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

RE/MAX West Realty Inc.,
Brokerage
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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Number of Copies and Distribution (1 original)

May 27, 2013 - Updated: May 27, 2013

 

  

 

 

Let’s have a look at an actual real estate transaction and see what happens with the copies of the agreement.

 

Assume the following:

 

  • Vendor: Robert Smith

 

  • Spouse of Vendor: Mary Ann Castlemore

 

  • Purchasers: William and Martha Jones

 

  • Vendor’s agent: ABC Realty Inc.

 

  • Vendor’s sales representative: Lorne Wycliffe

 

  • Vendor’s lawyer: Bob Seemore

 

  • Purchasers’ agent: XYZ Realty Inc.

 

  • Purchasers’ sales representative: Harold Wilson

 

  • Purchasers’ lawyer: C. J. Radcome

 

  • Property: matrimonial home

 

If everyone mentioned were to receive a copy, we would need 9, and we all know that is not going to happen.

 

So, who gets the copies, and what kind of copies do they get?

 

Let’s divide the transaction into two sides: the vendor’s and the purchasers’.

 

Vendor

 

On the assumption that we have one original signed Offer presented and accepted, then Lorne Wycliffe is in physical possession of the Genuine Original:

 

  1. he is under a common law duty to deliver the best copy in his possession to his client, that is, his principal, Robert Smith and that document happens to be the genuine original,
  2. Before delivery, he has certain duties imposed by the Code and the General Regulation under REBBA, 2002,
  3. First, he makes true copies for all parties to the agreement (s. 28 Code), and those copies are delivered as soon as practicable,
  4. Then, he makes a true copy for his brokerage (s. 13 Gen. Reg.), and that copy is delivered as soon as practicable,
  5. Mary Ann Castlemore is unrepresented, she is not on title, but she signed the spousal consent and she is therefore a party to the agreement, so Lorne delivers a true copy to her,
  6. Lorne forwards a true copy to the other sales representative, Harold Wilson, as required by the Code (s. 7 (1)), this is the copy for Harold’s client, the purchasers, William and Martha Jones.
  7. Lorne forwards a true copy to Bob Seemore, the vendor’s lawyer, as authorized under the agreement.

 

At this point, Lorne Wycliffe has complied with his obligations at common law, his obligations under REBBA, 2002, and his contractual authorization.

 

Purchasers

 

On the assumption that we have one original signed Offer presented and accepted, Lorne Wycliffe is in physical possession of the Genuine Original, and has forwarded a "true copy" to Harold Wilson :

 

  1. Harold Wilson is under a common law duty to deliver the best copy in his possession to his client, that is, his principals, William and Martha Jones, and that document happens to be true copy of the original,
  2. Harold’s duties to both his clients are independent of one another, so given that he only has a true copy, then he doesn’t have to choose between them as to who gets the copy and who gets the original,
  3. Before delivery, he has certain duties imposed by the Code and the General Regulation under REBBA, 2002,
  4. First, he is to ensure that all parties to the agreement (s. 28 Code), have copies and those copies are delivered as soon as practicable, but given that Lorne Wycliffe acts for the Vendor, he need not concern himself with the vendor,
  5. Mary Ann Castlemore is unrepresented, she is not on title, but she signed the spousal consent and she is therefore a party to the agreement, and Lorne Wycliffe possibly has delivered a true copy to her. Harold Wilson is to ensure that Lorne has in fact accepted that responsibility,
  6. Then, Harold makes a true copy for his brokerage (s. 13 Gen. Reg.), and that copy is delivered as soon as practicable,
  7. Harold forwards a true copy to C.J. Radcome, the lawyer for the purchasers, as authorized under the agreement.

 

At this point, Harold has complied with his obligations under REBBA, 2002 and the contractual authorization.

 

Discussion

 

 

In my opinion, Harold falls short of his fiduciary common law duties. The best copy that he got was a true copy. He should have stepped up his game and had a genuine original, signed or executed copy. That’s the document that his clients would need to have to go to Court, should litigation be necessary.

 

Both William Jones and Martha Jones were clients. So effectively, he would need two signed copies for them. But, if he only has one, it’s reasonable that they provide him with authority (upon an informed consent basis) to deliver the signed copy to one of them, and a true copy to the other.

 

It is interesting that Harold has a specific duty under the Act to Mary Ann Castlemore. She’s unrepresented, so Harold should ask whether Lorne is providing any services, or has any other legal relationship with her. If so, then it would be reasonable to have Lorne deliver the copy to her. If not, then, Harold should inquire whether Lorne intends to deliver a copy to her.

 

This next step, can go either of two ways. Lorne could say: “well, of course…. she’s my client’s wife… she lives in the house…”.

 

Or, we could have a slightly different response. Lorne could say: “well, that’s a good question…. I never thought of that…they are separated…she’s living in the house…they deal with each other through their lawyers…I suppose my client, Robert Smith will get a copy to her if she needs one”.

 

Harold’s duty under REBBA, 2002 is to ensure that Mary gets a copy. If Lorne will do it, then Harold should record this fact in his file, and he has fulfilled his responsibilities.

 

However, if Lorne has really no contact whatsoever with Mary and seems surprised and reluctant to get a copy to her, then Harold under s.28 of the Code is under a duty to “ensure” that she gets a copy. Let’s fast forward to the closing date, and she’s still there. William and Martha Jones approach the house, and Mary says she never, ever heard what the closing date was to be. She signed off on the spousal consent but no one ever told her what day was scheduled for closing . And, her lawyer didn’t know either.

 

So, at the very least, in these circumstances, Harold should be able to say that he delivered a copy to her, or alternatively he has an email in his file from Lorne confirming that Lorne will deliver a copy.

 

There is a requirement to use current forms (see s. 34 Code):

 

        Current forms

 

34. A registrant shall ensure that forms used by the registrant in the course of a trade in real estate are current.

 

If you have a look at the standard form Agreement of Purchase and Sale, presently in use in Ontario developed by OREA, you will find after the signature lines for the various parties the following:

 

 

“I acknowledge receipt of my signed copy of this accepted Agreement of Purchase and Sale and I authorize the Brokerage to forward a copy to my lawyer.”

 

This provision is duplicated and there is one for the vendor and another for the purchaser to complete. The lines that follow require inclusion of the lawyer’s contact particulars.

 

But, before we have a look at the lawyer’s role, let’s have another look at that statement. It says “signed copy”. So, the vendor completed the document and acknowledged receipt of his “signed copy”. And, he received the genuine original, which means that Lorne has discharged his responsibility.

 

Kindly note that if this part of the document was not completed, that is, the vendor had not included any information about his lawyer, then there would be no such duty.

 

Also, this provision says “authorize” which basically means “permission”. It is not strictly speaking the delegation of a task. That matter was intentionally left vague by the draftsman.

 

Further, the listing agreement is not helpful on this point. It does not address this issue (nor does the Buyer Representation Agreement).

 

The purchasers’ representative, Harold, falls short whether or not he amended this provision. He gave his clients, the best copy which he had, that being a “true copy”, but not a “signed copy”. Even if he amended this statement accurately, it would not have exonerated him from his duty at common law to secure a genuine copy, an executed copy or a signed copy. A “true copy” is just not good enough.

 

The duty to deliver a copy to the solicitor is possibly contractual. However, it is entirely likely that the duty exists at common law. The purchasers were clients, and that means the fiduciary duties come into play. At the very least, Harold should ensure that C.J. Radmore has a copy. The sales representative knows that the purchasers’ solicitor needs the document at once. The title needs to be searched and time limits are approaching under the agreement. It is not for the sales representative to say that the lawyer has enough time. If there is a serious title issue, then time will likely be insufficient.

 

A purchaser’s agent would be hard pressed to argue that he complied with all his duties, if he failed to ensure that the lawyer got a copy.

 

A similar argument can be made in favour of the duty and requirement on the part of the vendor's agent to get a copy to the vendor's lawyer. While it may not be quite as urgent in most cases, it is always important and can be urgent. It is impossible to know in advance which cases are urgent. Clearly, any title defect which requires attention, including investigation and a Court Order is likely urgent.

 

It should also be noted in the OREA statement, that the authorization was made in favour of the Brokerage, and not the sales representative.

 

 

COMMENT

 

As you can see, in what might otherwise be a very simple transaction, working with, and only having one genuine, signed or executed copy can be risky.

 

If you were Harold, ask to hold the genuine original, or at the very least get signed, executed copies before the deal is “done”. And, be sure the lawyer gets a copy as soon as possible.

 

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

 

 


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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

BRMadigan@Rogers.com

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