Adding a Seller to an Agreement
This is much more unusual than adding a Buyer. But, it does happen on occasion. The Seller / Owner of the property didn’t sign the Agreement. This subsequently arises with some surprise about the mistake or error that was made. Is it fixable?
Hopefully, the Seller might had just signed in the wrong spot on the Agreement. They might have signed the Spousal Consent rather than the Seller portion.
Usually, you simply have the wrong party. Let’s look at some examples:
· John Smith (the son) signed, but John Smith (the father) owns the property
· John Smith (the son) signed, knowing that his father, John Smith had passed away, under the mistaken belief that he had authority
· John Smith (the husband) signed incorrectly under Spousal Consent, while owning a 50% interest as a joint tenant with his wife, Mary, in a matrimonial home
There are some potential solutions as the time period approaches the closing date:
1) Transfer, on closing the correct document will be produced,
2) New Agreement of Purchase and Sale,
3) Amendment to an Existing Agreement, Adding a Necessary Party.
The Transfer works but there’s no supporting agreement. This is the “wait and see” approach. This is fine as long as you don’t need financing. A Lender won’t go along with this. Let’s look at the examples and the potential solutions.
John Smith (the son) signed, but John Smith (the father) owns the property
Here, the wrong person signed. The father was the registered owner. The son had no authority.
Any agreement with the son is really no agreement at all.
The only solution is the New Agreement.
John Smith (the son) signed, knowing that his father, John Smith had passed away, under the mistaken belief that he had authority
This situation is a little more complex. If there was no Will, then the Court must appoint an Estate Trustee. The son, even if he intends to make an application has no authority to act on behalf of the Estate until the Court Order.
Assuming there is a Will and the son, John is appointed, as Estate Trustee, then John’s authority comes directly from the Will, at the time of death. Here, the Amendment is a good route. The “agreement” would likely be an enforceable agreement, it just needs to be regularlized in some way, meaning that we need to ensure that the Seller is properly described as “The Estate of the late John Smith, deceased”.
A somewhat more perplexing situation would be a Will which does not appoint John Smith, the son, as the Estate Trustee. Instead, it appoints someone else, like ABC Trust Company as Estate Trustee. In that case, the son had no authority. There was no enforceable agreement. No amendment can be undertaken. A New Agreement signed by ABC Trust Company is required.
John Smith (the husband) signed incorrectly under Spousal Consent, while owning a 50% interest as a joint tenant with his wife, Mary, in a matrimonial home
Here is one more situation. A mistake is made. John and Mary are joint tenants of a matrimonial home. John is out of town on business. Mary signs the agreement and John signs the agreement later. But, by mistake John signs the Spousal Consent, instead of the Seller’s acceptance section.
There are two possibilities here:
1) John knowingly, only intended to sign the Spousal Consent, and that deals with possession alone, and not his undivided one half interest in the property.
2) John by mistake, signed in the wrong spot. He intended to convey his one half interest. We simply require rectification of the agreement to confirm this.
For #1, only a New Agreement would work. For #2, either an Amendment or New Agreement would work. But, how would you know the difference?
As the Buyer, the safest route is the New Agreement.
This generally leaves us with the brand New Agreement from start to finish working in all cases and the Amendment working every so often.
Obviously, the New Agreement is the better and safest course of action.
Brian Madigan LL.B., Broker