Special Clauses and Terms

Posted by Christopher Audette on Tuesday, May 15th, 2018 at 2:51pm.

Most Common Terms

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Alarm System | Commission Protections | Cash Back at Close (use Carefully) | Holdback | Late Signing | Permits | Pro Ceaning | Property Inspection (seller side) | RPR | Vacant possessions | Walk Through | Coming soon to MLS 

New Build - Single Family - Table of Contents

  1. GST Rebate
  2. Warranty
  3. Commision Not Paid on GST
  4. 10 Day Rescision Period

Buyer Side - Table of Contents

        1. 10 Day Recision
        2. 24 Hour Clause
        3. Alarm System
        4. Back-up offer
        5. Buyer agent’s fee
        6. Condo Doc Review - Declined
        7. Contract Supercedes Another
        8. Estate Sale / Probate
        9. Financing Condition Terms 
        10. Flood Plain/Environmental Protection Area
        11. Goods and Services Tax (GST) 
        12. Hazardous material, safety, health or environmental issue
        13. Heritage Property
        14. HOA Fees Disclosure 
        15. Holdback & Notice of Completion
        16. Illegal use
        17. Insufficient Funds to Close
        18. Insurance 
        19. Investment Property 
        20. Land Use
        21. Late Signing of Contract
        22. Permits 
        23. Personal Deals
        24. Professional Cleaning Needed
        25. Property Inspection 
        26. Proprety Inspection - Declined
        27. Rental Contracts 
        28. Repairs Needed
        29. Real Property Report
        30. Shortfall 
        31. Third Party Condition
        32. Title Search 
        33. Vacant Possession/Tenancy Clauses (New) 
        34. Water Access Only
        35. Walk-through
        36. Water softener removal
        37. Wood Stove/Fireplace Disclosure. 


Listing Side - Table of Contents

      1. Alarm System
      2. Back-up offer
      3. Coming Soon
      4. Estate Sale / Probate
      5. Illegal use
      6. Heritage Property
      7. HOA Fees Disclosure 
      8. Holdback
      9. Goods and Services Tax (GST) 
      10. Late Signing of Contract
      11. Non-Resident 
      12. Real Property Report
      13. Exclusive Seller Agreement Conditional Termination

10 Day Recission Period

If you have a client that you think may need to get out of the contract for no real reason this may be useful.

  • The purchaser may, without any liability for doing so, rescind this agreement in writing withiin 10 days of the date and time of final signing of this contract.

24 Hour Clause (Buyer Side)

Clause 9.2 Other Terms

  • 1) If the Buyer locates an alternate property they wish to pursue prior to the removal of the subject to sell condition, they must rescind this offer by providing written notice to the Seller or the Seller's representative.
  • 2)The Seller(s) agree to amend this contract to a pending sale when the Buyer's home becomes a pending sale. .

Alarm System

System to be removed

  • The seller, at the seller’s expense, will buy out the existing monitoring (or other agreement) for the alarm system currently located on the Property and have the system removed before Completion Day. The seller will repair any damages caused by the removal of the alarm system.

System to remain in property but not monitored

  • The seller, at the seller’s expense, will buy out the monitoring or other agreement for the alarm system currently located on the Property before Completion Day. The alarm system will remain intact but no longer will be monitored.

System and monitoring to be assumed by buyer

  • The buyer will assume the alarm system and any existing agreement for the system, including monitoring charges as of Completion Day.

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Back-up offer

Seller is bound to another offer
For use in situations where the seller is currently bound to a purchase contract and has been presented with another that they would like to accept. Insert a seller’s condition in clause 8.3, as follows:

  • Option 1 - Seller This contract is subject to the seller obtaining a written release from all obligations under a previously accepted Purchase Contract number ________, before ______ ___m on ___________, 20___ (Condition Day).
  • Option 2 - Buyer The buyer acknowledges that the seller has accepted this offer as a back-up offer and this contract is subject to the seller obtaining cancellation in writing of Purchase Contract number ________ before ______ ___m on ______, 20 ____ (Condition Day).
Buyer is bound to another offer

Less common is a situation where the buyer has offered on another property and needs a release from that contract before proceeding with another buyer’s offer to a seller.

  • This contract is subject to the buyer obtaining a written release from all obligations under a previously accepted Purchase Contract number ________, before ______ ___m on_______, 20___ (Condition Day).

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Permits

Permits required but were not obtained – seller disclosure

The Purchase Contract requires the seller to disclose known lack of permits for any development on the Property. The following clause provides this disclosure:

  • The seller discloses that ________________________development on the Property was completed without the required permits.

Determining availability of permits – buyer condition

  • This contract is subject to the buyer determining that required permits for ___________ development on the Property (describe or attach the plans as an addendum) are available before ______ ___m on ________, 20__ (Condition Day).

Seller to obtain permits not previously obtained – buyer’s condition

  • This contract is subject to the seller, at the seller’s expense, obtaining permits which were required but not obtained for _____________________development on the property, and providing those permits to the buyer before ___ ___.m. on _____ 20, _____(Condition Day)

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Personal Deal Term

The Purchase Contract requires the seller to disclose they are aware that you are are real estate agent:

  • Seller acknowledges that buyer is a licensed realtor in the province of Alberta.

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Professional Cleaning Needed

    • The seller, at the seller’s expense will have _____________(detail what needs to be cleaned) professionally cleaned before ____ __ .m. on _______, 20____ . The cost of the cleaning shall not exceed $______ The cleaning will be done by __________ (options include: professional cleaner of the seller’s or buyer’s choice, a named cleaning company, etc.) and the seller will provide the buyer with a copy of the receipt. The seller and buyer agree that the receipt is evidence of completion of this term. The buyer will instruct the buyer’s lawyer to hold back $________ from the payment of the Purchase Price until the receipt is provided. If the receipt is not provided by the agreed date, the holdback funds will be paid to the buyer.

General Notice for Satisfaction of Holdback Terms

  • I, the BUYER / SELLER, have satisfied the following terms and serve notice that all funds being held in trust as a holdback are releasable under the terms of the purchase contract.: LIST THE TERM FROM THE ORIGINAL CONTRACT HERE LIKE YOU WOULD ON A WAIVER

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Financing Condition Terms

Details of financing

For a situation where more details of buyer financing are required, the Purchase Contract financing condition can be replaced with the following:

  • This contract is subject to the buyer securing new financing, on or before _____ __.m., on ___________, 20__ (Condition Day) as follows:
    (i) new mortgage amount of $_________________ (plus applicable mortgage insurance fee, if any).
    (ii) interest rate not to exceed _____% a year, calculated semi-annually not in advance.
    (iii) a term of not less than _____ years.
    (iv) Monthly payment of principal and interest not to exceed $_________ (including mortgage insurance fee, if applicable) for an amortization of _____ years.

Note: unless you carry a mortgage broker’s license in addition to your real estate license, ensure that these details are provided by the buyer’s mortgage broker or lender. REALTOR® liability is increased when you go outside the scope of your license and expertise in providing advice to clients.

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Shortfalls

note: if it is questionable whether there is enough equity to cover the sale use the mortgage verification form, if it is highly questionable, take it to the next level and use the statement of adjustments

BUY SIDE - Use in Cases where there is a definite shortfall - Subject to buyers review and satisfaction of written confirmation via a preliminary statement of adjustments from sellers lawyer that $xxxx has been deposited to the seller's lawyers trust account for the purpose of covering any shortfall that may prevent the closing of this transaction. The shortfall includes but is not limited to mortgage payout penalty, Realtor commissions, property tax, and any other sellers expense.

SELLER SIDE - For use when the title red flags a potential shortfall - Subject to lawyers review of contract and verifying the sellers' ability to close the transaction at the purchase price.

Use in Cases where there is a definite shortfall - Subject to buyers review and satisfaction of written confirmation via a preliminary statement of adjustments from sellers lawyer that $xxxx has been deposited to the seller's lawyers trust account for the purpose of covering any shortfall that may prevent the closing of this transaction. The shortfall includes but is not limited to mortgage payout penalty, Realtor commissions, property tax, and any other sellers expense.

LISTING ESRA - To be used on the Listing Agreement - Sellers agree to provide a bank draft for $X within X days of signing this listing contract to be held in trust to cover any potential shortfall for the transactions commissions. Sellers also agree to provide a bank draft to be held in trust, during the condition period of any negotiated offer, to cover any additional shortfall in the sale price of the property as deemed by the listing agent, or sellers' lawyer.

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Estate Sale / Probate

In order for an estate to be sold, the seller of the estate must have certain information in place. The following clauses offer optional terms or conditions allowing the seller time to obtain the required information.

Option 1 – Completion Day Delayed - Where the buyer and seller are willing to proceed with a term regarding the estate issues:

  • The buyer acknowledges that the seller of the Property is an estate and a Grant has not yet been issued from the Courts. The seller acknowledges that the persons signing this contract have applied for a Grant and that anyone entitled to a share of the Property has consented to this sale. The buyer and seller agree that if a Grant has not been obtained by the Completion Day, then: The Completion Day will be delayed until the seller is able to provide a Grant and a Transfer of Land.

OR

Option 2 – Buyer Tenancy

  • The buyer acknowledges that the seller of the Property is an estate and a Grant has not yet been issued from the Courts. The seller acknowledges that the persons signing this contract have applied for a Grant and that anyone entitled to a share of the Property has consented to this sale. The buyer and seller agree that, if a Grant has not been obtained by the Completion Day, the buyer will take possession on a tenancy basis, with rent paid to the seller as determined by the amount of monthly interest the buyer would pay on their mortgage or at the agreed rate of $_______ per month.

Option 3 – Buyer condition -

Where the buyer desires to have the issuance of a Grant made a condition of the contract:

  • This contract is subject to the seller receiving before ____ ____m. on __________________, 2016 (Condition Day) the following:
    1. A Grant from the Surrogate Court,
    2. Assurance from the lawyer for the estate that everyone entitled to a claim has waived or released their claim against the Property,

Goods and Services Tax (GST)

The contract provides that the Purchase Price includes GST. If the seller or buyer is unsure whether GST should be included in the Purchase Price or if there is an available rebate or exemption etc., professional, qualified advice should be sought. Sources of information could include a lawyer, an accountant or Canada Revenue Agency (CRA).

  • This contract is subject to the _____ (seller’s or buyer’s) satisfaction with advice obtained on Goods and Services Tax (GST), on or before _____ __.m., on ___________, 20__ (Condition Day).

Note that the responsibility for costs to satisfy conditions is stated in the Purchase Contract Conditions section.

GST is not included in the Purchase Price

The Purchase Price does not include GST.

For additional clarity, once the client has received independent, expert advice on GST, the amount of GST and the responsible party can be added to this clause. If this clause is inserted, the Purchase Contract reference to GST being included should be stroked out.

Independent advice

  • The buyer confirms the buyer has obtained independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any GST rebate in connection with this transaction.

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Property Inspection

The Purchase Contract property inspection condition is to the buyer’s satisfaction. While buyers may prefer this, sellers may wish to impose limits on the type enough time for both the inspection to occur and for the buyer to obtain quotes to determine if the cost limit has been exceeded.

To avoid disputes about the quotes obtained, ensure the clause indicates the buyer and seller agree that the quotes are to be obtained by a contractor of the buyer’s choice.

Most service agreements between a licensed property inspector and their client will not allow the client to share the report. Ensure your clause does not cause the buyer to break the terms of their agreement with the property inspector.

Also keep in mind that if the seller insists the buyer share specific details of defects, the seller may learn of defects they were previously not aware existed. This knowledge can cause future disclosure issues for the seller.

Property Inspection – seller imposed limits

  • This contract is subject to the buyer obtaining a property inspection, conducted by a licensed home inspector, before ____ ____.m. on ___________, 20___. (add one of the following options)
    1. If the inspection identifies defects in the Property that are estimated to exceed $___________ to repair, the buyer will have a valid reason to not waive the buyer’s condition.
    2. Quotes to determine the estimated cost of repair are to be obtained by a contractor of the buyer’s choice.
    The seller will cooperate by providing access to the Property on reasonable terms.

Property Inspection – specific item inspection or testing

This clause can be used in a wide variety of situations where the buyer wishes to obtain one or more inspections of items of concern to the buyer. The inspections may be in addition to a typical property inspection of the structure or item may be the only inspection the buyer requires. Examples include:

  • water – potability, source, quality, quantity, drainage
  • soil quality
  • sewer or septic – adequacy, disposal, treatment
  • environmental concerns
  • hazardous materials – asbestos, urea formaldehyde foam insulation
  • suitability for development
  • availability of property insurance

Note: While the seller may attempt to impose limits on this type of condition, the seller is less likely to obtain agreement from the buyer due to the specific nature of the buyer’s concern.

  • This contract is subject to the buyer’s satisfaction with an inspection by an inspector of the buyer’s choice of the ____________________________ (describe the concern), before _____ ____.m. on _____________________, 20___ (Condition Day).
    The seller will cooperate by providing access to the Property on reasonable terms.

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Rental Contracts

  • This contract is subject to the buyer’s satisfaction with a review of the terms of the agreement for ______________________ (examples: rental items not included in the Purchase Price but being assumed by the buyer, lease contracts, lease to own agreements, etc.) before ________ _____.m. on ______________, 20___ (Condition Day).
    The seller will cooperate by providing the buyer with true copies of the rental agreement before ____ ____. m. on _____________________, 20___ (Document Delivery Day).

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Repairs Needed

To allow space to specify details of the needed work, use of the Addendum form is recommended. The following details will help to provide clarity in the work to be done.

  • The seller, at the seller’s expense, will repair ________(detail what needs to be done), before ____ __ .m. on _______(date).
    The repairs will be done by __________(professional contractor of the seller or buyer’s choice, a named contractor, etc.) with materials and quality of workmanship equal to or better than the surrounding construction and the seller will provide the buyer with a copy of the receipt. The seller and buyer agree that the receipt is evidence of completion of this term.
    The buyer will instruct the buyer’s lawyer to hold back $________ from the payment of the Purchase Price until the receipt is provided.
    If the receipt is not provided by the agreed date, the hold back funds will be paid to the buyer.

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Third Party Condition

This is a catch-all clause. It can be used when the seller or buyer requires an approval, opinion or confirmation by a third party before proceeding with the contract. Circumstances where this may be required include:

  • legal advice on the contract
  • approval of purchase by spouse or relative
  • confirmation of the availability of property insurance
  • approval of employer (corporate transfer)
  • site inspection report (environmental, engineering, structural, lot grading etc.)
  • This contract is subject to the _________ (seller’s or buyer’s) satisfaction with _________ (insert circumstance), before _____ ___.m. on _________________, 20______ (Condition Day).

Note: if the needed action requires access to the property, include: The seller will cooperate by providing access to the Property on reasonable terms.

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Water Access Only

Seller Disclosure

This clause can be written as a seller disclosure:

  • The seller discloses to the buyer that the Property is accessible only by water.

Buyer acknowledgement

  • Buyer acknowledges that the Property is accessible only by water.

Note: in both cases, details about the body of water, if the water access is available year-round, etc. can add clarity and reduce disputes.

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Walk-through

A final walk-through (sometimes called a pre-closing viewing) can serve as a check of the condition of the property and to confirm that items that were intended to be included remain in the property. The walk-through will usually occur a short time prior to closing. The walk-though is not intended to be an in-depth inspection of the property of the type conducted by a licensed property inspector. If a buyer wants to complete a walk-though, a term should be included in the contract.

  • Option 1 The buyer will have the right to a ________(walk-through, pre-closing viewing) of the Property prior to Completion Day, to a maximum of ____ times. The seller will cooperate by providing access to the Property on reasonable terms.
  • Option 2 The buyer will have the right to a ______(walk through, pre-closing viewing)of the Property on _________________________, 20__ (specify date and time, if required). The seller will cooperate by providing access to the Property on reasonable terms.

Water softener removal

  • The seller, at the seller’s expense, will remove the rented water softener and cap the pipes, before Completion Day.

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Wood Stove/Fireplace Disclosure

Seller disclosure

  • The seller discloses that the ______ (wood stove or fireplace) on the Property may not be approved for legal use and may cause fire insurance taken on the Property to become void.

Buyer acknowledgement

  • The buyer acknowledges that the ____________(wood stove or fireplace) may not be approved for legal use and may cause fire insurance taken on the Property to become void. The buyer accepts all risks associated with the _______(wood stove or fireplace).

Financial Obligations May Exceed Sale Price

Where the sale price appears to be insufficient to cover the seller’s financial encumbrances and real estate fees, the seller can be protected by the use of a condition.

  • This contract is subject to the seller verifying the seller’s ability to proceed with the sale of the Property before _____ ____.m. on ____________, 20___ (Condition Day)

Real estate brokerages should protect their fee agreement by registering a caveat on the title.

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Illegal use

Seller warranty

  • The seller represents and warrants that, during the time the seller has owned the Property, the Property has not been used for any criminal activity including the growth of marijuana or manufacture of any illegal substances.

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Hazardous material, safety, health or environmental issue

Many hazardous or safety issues can exist in a real estate property. These can include:

  • asbestos (insulation, tile, etc.)
  • urea formaldehyde foam insulation (UFFI)
  • radon
  • pests (termites, bed bugs, vermin, etc.)
  • environmental problems (oil spills, creosote contamination, underground storage tanks, erosion, etc.)

The following clauses offer options for seller disclosure of the issue and a buyer condition regarding the issue.

Seller disclosure of issue

  • The Seller discloses that the Property contains ____________________________.

Note: the clause can be customized by the addition of details of the extent of the issue, where it is specifically located on or in the Property, etc. The more detail provided, the more clarity will result.

Buyer confirmation of acceptance of risk

  • The Seller discloses that the Property contains ____________________________.

The buyer accepts the property in this state and any related risk.

Seller disclosure on corrective measures

  • Option 1 - The seller discloses that ______________________________(describe issue, example: asbestos insulation in the attic of the main residence on the Property) has undergone the following corrective measures (or remedy)_______________________(describe).
    The seller has provided the following documents to prove this disclosure: ___________________________(describe)

Specific issues do not exist

  • Option 2 - The seller represents and warrants that the Property does not contain _________(describe).
  • Option 3 - The seller discloses that although ______________________(describe issue) was known to have existed on the Property, the Property has undergone the following corrective measures (or remedy) ________________(describe).
    The seller has provided the following documents to prove this disclosure: ___________________________(describe)

Buyer condition regarding the issue

  • This contract is subject to the buyer’s satisfaction with an inspection of the Property for ______________________(describe the issue), before _______ ____.m. on __________, 20____ (Condition Day).
    The seller will cooperate by providing access to the Property on reasonable terms.

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HOA Fees Disclosure

  • To the best of the seller’s knowledge and to be verified by the buyer, the total current monthly contribution for the Property’s Home Owner Association (HOA) fee is: $__________________.

Development/Redevelopment

Buyer’s condition

  • This contract is subject to the buyer determining that the Property can be developed to the buyer’s needs, before _______ ____m. on __________________, 20__ (Condition Day).
    The seller will cooperate by providing access to the Property on reasonable terms.

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Investment Property

Buyer’s condition

  • This contract is subject to the buyer’s satisfaction with a review of _____________________ (lease and rental agreements, deposits, financial reports, etc), before ____ ____.m. on __________, 20 __(Condition Day).
    The seller will cooperate by providing the required documents.

No changes without consent

  • The seller will not ___________________________________(alter existing agreements, enter into new agreements, etc.) prior to Completion Day without the prior written consent of the buyer.

Seller’s warranty re documents

  • The seller represents and warrants to the buyer that the ___________________(lease and rental agreements, deposits financial reports, etc.) are true and accurate.

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Flood Plain/Environmental Protection Area

Seller disclosure

  • The seller discloses that the Property is located in ___________ (floodway, flood fringe, overland flow, environmentally protected area) as indicated on the ____________________ (describe source of information – examples: on-line Alberta Environment and Parks Flood Hazard Map Application, municipal flood mapping, municipal land use maps, etc.)

Buyer condition

  • This contract is subject to the buyer’s satisfaction of the buyer’s review of the Property location in relation to _________________ (designated flood zones, environmentally protected areas, etc.), before _____ ____.m., _______, 20___ (Condition Day).

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Heritage Property

  • The seller discloses that the Property (is/may be) subject to the provisions of The Historical Resources Act (Alberta).

Non-Resident

The Purchase Contract includes a seller warranty that the seller is “not a non-resident for the purposes of the Income Tax Act (Canada)” (clause 6.1(b)). If in fact the seller is a non-resident, 6.1(b) should be stroked out and the following clause inserted:

  • The seller discloses that the seller is a non-resident of Canada for the purposes of the Income Tax Act (Canada) and that a portion of the sale proceeds as required that Act may be held back by the buyer or buyer’s lawyer or the seller’s lawyer under appropriate trust conditions until the seller supplies the appropriate clearance certificate from the Canada Revenue Agency.

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Buyer Agent’s Fee

Occasionally, a REALTOR® may represent a buyer in situation where the seller will not pay the buyer agent’s fee.

If the seller will not pay the buyer agent fee, one option is for the buyer to pay out of pocket - but this won’t work for cash poor buyers.

Another option is to include a term in the offer where the seller and buyer acknowledge that the purchase price includes the buyer agent’s fee and that amount will be directed to the buyer’s brokerage. This method is supported by Canada Mortgage and Housing Corporation (or CMHC), who acknowledge that the purchase price on a contract includes the brokerage fee and regardless if the fee is intended to go to the seller’s agent or buyer’s brokerage it is the amount that lenders are expected to submit to CMHC for consideration of the lending value. Buyers should speak with their own lenders, because individual lenders can set their own policies. However, most do follow CMHC’s lead.

  • The seller and buyer acknowledge that the Purchase Price includes a fee payable by the buyer to the buyer’s brokerage under the terms of a written fee agreement.
    The seller agrees to direct the seller’s lawyer to pay the amount of $________________, plus GST upon closing to _______________(the buyer’s brokerage or the buyer’s lawyer.)

If it is the buyer’s lawyer making the payment, you will need an agreement with the buyer that the buyer will instruct the amount to be paid to your brokerage on closing.

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Vacant Possession/Tenancy Clauses (New)

The purchase contract contemplates vacant possession (“this contract will be completed, the Purchase Price fully paid and vacant possession given to the buyer….”). If a tenant is in place, the seller will need to stroke out “vacant possession”, indicate there is a tenant and use the Tenancy Schedule.

The buyer may be willing to accept the tenant on possession but want the property to be vacated for their own use or the use of their immediate family. This can occur in two ways, the buyer can take possession and give the tenant the appropriate notice under the Residential Tenancies Act (Alberta), or they can ask the seller to give those notices, as follows:

Seller to give notice

  • The buyer and seller agree that when this contract becomes firm, the seller will give the tenant the required notice under the Residential Tenancies Act (Alberta) to vacate the property so that vacant possession is given to the buyer on _________(date).

Past landlord and tenant issues can be a concern to a buyer of a property who is assuming the tenant. The following clauses may give some assurance to a buyer that the tenancy has been handled correctly in the past and they are not assuming a problem along with a tenant.

Tenancy history – seller warranty

  • The seller represents and warrants that during the period of the seller’s ownership and rental of the Property, the Property has been rented in accordance with the Residential Tenancies Act (Alberta), and that any rent increase has been effected in accordance with the legislation.

Landlord/tenant disputes – seller warranty

  • The seller represents and warrants that there are no outstanding disputes between the seller as landlord and any tenant of the Property.

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Insurance

The availability of adequate property insurance is something a buyer may want to confirm prior to being bound to a contract. Weather events (floods, hail, tornados, etc.) and property features that present a possible risk (woodstove, unpermitted work, etc.) may mean property insurance is difficult or expensive to obtain. If situation such as these apply to a property, a buyer’s condition can help to protect the buyer’s interests.

Obtaining insurance – buyer condition

  • This contract is subject to the buyer’s satisfaction that adequate insurance coverage for the Property is available, before _____ ___m. on _______, 20____ (Condition Day).

Another situation specific to insurance is where a seller has received a payout from an insurer but has not repaired the insured item. In these cases, if a buyer were to submit a future claim for the item, it may not be covered. The following warranty serves to protect the buyer in this situation.

Receipt of insurance payout – seller warranty

  • The seller warrants that it has not received any insurance settlements where the work on the Property has not been completed.

Insurance Claim Underway but not Completed

  • The seller will instruct the sellers insurance company to assign the buyer as beneficiary and authorized person to deal with insurance claim #____ as of possession date. All information as related to this and any other outstanding claims against the property to be disclosed in writing and to the buyers satisfaction within 2 business days.

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Title Search

Whether you are working for the buyer or the seller, a title search can reveal valuable information about the property. Among other things, the title provides key information about the property, its owners, any use restrictions, liens, health authority notices, etc.

As a buyer’s agent, the ideal time to review the title is prior to writing an offer. This is because some of the information may affect the amount the buyer wants to offer or conditions the buyer may want to include. If, in the interest of time; the buyer does not want to delay making an offer or items on the title require legal advice, a contract condition can be inserted to allow time for the review of the title. This will help fill the gap and still protect your buyer’s interests.

  • This contract is subject to the buyer’s satisfaction with a review of the land title for the Property, before ___ __m. on ______, 20____ (Condition Day).

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Land Use

In the residential real estate market, sellers and buyers exchange properties primarily for their personal use. However, there may be a need for supplemental uses such as a home based business or secondary suite. When the buyer requires an additional use, one of the following clauses can be inserted to allow time for the buyer to determine if the current land use is suitable for their needs. Or, the seller can provide a warranty that the buyer’s intended use is allowed. Caution – sellers making such a warranty can be held liable for the warranty. With land use matters, the assistance of a lawyer may be required.

Buyer conditions:

  • Option 1 - This contract is subject to the buyer confirming the land use for the Property is appropriate for __________________ (suitable for the buyer’s intended use, homebased business, basement suite, etc.), before ____ ___m. on ________,20___ (Condition Day).
  • Option 2 - This contract is subject to the buyer obtaining final municipal approval of land use changes from ________ to __________, before ____ ___. on ________,20__ (Condition Day).
    The seller will cooperate with the buyer in the land use change process. Seller warrants land use The seller represents and warrants that the land use for the Property allows the Property to be used for ___________________. (basement suite, home based business, etc.)

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Real Property Report (RPR)

RPR – buyer’s condition

Problems with the RPR are the single most common reasons for delays and disputes on closing. Therefore, the buyer may choose to make the contract subject to their review of the RPR. This review should be undertaken by the buyer’s lawyer. Reviewing the RPR in advance and addressing any problems early in the transaction makes for smoother closings.

  • Option 1 PREFERRED (Term) - Seller to provide a current, Real Property Report with municipal compliance to the buyer for the buyer to review by ____________.
  • Option 2 (Condition) - This contract is subject to the buyer’s satisfaction of a Real Property Report review, conducted by their lawyer, before ______ _____.m. on _______, 20 ______(Condition Day).
    The seller will cooperate with the review by providing the buyer with an RPR (or a photo copy) showing the current improvements on the Property, according to the Alberta Land Surveyors’ Association Manual of Standard Practice, with evidence of municipal compliance or non-conformance and confirming the seller’s warranties about the land and buildings.

When there are KNOWN issues, please refer to the linked RPR Compliance Document for proper wording of the terms and conditions.

  • Scenario 1 Current RPR is available without Compliance and the municipality no longer offers Compliance - 9.2 Add The seller agrees to pay the buyer’s cost for obtaining title insurance by providing a credit to the buyer on closing
    10.2 Make the following changes:
    Closing documents will include an RPR showing the current improvements on the Property according to the Alberta Land Surveyor’s Association Manual of Standard Practice, with evidence of municipal compliance or non-conformance and confirming the seller’s warranties about the land and buildings. This obligation will not apply if there are no structures on the land. The buyer or buyer’s lawyer must have a reasonable time to review the RPR prior to submitting the transfer documents to the Land Titles Office.
  • Scenario 2 An RPR with Compliance that is not current due to the addition or alteration of structures is available and compliance is no longer available - 9.2 Add the seller agrees to provide a new RPR showing the current improvements on the property. The buyer acknowledges that the seller will not provide any new or updated compliance. The seller agrees to pay the buyer’s cost for obtaining title insurance by providing a credit to the buyer on closing.
    10.2 Make the following changes:
    Closing documents will include an RPR showing the current improvements on the Property according to the Alberta Land Surveyor’s Association Manual of Standard Practice, with evidence of municipal compliance or non-conformance “as shown on the RPR (or as shown on the letter from (name of municipality) dated (insert date) ” and confirming the seller’s warranties about the land and buildings. This obligation will not apply if there are no structures on the land. The buyer or buyer’s lawyer must have a reasonable time to review the RPR prior to submitting the transfer documents to the Land Titles Office..

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Title Insurance

Seller to pay cost of title insurance. RPR is not provided.

  • The seller will contribute up to $____________ towards the cost of a Title Insurance Policy for the benefit of the buyer and the buyer’s lender (if financing is obtained). The policy is to be secured by the buyer. A Real Property Report will not be provided.

If choosing to strike out sections of the standard AREA Purchase Contracts, then please obtain legal advice.

Seller to pay cost of title insurance. Existing RPR is provided

In circumstances where the seller has an existing Real Property Report that does not reflect the current state of the property, the RPR should be updated. If the seller does not want to update the RPR and the buyer is willing, title insurance could be used in addition to the existing RPR. In cases where an RPR is not current and title insurance will be obtained, legal advice is recommended.

  • The seller will provide an existing Real Property Report dated _______, which does not reflect the current improvements on Property.
    The seller will contribute up to $___________towards the cost of a Title Insurance Policy for the benefit of the buyer and buyer’s lender (if financing is obtained). The Policy is to be secured by the buyer. An updated Real Property Report will not be provided.

If choosing to strike out sections of the standard AREA Purchase Contracts, then please obtain legal advice.

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Holdback

    • The seller, at the sellers expense will [work to be done}____ before ____am/pm on _____. This will be done by ___[a licensed - type of contractor]__ and the seller will provide the buyer with a copy of the receipt(s) by such date. The seller and buyer agree that the receipt is evidence of completion of the term. The buyer will instruct the buyer's lawyer to holdback $______ from the payment of the Purchase Price until the receipt is provided. If the receipt is not provided by the agreed date, the holdback funds will be paid to the buyer. If the client is the seller - add this: Despite the warranties contained in this contract, the Seller's liablility for __[event]__ shall be limited to the Holdback.

General Notice for Satisfaction of Holdback Terms

  • I, the BUYER / SELLER, am serving notice that the terms LIST THE TERM FROM THE ORIGINAL CONTRACT HERE LIKE YOU WOULD ON A WAIVER I.E. *.1(A) have been satisfied. The buyer lawyer is instructed to release the holdback funds under the terms of the contract. As per the contract, the attached receipts are deemed proof.

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Contract Supercedes Another Contract

To be used in cases replacing a particularly messy contract,
  • This contract supercedes contract #______ dated _____.

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Exclusive Seller Representation Agreement Termination

To be used under Conditional Termination - Additional Terms. Note: If a conditional termination is given, the Additional Terms checkbox must be filled in and additional terms must be stated.
  • Option 1 - Notwithstanding the execution of a signed Exclusive Seller Representation Agreement with another REALTOR ® , You must pay our fee if:
    A) in the ____ days after this termination you enter into a legally binding contract to sell the property where the buyer was introduced to the property during the term of this agreement.
    B) "Other term to be determined by the agent"
  • Option 2 - If you change your mind about selling, and decide to relist the property for sale in any capacity within ____ days you must inform us in writing and sign an Exclusive Seller Representation Agreement with the same or similar terms with (name)_____.

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Late Signing of Contract

Technically once a time limit has passed a contract is dead, and a dead contract can not be revived. Section 3.1 C under general terms states that time is of the essence, whcich means that times and dates will be strictly followed and enforced. Noting that we are not the only parties to theis contract and having a new contract written may not alwasy be feasible, the following terms msut, at minimum, be added to any contract or piece of contract that does not strictly meet the deadlines. It is preferred that if at all possible, a new contract be drawn up
  • Both Buyer and Seller agree to the late signing of this contract. OR Notwithstanding the amendment changing the condition dates for purchase contact #___ was signed after the condition date, both parties agree the contract is still in full force and effect

Coming Soon Listing

Listing agreements should be signed and effective asap to facilitate a Coming Soon Listing campaing. Technically this is a Coming Soon To The CREB MLS Listing Database. Because the the board rules state that listings must be loaded onto the MLS within 48 hours, a special clause must be inserted that allows us to Hold the listing but not have it entered into the database until a time in the future.
  • .Property to be listed on the CREB MLS database on or before _________, unless confirmed in writing via email by the seller.

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Cash Back at Close

This is a workaround for the lenders not financing a cashback amount at close. Any amounts that are done this way, the bank is technically giving the buyer money as it is thier money being loaned to seller to give to the buyer. Property will still need to appraise for the full amount and all paperwork associated with the contract needs to be submitted tot the lender or you are looking at a fraudulent situation. Amounts also need to be reasonable for poperty and for work the holdback is for
  • The seller, at the sellers expense will [work to be done}____ before ____am/pm on _____. This will be done by ___[a licensed - type of contractor]__ and the seller will provide the buyer with a copy of the receipt(s) by such date. The seller and buyer agree that the receipt is evidence of completion of the term. The buyer will instruct the buyer's lawyer to holdback $______ from the payment of the Purchase Price until the receipt is provided. If the receipt is not provided by the agreed date, the holdback funds will be paid to the buyer. If the client is the seller - add this: Despite the warranties contained in this contract, the Seller's liablility for __[event]__ shall be limited to the Holdback.

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New Build - Single Family - Table of Contents

  1. GST Rebate
  2. Warranty
  3. Commision Not Paid on GST
  4. 10 Day Rescision Period

GST Rebate Assignment to Vendor

To the benefit of the vendor (builder)

  • GST REBATE: The purchaser declares that he/she fully understands that the GST rebate will only be credited to the Total Price if the price of the Residential Unit are less than $450,000.00 inclusive AND the purchaser or a member of his or her immediate family resides int he Residential Unit as his/her principal residence. In such case, the Purchaser irrevocably assigns the available GST rebate to the Builder. In the event that the Purchaser does not intedn to reside in the Residential Uniat as their principal residence, a GST rebate would not be applicable. The builder is permitted in any case to make its own application for any applicable rebates to the appropriate taxing authority, as applicable and necessary, and the Builder reserves the right to adjut the Total Price in the even no or a lesser GST rebate is available.

Applicable for homes under $450k and owner occupied
This term is used to the benefit of the BUILDER not the buyer. See Rick or Cliff for further clarification

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Warranty to Be Provided

New home warranties are mandatory under the real estate act. this is applicable for new builds, and substantially renovated homes. A due diligence search on https://residentialprotection.alberta.ca/public-registry/ to ensure a the builder is registered and the property is registered before possession.

  • Seller to provide new home warranty paperwork to buyers lawyer for signing prior to possession.

SUBTITLE
As part of your due diligence you must do a search for the property address and builder to ensure a warranty registration has been assigned through: https://residentialprotection.alberta.ca/public-registry/

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Commision Not Paid on GST

Buyer Realtors Commissions are NOT typically paid on the GST portion of a new build.This is placed on the MLS, in the pirvate remarks.

  • No commissions paid on GST portion of sale. .

10 Day Recission Period

NOTE

  • The purchaser may, without any liability for doing so, rescind this agreement withiin 10 days of the later of the date the purchaser receives all of the information and documents required to be delivered to the purchaser under secion 12 of the condominium property act and if there is a conflict between this agreement and the act, the act prevails.

this is applicable to new condos only
If this is being done on a new single family and on builder paperwork, this needs to be on a sheet on the front of the offer. It is not applicable on MLS residential resale offers.

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TITLE

NOTE

  • RED TEXT THE ACTUAL TERM.
  • RED TEXT THE ACTUAL TERM 2

SUBTITLE
EXPLANATION

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