement-standard/) that any realtor listing on MLS has to adhere to.

So if a listing realtor shall list house measures in accordance to a pre-defined standard, one might wonder why a buyer shall verify such measurements at his/her own cost. And what if a buyer relies on such measures and buys a house only to later find out that the measures were not accurate or in accordance to RECA’s standard? We can only assume that the wording of clause 3.1 (i) would make it very difficult (if not impossible) to bring an action against the Seller of the house (otherwise, why is the wording even here). So would the claim be against the listing realtor? If so, what can the buyer expect for damages? Realtor’s (potential) suspension of licence by RECA will not be helping a grieved buyer who owns a smaller home than what was represented (as an example).

Regardless of any potential inconsistencies in the Purchase Agreement, one thing is clear and that is the fact that a buyer is better off spending some money and have the title, RPR (if existent at the time) and other title-related mattered reviewed by a lawyer or have a professional have the house measured to have a peace of mind before signing the agreement. Once the agreement signed, resolving any disputes would likely be much more time-consuming and costly.

At Agahi Law, we review the RPR and title for our working-partners free of charge. For more information, feel free to contact us at general@agahilaw.com.

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