Brian Madigan LL.B., Broker
BRMadigan@iSourceRealEstate.com

RE/MAX West Realty Inc.,
Brokerage
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 


Phone: 416-745-2300
Toll Free: 1-888-507-0817

 

Search Blog

Search in:  
    
    
       

Sort by:

How Many Copies of an Agreement do you Need?

May 25, 2013 - Updated: May 26, 2013

 

 

 

This is a question that arises quite often. The common answers appear to be 6, 4, 2 and 1.

 

Now, you would think that there would be some regulations about this. However, while there are no specific provisions, there are certainly some general rules.

 

In reviewing this matter, we have to look at several matters including:

 

  1. Contract law,
  2. Laws of Evidence,
  3. Deeds, and Conveyancing Documents,
  4. Different terms including: genuine original, duplicate original, original copies, executed copies, signed copies, true copies, photocopies, certified copies, notarial copies and counterpart copies,            
  5. Practice and Procedure under the Real Estate and Business Brokers Act, 2002,
  6. Parties,
  7. Acceptable Alternatives (with informed consent).

 

 

Contract Law

 

An agreement of purchase and sale for the conveyance of real property must be in writing. That is set out in the Statute of Frauds, and the reason is quite simple, it may otherwise give rise to fraudulent activities. Real estate is a valuable asset and the “in writing” requirement seems quite reasonable. In fact, it’s been the law since 1677.

 

Here’s what the current Statute of Frauds says:

 

Writing required to create certain estates or interests

 

1.  (1) Every estate or interest of freehold and every uncertain interest of, in, to or out of any messuages, lands, tenements or hereditaments shall be made or created by a writing signed by the parties making or creating the same, or their agents thereunto lawfully authorized in writing, and, if not so made or created, has the force and effect of an estate at will only, and shall not be deemed or taken to have any other or greater force or effect.

 

So, it must be in writing. But, how many copies? The Act doesn’t say, which can easily be interpreted to mean that one is sufficient.

 

In some cases, that’s all you need for a contract, one original and that’s it. Consider a promissory note from Adam to Bob for $10,000 due in one year with interest at 5% per annum, not compounded and no payments. Adam just signs one. If he signs another, then he has just created an obligation to pay $20,000. The money is given to Adam and in exchange the original promissory note is given to Bob. Adam has a copy, so that he will know exactly what he signed. One year later, Adam pays Bob, $10,500 and receives the original promissory note in return, marked “paid in full”.

 

However, some contracts are more complex than that. And, you have to appreciate that there wasn’t much chance of Adam suing Bob, once he had the money. Really, it was the other way around.

 

But, many contracts impose serious and significant obligations on both sides. It’s unreasonable for the parties to a contract not to have access to their own documentation. Each side needs a copy, just in case they need to sue the other party to the transaction. Having one party only “in possession” of the original doesn’t make any sense. You have to sue the other party, just to see the document.

 

Laws of Evidence

 

There is a “best evidence rule” in the Courts. Stated succinctly, there is an obligation upon a party to produce the best evidence available of a document, or a fact. So, that means the genuine original document, not a copy. In the event of a conflict, the genuine original will be preferred.

 

This is also extended to include the doctrine of “hearsay”. You need to “hear” from the person to saw the event, not just someone who “heard” about it.

 

This rule was initially extremely stringent, and a party might be precluded from entering into evidence any copy whatsoever, if the original might be found or available somewhere. Now, the law has evolved to the point where the copy can be introduced, but there is more weight associated with the genuine original.

 

The best evidence rule is that secondary evidence, which would include a copy or facsimilie, or some other type of more remote evidence will be not admissible in Court if an original document exists, and is not unavailable due to destruction or other circumstances which would indicate its unavailability.

 

The expectation of the Court will be that the genuine original document will be forthcoming. This could interfere with the presentation of a party’s case.

 

The party with only a photocopy must explain who has the genuine original, and why it is not available, then seek the Court’s indulgence to present the secondary document. This should be quite unnecessary. A party to a lawsuit should not be placed in this position.

 

There are some provisions contained in the Evidence Act which are noteworthy:

 

        Proof of certain written instruments

 

55.  (1)  A party intending to prove the original of a telegram, letter, shipping bill, bill of lading, delivery order, receipt, account or other written instrument used in business or other transactions, may give notice to the opposite party, ten days at least before the trial or other proceeding in which the proof is intended to be adduced, that the party intends to give in evidence as proof of the contents a writing purporting to be a copy of the documents, and in the notice shall name some convenient time and place for the inspection thereof.

 

        Inspection

 

(2)  Such copy may then be inspected by the opposite party, and is without further proof sufficient evidence of the contents of the original document, and shall be accepted and taken in lieu of the original, unless the party receiving the notice within four days after the time mentioned for such inspection gives notice that the party intends to dispute the correctness or genuineness of the copy at the trial or proceeding, and to require proof of the original, and the costs attending any production or proof of the original document are in the discretion of the court.

 

        Where no attestation required

 

56.  It is not necessary to prove, by the attesting witness, an instrument to the validity of which attestation is not requisite.

 

       Comparison of disputed writing with genuine

 

57.  Comparison of a disputed writing with a writing proved to the satisfaction of the court to be genuine shall be permitted to be made by a witness, and such writings and the evidence of witnesses respecting them may be submitted to the court or jury as evidence of the genuineness or otherwise of the writing in dispute.

 

What does all that mean? Simply, if you have in your possession the copy, rather than the original, then you have to give advance notice to the other side in the lawsuit that you intend to introduce it at trial. The other party has the corresponding right to examine the document. This is a costly and otherwise unnecessary step if you had an “original”. Lawyers are expensive enough. You certainly don’t need to have a few extra hours docketed to the file for them to engage in this process. If you had the original, this step could be avoided.

 

Deeds and Conveyancing Documents

 

Hundreds of years ago, there was just one Deed. Both parties would sign it. Rarely, would there be a separate agreement ahead of time. However, the practice of executory agreements developed later.

 

The owner of the property would hold all the Deeds from A to B, B to C, C to D etc. as proof that they truly owned the property. They had to show evidence of title for 60 continuous years (considered to be two lifetimes, at that time). Then came official Registry Offices. All you really needed was the original to be registered in the Registry Office, however, people didn’t like to place all their faith in government institutions, so they liked to have another copy for themselves.

 

Until the mid 1980’s in Ontario, two Deeds would be produced for every transaction:

 

  1. original, (for registration)
  2. duplicate original (stamped by the Registry Office, but given to the new owner).

 

Naturally, before you had the Deed, there was an Agreement of Purchase and Sale.

 

You must appreciate that prior to word processing computers, Legal Stationers produced their own copies of the agreement. Dye and Durham referred to the document as an “Offer to Purchase”, and Newsome & Gilbert called it an “Agreement of Purchase and Sale”. Both documents were printed front and back (2 pages)  and came in paper pads, affixed at the top with glue. It was common practice at the time to use 6 copies. They could fit into a typewriter with carbon paper. Any more copies would just be too “blurry”. The distribution scheme was, the vendor got the top copy, the purchaser got the second copy, and the two brokerages and the two lawyers got the others. Original signatures appeared on all 6 copies of the document.

 

Over the years, the practice has changed. The standard form OREA Agreement of Purchase and Sale with companion schedules and related documents usually runs about 10 pages for even the simplest transaction. That amounts to 60 pages of material, if all the same people are going to get their own copy.

 

That is also troublesome since there are some new risks:

 

  • Will all 6 copies be identical?
  • It takes perhaps an extra hour of time to produce 6 copies (is that time available)
  • Should one or two originals be produced?
  • Can or should each side deal with copies from their own original document?
  • Are printers or photocopiers available?    
  • Would one original, to be placed in safekeeping, and everyone to have a photocopy be better?

 

The best practice is one that should meet all the legal requirements for the parties and be the most efficient and accurate procedure. But, what is that? Technology changes, but old systems seem to continue forever. 

 

Different terms for the Documents

 

It would be wise to first to reach a common understanding about how the documents are described.

 

Genuine Original: this is a document which has been signed and sealed by the parties and bears the original signatures of each party to the agreement. There is no better evidence of the deal between the parties than this document. There may be more than one genuine original.

 

Duplicate Original: This is the second copy made. It’s the first carbon copy out of a typewriter. In cases where photocopies or laser prints are made, it cannot be distinguished from the first copy. In the event that the first original is misplaced or lost, this document can be used in its place. It is not used for Offers but it is used for Deeds.

 

Original copies: this is a document which is the second or later document to be signed. The deal between the parties may have been struck once that first genuine original was signed, but this is the companion copy. The intention is that both parties (or all parties) are to have their own originals. So, in effect, everything is in escrow (it can all be undone) pending the production of the additional original copies, however many, may be needed. Once completed, so that there are sufficient copies for all concerned, the deal is done. These original copies are then just as important as the first copy made.  So, provided there is fact such an escrow arrangement, they are all originals. Proving such an arrangement exists becomes somewhat problematic if there are no verbal discussions about the offer and acceptance process at the time.

 

Executed copies: These copies are one step down from original copies. There is no escrow arrangement here. The deal has been struck with the first genuine original, but it is thought that everyone should have their own copy. So, these additional executed copies are made. They bear original signatures and initials and would be difficult to detect any difference from “original copies” from their appearance.

 

Signed copies: This is just another name for an executed copy.

 

True copies: This document is slightly different. The keyword here is “COPY”. It’s not an original. For example, Bob Smith signs his name and places his initials upon the original document. Now, someone else makes a true copy of the original. In places where Bob Smith signs, they place the words “Bob Smith”, and where he has placed his initials they place the letters “BS”. You will notice the Quote Marks. That’s the correct way to make a true copy. It will be evident that Bob Smith personally didn’t actually sign that document. But, it does show that someone made a true copy of a document that Bob Smith did in fact sign. This is not quite as good as the original for the purposes of the best evidence rule.

 

Photocopies: These are documents produced on a photocopier. As long as the photocopier is working properly, then you have produced a copy which is the equivalent of a true copy. Decent enough, but, not quite as good as the original.

 

Certified copies: These are documents which are produced by a person authorized by law to produce certified copies. This is likely to change depending upon the purpose for which the certified copy is required. Often, it will be covered in specific legislation. Passport applications permit a broad number of professions to look at a document, make a photocopy, then attest to the fact that it is “certified” to be a true and accurate copy of the original document which they have personally examined.

 

There is no specific person authorized to make copies of agreements of purchase and sale under REBBA, 2002.

 

The Evidence Act says “a copy of an instrument or memorial, certified to be a true copy by the land registrar in whose office the instrument or memorial is deposited, filed, kept or registered, is proof of the original….” That means, the only way to prove a registered document on title, is to have the Land Registrar make a “true copy”. That is accomplished by attaching an attestation page to a photocopy of the document.

 

Notarial copies: These are official photocopies made by a Notary Public. The original document is examined, a photocopy is made and the attestation page is affixed. If the best document is a photocopy, then the notarial certificate will say “this is a true copy of a document purporting to be a photocopy of….”. The Notary will then sign and seal the document.

 

But, please notice what the exact wording is in the certification. Is it a photocopy of an original, or is it a photocopy of a photocopy? The copy of a copy may not have much value.

 

Also, Notaries are strictly regulated. They will not have someone bring in a 200 page original document and 200 pages of photocopies. They will make the copies in their own offices in order to ensure that there is no tampering.

 

Counterpart copies: These copies are slightly different. The contracting parties are not together in the same room at the same time, or even closeby. They may be at the opposite ends of the earth. Both parties sign the contract in the own offices, then they mail them to the other party. The intention is that the operative date for the contract is day one, the signing date, not two weeks later when your copy finally arrives in the mail. Upon receipt, all you have to do is “sign”, because the other party’s signature already appears upon the document. This is a slightly different arrangement, and does not usually apply to real estate deals. The practice for “acceptance” of an offer is slightly altered in these situations from standard practice.    

 

Practice and Procedure under the Real Estate and Business Brokers Act, 2002

 

As mentioned earlier, a clear and definite standard procedure has not developed in Ontario. However, it seems to be clear that agents are using fewer than 6 originals of the agreement. Those days are long since gone.

 

Let’s have a look at the Act and the Regulations and see what it says concerning agreements.

 

The Code of Ethics states:

  

Written and legible agreements

 

27.  (1) A registrant who represents a client in respect of a trade in real estate shall use the registrant’s best efforts to ensure that,

          (a) any agreement that deals with the conveyance of an interest in real estate is in writing; and

 (b) any written agreement that deals with the conveyance of an interest in real estate is legible.

 

Consequently, a real estate agent must produce an agreement which is in writing and is legible. However, have a look at that wording. That was kind of “fuzzy”. It said “best efforts”. Remember that an agreement relating to real property which is not in writing is not enforceable (subject to some limited exceptions). So, this certainly doesn’t sound very professional

 

The next requirement is the document be “legible”. Again however, it is subject to the “best efforts” limitation. Now, I would have thought that both of these matters be absolute, or at least the “in writing” provision. I suppose, one could always sue over an illegible agreement and see if the Judge could read it. If not, that’s a pretty expensive exercise! And, a complete waste of time if the Judge can’t read it.

 

The Code goes on to deal with copies of the agreement:

 

        Copies of agreements

 

28. (1)  If a registrant represents a client who enters into a written agreement that deals with the conveyance of an interest in real estate, the registrant shall use the registrant’s best efforts to ensure that all parties to the agreement receive a copy of the agreement at the earliest practicable opportunity.

 

(2) Subsection (1) applies, with necessary modifications, if a brokerage and a customer have an agreement that provides for the brokerage to provide services to the customer in respect of any agreement that deals with the conveyance of an interest in real estate.

 

This may be a strange way of dealing with the matter, but real estate agents (registrants) for both clients and customers must ensure that all parties have copies.

 

You might recall, that there are two levels of service that a registrant may provide:

 

  1. client services, this is agency and fiduciary obligations apply, and
  2. customer services, this non-agency without fiduciary obligations.

 

Under the Code, for a registrant there is a statutory duty to ensure that all parties have copies. And, this obligation applies whether or not the registrant has fiduciary obligations.

 

So, in this case, you can easily see what is happening. From statutory perspective, there are some additional duties imposed upon the registrant. It doesn’t matter what level of service is being provided to their own client or customer. The statutory duty really arises in favour of the other parties, who may not be represented at all in the transaction (or receiving services) from another registrant.

 

Just exactly what does that mean? It says “copies”. It didn’t specifically say “originals”. Again, the “best efforts” limitation comes in. That’s certainly “loose practice”. Why not, just say “do it”. A time limit suggests that it should be done “at the earliest practicable opportunity”. Let’s take that requirement on good faith but what about the “best efforts” business? I suppose if you are not representing someone, nor providing services and they have not provided you with a means of communication, then this could be impossible. But, that matter is covered by general laws, we don’t need the “best efforts” fudge factor here.

 

The term “copy of the agreement” is an undefined expression under the Code. To the extent that there are some alternatives, we have experienced the evolution of a variety of practices. Yet, everyone is working off the same “songbook” here.

 

We better have a look at the common law duties for agents:

 

  • Disclosure
  • Obedience
  • Competence
  • Confidentiality
  • Accounting
  • Loyalty

 

  

1) Disclosure. The agent is under an obligation to keep the principal informed and to disclose any material and relevant matters to the principal.

 

2) Obedience. The agent is subservient to the interests of the principal. The agent is to follow the reasonable and lawful directions of the principal, carrying out the principal’s instructions. The agent is to act in the principal’s best interests and not his own.

 

3) Competence. The agent is under an obligation to be competent in his profession, and to inform the principal that there are matters beyond the agent’s expertise.

 

4) Confidentiality. The agent is to maintain the privacy of the principal and matters that are of a private nature are to remain in confidence. Information provided to an agent is received in a fiduciary capacity and is not to be disclosed without authorization by the principal.

 

5) Accounting. The agent is to account for monies received and disbursed. Payments of any kind or nature, direct or indirect are all for the benefit of the principal. Funds are received as a fiduciary, and are to be disclosed and remitted in full to the principal. The agent is the intermediary between the principal and third parties. The agent is not a third party contractor but rather the person who brings the principal and third parties into a contractual relationship.

 

6) Loyalty. An agent is to offer loyalty to the principal. Once engaged in a fiduciary capacity, the agent must place the interests of the principal above his own, must not entertain the interest of others, including himself above that of his principal.

 

Each of these duties are separate and distinct obligations and vary somewhat in their application and interpretation depending on the nature of the agent’s profession and the actual agency agreement.

 

Common agency arrangements today include attorneys, trustees, solicitors, barristers, doctors, accountants, financial agents and real estate agents.

 

All those in an agency relationship are subject to the common law. These are important matters and should not be discounted.

 

Statutory obligations are in addition to the fundamental common law duties. Professionals in the real estate industry would be well-advised to adhere to those principles in addition to their statutory requirements.

 

Now, what does that mean when it comes to an agent’s own client? An agent would be hard pressed to fail to deliver a real or proper copy of the agreement to their own client. Look at the duties of disclosure, obedience, competence, and accounting. How does one come up with a less than proper copy?

 

So, what’s a proper copy for a client?

 

In my opinion, it is:

  1. the genuine original,
  2. the duplicate original,
  3. executed copies, and
  4. signed copies.

 

Since, the agent is the “agent” of the principal, then the very best copy that the agent has in his possession should be delivered to his principal. The common law calls for that. The real estate agent is not a contracting party, but rather is a legal agent for a contracting party. That means the client gets the “best copy”.

 

In order to meet the duty of competence, whatever copy is the best copy better meet the standard of the best evidence rule and not run the risk of exclusion. If that were the case, then we have an agent who has fallen short when it comes to competence. A principal needs to have documents in his possession which can be introduced properly into evidence in any litigation arising as a result of the contract.

 

I appreciate that a principal, properly informed, could consent to the agent holding onto the best copy that they have between them.

 

The next question that arises in the circumstances is the very peculiar obligations owed to those who are customers. For these people, there are no common law duties. Are they simply to be placed in the same category as everyone else under the Act? Perhaps! Let’s come back to “customers”.

 

The next group are the other parties to the agreement. They are strangers to the registrant. There are no fiduciary duties, or statutory service duties under the Code. So, what kind of copies should they get? The best document goes to the registrant’s principal. I suppose the next question is “what’s left”.

 

Meeting or exceeding the obligation would be the same documents mentioned above for the client (principal) if there were additional copies.

 

But, at the very least, the requirement under the Code, would be to provide a “true copy”. Remember that a photocopy is a true copy. That obligation would seem to be met, if the true copy were provided.

 

What about customers? Should they be elevated to the client level, or dropped down to the statutory stranger level? There are no cases discussing this point. Consequently, it is likely arguable that a registrant may provide a true copy to a customer and still be in compliance with his statutory obligations under the Code. It’s the common law which bumps up the duties for the agent representing a client.

 

There is one other section under the General Regulation, 567/05 which deals with this issue of copies of agreements:

 

         Copies of Agreements 

 

13.  (1) If a broker or salesperson represents a client who enters into a written agreement that deals with the conveyance of an interest in real estate, the broker or salesperson shall use his or her best efforts to deliver a copy of the agreement at the earliest practicable opportunity to the brokerage that employs the broker or salesperson.

 

(2)  Subsection (1) applies, with necessary modifications, to a broker or salesperson who has a customer, if the customer and the brokerage that employs the broker or salesperson have an agreement that provides for the brokerage to provide services to the customer in respect of any agreement that deals with the conveyance of an interest in real estate.

 

This simply means that the sales representative should submit a copy of the agreement to the brokerage. The reason this provision is included is because the brokerage is not a party. Again, you will notice the best efforts’ limitation.

 

Parties

 

As we look through the various issues here, we have to determine who is a party and who is not a party. A vendor and if there is more than one vendor, then all vendors are parties. A purchaser, and if there is more than one purchaser, then all purchasers are parties.

 

A spouse executing a spousal consent under the agreement is a party. The spouse is not conveying an interest in land, but they are agreeing to release their rights, and give up possession of the property on the day of closing. They have executed the agreement under seal, and that makes the agreement enforceable as against them.

 

What kind of copy should they have? They don’t need an original, a “true copy” should be sufficient. Since they are not represented, there is no need for them to have the “best copy” that the agent has in his possession.

 

The next question is the registrant, who is personally present, the brokerage which is the agent in law for the parties, and the client’s lawyer who may or may not be identified in the document.

 

None of these individuals, notwithstanding their interest, and their subsequent duties that may arise following the agreement are “parties”. That means they don’t get copies as “parties”.

 

I’m not saying that they shouldn’t have a copy at all, it’s just when the originals etc. are in short supply, they are not on the list. And, they don’t come in as parties under s. 28 of the Code.

 

Acceptable Alternatives (with informed consent)

 

Even though there are common law and statutory obligations, it is possible for a Principal to issue alternate instructions. A principal could say to his agent: “you keep my original document”. In some case, this is preferable because the Principal is moving, does not have a proper office or lacks the ability to maintain the document is safe custody.

 

In such situations, the principal may say my real estate brokerage (my agent), or my lawyer (also my agent) should hold the original document. Nevertheless, the principal must know, understand and appreciate that they have the right to the original.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

 


Tagged with: copies original true executed signed certified notarial photocopies counterparts
| | Share

Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Powered by Lone Wolf Real Estate Technologies (CMS6)