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Brian Madigan LL.B., Broker

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

96 Rexdale Blvd. 
Toronto, Ontario 

Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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Hundreds of Real Estate Agreements are at RISK!

June 29, 2015 - Updated: June 29, 2015

Real Estate Agreements - at RISK!


Actually, it could be thousands. But, for the moment let’s concentrate upon the problem.


The Electronic Commerce Act is being amended on Canada Day to permit digital agreements and e-signatures. In Ontario, we have been waiting 2 years for this section of the Act to be proclaimed and other jurisdictions have allowed this for over a decade.


So far, so good, what’s the problem?


The issue revolves around the fact that many lost sight of the fact that digital agreements and e-signatures were NOT permissible. So, they were using them anyways. They just went ahead. Other jurisdictions used them. Software was easily available over the internet. They could indeed be used for all kinds of real estate agreements, just not the actual Agreement of Purchase and Sale.


And, of course, there were some very good “work-arounds”, all of which were efficient and saved both time and expense.


I suppose many people simply forgot! They heard that the legislation was changed in June 2013, and they never realized that the legislation had not been proclaimed in force. They never appreciated that this new authorization was “on hold”.


The result, of course, is that there are many deals out there with ineffective paperwork. It looks like an agreement, however it’s not.


Authorized Use (other documents)


You can easily use digital formats for Listings, Buyer Representation Agreements, and other common documents in a real estate transaction.


Authorized Use (related documents to the Agreement of Purchase and Sale)


Once the Agreement is in place, all kinds of other documents might flow in digital format, Waivers, Fulfillments, Notices and the like.


Authorized Use (documents BEFORE the Agreement of Purchase and Sale)

These are actually the lead up documents to the actual Agreement of Purchase and Sale. These are the series of Offers, Counter-Offers and so on. They are still permissible because they do not transfer an interest in land.


IMPROPER USE – The Agreement of Purchase and Sale


This was the problem! This is the new authorized arrangement effective 1 July 2015.


That truly means NOT BEFORE 1 July 2015.


This is the provision which is to be deleted from the Act:


“4. Documents, including agreements of purchase and sale,  that create or transfer interests in land and require registration to be effective against third parties.”


Consequently, nothing really happened with Offers and Counter-offers going back and forth. There was no deal. There was no creation or transfer of an interest in land. That only occurred upon ACCEPTANCE.


It was the acceptance of the Offer which resulted in the Agreement of Purchase and Sale. The Agreement “created and transferred the interest in land”.


The Authorized “Work-Around”


Here’s a procedure which would work:


·        Offer from Buyer by email

·        Counter Offer from Seller by Email

·        Further Counter Offer from Buyer by email

·        ACCEPTANCE by Seller, by fax or hard copy


This arrangement for negotiations works quite well. Right to the very last moment email is utilized. Then, we have to switch over to a fax machine (or deliver a hard copy).


Ongoing RISK


Many deals were struck by digital arrangements. If they took place before 1 July 2015, then they are unenforceable. They are not “agreements”, they just look like “agreements”. This bad paperwork could come back to haunt someone.


My guess would be in the hundreds, but it could easily be in the thousands.


Consider the opportunity to a Buyer with a long closing who thinks he paid too much?


Consider the opportunity to a Seller with a long closing who thinks he sold for too little?


If you find yourself in a situation similar to this, you should seek legal assistance from a lawyer who is familiar with this area of the law.


Brian Madigan LL.B., Broker

Tagged with: contracts risk unenforceable bill 55 digital offers e-signatures ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

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