CLAUSES & PHRASES 2012 FOR USE WITH CONTRACTS OF PURCHASE AND SALE

CLAUSES & PHRASES 2012 FOR USE WITH CONTRACTS OF PURCHASE AND SALE

ASSOCIATION OF SASKATCHEWAN REALTORS CLAUSES AND PHRASES FOR CONTRACTS OF PURCHASE AND SALE 2012 EDITION

ACKNOWLEDGEMENTS The Association of Saskatchewan REALTORS (ASR) wishes to thank the Ontario Real Estate Association for sharing their educational materials in regards to clauses and phrases. GENERAL DISCLAIMER AND CAUTION TO USER: The Association of Saskatchewan REALTORS (ASR) has developed these clauses and phrases for use by ASR members in the preparation of Contracts of Purchase and Sale. The clauses and phrases, which are contained herein, are provided solely for the purpose of guidance and do not in any way constitute required wording. TAKE NOTE THAT EVERY REAL ESTATE TRANSACTION IS UNIQUE AND THE ASSOCIATION OF SASKATCHEWAN REALTORS DOES NOT WARRANT AND IS NOT RESPONSIBLE IN ANY WAY FOR THE ADEQUACY, SUFFICIENCY, APPLICABILITY, ACCURACY OR SUITABILITY OF ANY OF THE CLAUSES OR PROVISIONS HEREINAFTER SET OUT. FURTHER, THE ASSOCIATION OF SASKATCHEWAN REALTORS ASSUMES NO LIABILITY FOR THE UTILIZATION OF ANY OF THE CLAUSES OR PHRASES HEREINAFTER SET OUT. The real estate professional is encouraged to seek expert advice in the drafting of agreements. COPYRIGHT Revised May, 2012 Association of Saskatchewan REALTORS SASKATOON, SK S7J 2V8 Phone: 306.373.3350 Toll-free: 1.877.306.7732 Fax: 306.373.5377 Email: info@saskatchewanrealestate.com Website: www.saskatchewanrealestate.com ii

TABLE OF CONTENTS FOREWORD... vi IMPORTANT INSTRUCTIONS TO USERS... vii INTRODUCTION... x A. CLAUSES AND PHRASES 1. RESIDENTIAL (RES)... 1 AGENCY... 1 AGEN-1 Seller to Only Pay Seller s Brokerage... 1 AGEN-2 Buyer Pays Buyer s Brokerage... 2 AGEN-3 Buyer s Agent Paid by Both the Seller s and Buyer s Brokerages... 2 AGEN-4 Limited Dual Agency/Disclosure of Payment... 2 AGEN-5 Not in Limited Dual Agency... 3 AGEN-6 Single Agency/Buyer as Customer and Seller as Client... 3 AGEN-7 Single Agency/Seller as Customer and Buyer as Client... 3 AGEN-8 Registrant Disclosure Buying/Selling... 4 BUILDINGS/CONSTRUCTION... 5 BUILD/CONST-1 Condition Obtaining Building Permit... 5 BUILD/CONST-2 Walk-Through Inspection Deficiency List Clause... 5 BUILD/CONST-3 Seller to Complete/Repair Deficiencies... 5 BUILD/CONST-4 Confirmation New Home Warranty... 6 BUILD/CONST-5 Seller Warranty Against Structural Defects... 6 BUILD/CONST-6 Seller Warranty Work/Materials... 6 CONDOMINIUM... 7 CONDO-1 Condominium Plan Not Registered/Contract Signed... 7 DEPOSITS/PAYMENTS... 8 DEP/PAY-1 Deposit Trust Account... 8 DEP/PAY-2 Amount of Deposit... 8 DEP/PAY-3 Conditional on Deposit... 8 DEP/PAY-4 No Deposit Provided... 9 DEP/PAY-5 Deposit Increase On Removal of Condition(s)... 9 DEP/PAY-6 Conditional on Deposit Increase... 9 DEP/PAY-7 Deposit Interest Bearing... 10 DEP/PAY-8 Conditional on Lawyer Approval/Holding of Deposit... 10 i

ENVIRONMENTAL... 11 ENV-1 Agricultural Activities Acknowledgement... 11 ENV-2 Buyer Accepts Building/Property in Present Condition... 11 ENV-3 Seller s Remedy of Condition... 11 ENV-4 Non-existence of Condition... 12 ENV-5 Condition Acceptance Level... 12 ENV-6 Conditional on Site Inspection/Report... 12 ENV-7 Growth or Manufacture of Illegal Substances Acknowledgement... 13 ENV-8 No Growth or Manufacture of Illegal Substances - Warranty... 13 ENV-9 No Illegal Activity - Warranty... 13 ENV-10 Condition Oil Tank Aboveground or Underground... 14 ENV-11 Underground Tank Seller has Removed... 14 ENV-12 Underground Tank Seller to Remove... 14 ESTATE SALE... 15 EST-SAL-1 Conditional on Letters Probate/Consent... 15 GOODS AND SERVICES TAX CLAUSES (GST)... 16 GST-1 Conditional on Buyer/Seller Receiving and Approving GST Information... 16 GST-2 Buyer to Pay GST... 18 GST-3 Seller to Pay GST/Buyer to Assign Rebate... 18 GST-4 Eligibility for GST Rebate... 18 GST-5 GST Not Included... 19 GST-6 GST in Addition To... 19 GST-7 Not Subject to GST... 19 GST-8 Buyer to Remit GST... 20 INSPECTION OF PROPERTY... 21 INSP-1 Condition Inspection of Property by a Home Inspector... 21 INSP-2 Condition Inspection of Property by a Home Inspector Condo... 21 INSP-3 Buyer Right of Re-Inspection... 21 INSURANCE... 22 INS-1 Approval of Fire/Property Insurance... 22 INS-2 Buyer Acknowledgement of Woodstove/Fireplace... 22 INS-3 Conditional on Confirmation of Valid Insurance for Woodstove/Fireplace... 22 ii

MORTGAGES... 23 MORT-1 Conditional on New Mortgage... 23 MORT-2 Conditional on New Mortgage with Existing Mortgagee... 23 MORT-3 Discharge of Existing Mortgage Seller to Pay... 23 MORT-4 Conditional on Assumption of Existing Mortgage (Mortgagee Approval)... 24 MORT-5 Assumption of Existing Mortgage (No Approval)... 24 MORT-6 Conditional on Seller Take Back Mortgage... 25 MORT-7 Conditional on Legal Advice Agreement for Sale... 25 MORT-8 Conditional on Legal Advice Lease with Option to Purchase 26 MORT-9 Buyer to Bear Costs Agreement for Sale or Seller to Take Back Mortgage... 26 MORT-10 Buyer Credit Report... 26 MORT-11 Payment in Advance... 26 MORT-12 Conditional on the Appraisal Equal Greater Purchase Price 26 MORT-13 Buyer Acknowledges Finder Fee... 27 MORT-14 Conditional on Seller Taking Buyer s Property in Trade... 27 PROPERTY CONDITION DISCLOSURE STATEMENT... 28 PCDS-1 Incorporation of Property Condition Disclosure Statement/Contract... 28 PCDS-2 Conditional on Incorporation of Property Disclosure Statement/Contract... 28 REAL PROPERTY REPORT... 29 RPR-1 Seller to Provide Existing Real Property Report... 29 RPR-2 Conditional on Seller to Provide New Real Property Report... 29 RPR-3 Buyer to Obtain Real Property Report... 29 RELATIVE/ADVISOR/LEGAL/FINANCIAL APPROVAL... 30 APP-1 Conditional on Contract Approval... 30 APP-2 Conditional on Viewing by Third Party... 30 APP-3 Conditional on Legal Advice... 30 APP-4 Conditional on Financial Advice... 30 RENT/SALE OF PROPERTY... 31 RENT-1 Confidentiality of Disclosed Rental Information... 31 RENT-2 Seller Warranty Tenancy Information... 31 RENT-3 Seller Warranty Tenancy Information... 32 RENT-4 No Rent Increases Pending Completion of Sale... 32 RENT-5 Notices to Tenants of New Owner... 32 RENT-6 Buyer Assumption of Existing Tenancy... 33 RENT-7 Conditional on Seller as Tenant... 33 RENT-8 Seller Notice to Tenant(s)... 33 RENT-9 Conditional on Documentation/Legality of Suite... 33 RENT-10 Unauthorized Accommodation... 33 iii

SALE OF BUYER S PROPERTY... 34 SBP-1 Conditional on Sale of Buyer s Property... 34 SBP-2 Conditional on Sale of Buyer s Property Option Clause... 34 SBP-3 Conditional on Sale of Buyer s Property/to be Listed Option Clause... 34 SBP-4 Conditional on Completion of Sale of Buyer s Property... 35 SBP-5 Conditional on Seller s Release from Previous Offer to Purchase... 35 SBP-6 Conditional on Seller Purchase... 35 SEWER/WATER... 36 SEW/WAT-1 Water Supply Seller to Provide Bacteriological Analysis... 36 SEW/WAT-2 Conditional on Buyer Acceptance of Quality/Quantity of Water... 36 SEW/WAT-3 Water Supply All Well Types Warranty... 37 SEW/WAT-4 Seller s Warranty/Proper Installation of Sewage System... 37 SEW/WAT-5 Sewage Systems Good Working Order - Warranty... 37 SEW/WAT-6 Conditional on Buyer Acceptance of Septic System... 38 SWIMMING POOLS... 39 SWIM-1 Seller Warrants Condition of Pool... 39 SWIM-2 Seller Warrants Legislative Compliance... 39 SWIM-3 Seller Responsible for Winterizing Pool... 39 TITLE... 40 TITLE-1 Buyer Acceptance of Information on Title... 40 UREA FORMALDEHYDE INSULATION (UFFI)... 41 UFFI-1 Acknowledgement UFFI Present in Building... 41 UFFI-2 The Seller Has No Knowledge of UFFI... 41 UFFI-3 UFFI Found But Corrective Action Taken... 41 UFFI-4 UFFI Removed from Building... 42 UFFI-5 UFFI Test Performed with Negative Result... 42 UFFI-6 UFFI Test Positive But Within Acceptable Limits... 42 ZONING... 43 ZON-1 Conditional on Buyer Confirmation of Zoning... 43 ZON-2 Conditional on Buyer Acquiring Zoning Changes... 43 ZON-3 Zoning Warranty by the Seller... 43 iv

2. INVESTMENT, COMMERCIAL AND INDUSTRIAL PROPERTIES... 44 ICI-1 Conditional on Lawyer s Approval of Documentation... 44 ICI-2 Conditional on Lawyer s Approval of Contract... 44 ICI-3 Conditional on Approval of Financial Statements... 44 ICI-4 Buyer Purchasing Business Assets... 45 ICI-5 Conditional on Buyer Approval Upon Receipt/Financial Statements... 45 ICI-6 Seller Warrants No Financial Statements... 45 ICI-7 Inventory Included in Purchase Price... 46 ICI-8 Inventory Not Included in Purchase Price... 46 ICI-9 Conditional on Determination of Inventory... 46 ICI-10 Conditional on Buyer Arranging Satisfactory Lease... 47 ICI-11 Conditional on Buyer Approving/Assuming Existing Lease... 47 ICI-12 Conditional on Landlord Approval/Assignment of Lease... 47 ICI-13 Conditional on Buyer Approval/Franchise Agreement... 47 ICI-14 Conditional on Franchisor s Approval/Assignment of Franchise... 48 B. COMPLETION GUIDELINES FOR THE SEVEN MANDATORY FORMS 1. RESIDENTIAL CONTRACT OF PURCHASE AND SALE... 49 2. COUNTER OFFER TO RESIDENTIAL CONTRACT OF PURCHASE AND SALE... 53 3. NOTICE TO REMOVE CONDITION(S) ON RESIDENTIAL CONTRACT OF PURCHASE AND SALE... 54 4. SCHEDULE C... 56 5. DISCLOSURE OF INTEREST IN TRADE... 57 6. ANCILLARY SERVICES IN THE PURCHASE OF RESIDENTIAL REAL ESTATE... 59 7. AMENDMENT TO RESIDENTIAL CONTRACT OF PURCHASE AND SALE... 60 v

FOREWORD The Association of Saskatchewan REALTORS can best fulfill its responsibility and role in organized real estate by ensuring that all persons engaged in real estate have an opportunity to be properly trained and well informed, and thereby better serve the public in a professional manner. To this end, this series of clauses and phrases is provided to complement the growing list of educational programs, reference materials, online instruction and standard forms available to the general membership. vi

IMPORTANT INSTRUCTIONS TO USERS a) Typed/Written Supersedes Printed: Any clauses added to the body of the offer will supersede any information in the pre-printed form. Care must, therefore, be taken with any inclusions. b) Conditions Versus Warranties/Representations: The decision to utilize a condition, warranty, or other representation will depend largely on circumstances. The vast majority of clauses are presented in condition format, however, various warranty examples have been included as well. The reader should note that most warranties included are made to the best knowledge and belief of the Seller. Many variations exist in the marketplace and caution is advised when using warranties and representations. c) Subject to Clauses: It is always important to be clear on whether a condition you are putting into an offer to purchase is a condition precedent or not. A condition precedent refers to a condition that must be fulfilled for the offer of purchase to be complete. In general, these clauses are used to deal with preliminary matters, such as financing, inspections or the sale of the Buyer s home. Usually, these conditions are so important that if they are not satisfied or waived in writing, the deposit is returned to the Buyer and the contract is void. Whereas, when the conditions of the offer have been satisfied, or waived in writing (with the agreement of both parties) and the Buyer defaults, the Seller is entitled to retain the deposit. A subject to clause does this. When utilizing subject to clauses, be as specific as possible. Ensure that a date is inserted for satisfaction or removal of these conditions. vii

d) Terms of the Contract: Terms are important inclusions to the offer, e.g., possession date, what chattels remain. While these terms are enforceable as part of the contract for which the parties can sue and be sued the sale does not automatically cancel if not adhered to. Subject to clauses are usually not used for the terms of the contract to be performed on the closing date, such as appliances to be included in the sale, because you would not want the sale to be automatically cancelled if the seller, on closing, failed to leave the fridge and stove. e) Alternative Wordings: In certain instances, alternative wordings are provided for the same general topic area. Users should carefully read all possibilities and revise as required to meet individual circumstances. f) Capitalized Words: The first letter of selected words has been capitalized for emphasis only (i.e. Buyer, Seller, Buyer s Brokerage, Seller s Brokerage, etc.) and should not be viewed as a required format. g) Use of Pronouns: This text should be read with all changes of gender and number as the reader may feel is required. h) General Revocation of Offer/Counter Offer o until acceptance is communicated in writing, there is no acceptance. Therefore, prior to acceptance being communicated, the offer or counter offer can be revoked. viii

Agency Relationships o all members are required to fully disclose their agency relationship with their client in writing and receive acknowledgement in writing, on all transactions, ideally, at their first significant meeting. Legal Counsel o the parties to the transaction in most instances should be represented by their own separate lawyer to avoid a conflict of interests, etc. If a problem occurs they cannot both be represented by the same lawyer or firm. ix

INTRODUCTION CONTRACTS OF PURCHASE AND SALE Poorly drawn Contracts of Purchase and Sale are a significant problem in real estate practise. As with any contract, the purpose of each item included must be clear and so specific that there is no misunderstanding possible with regard to who will do what and by what date. Drawing upon the experiences of many practitioners and jurisdictions, the Association has collected some samples of clauses intended to meet various situations confronted in real estate practice in the hope that members will find them of use. When in doubt on any issue, members are advised to seek the advice of their broker, sales manager, etc., and if necessary, a lawyer. A slight delay or extra expense at an early stage may help to prepare an enforceable contract. This care may prevent the loss of a sale (and of commission) and reduce the chance of misunderstanding and litigation. Members must be familiar with the form of contract they use and be knowledgeable as to how to use the necessary clauses and phrases. No clause should be used without due consideration as to its meaning and effect. Clauses must be tailored to suit the needs of the parties. While the sample clauses are useful in many circumstances, they should be used only as a guide. It is important that the applicable clause be reviewed prior to inserting it into a contract, to ensure that the clause is suitable for the circumstances of the particular situation. The clauses must clearly and accurately reflect the intentions of the parties. The sample clauses may need to be altered accordingly. Members must recognize their limitations and refrain from negotiating contracts beyond the scope of their knowledge and experience. Such expertise results from training and study. All members are urged to participate in educational programs to keep their skills current. x

MANDATORY CONTRACT OF PURCHASE AND SALE The Saskatchewan Real Estate Commission mandates that registrants use the Residential Contract of Purchase and Sale developed for use in Saskatchewan, for all types of singlefamily dwellings, duplexes, mobile homes (on leased or owned property), re-sale condominiums and homes under construction. xi

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1. RESIDENTIAL AGENCY The Association has instituted forms and procedures utilized for agency disclosure consisting of a brochure, a limited dual agency acknowledgement form and written brokerage contracts. When using the Agency Disclosure brochure, the member should keep the signed portion in the client s file as proof that the agency information was provided to and acknowledged by the client. BUYER BROKERAGE Where the commission to be paid to the Buyer s Brokerage is to be paid exclusively by the Buyer, the Seller and Seller s Brokerage should be made aware of this method of payment as the Buyer s Brokerage waives the right to be paid through the Seller s Brokerage Contract (which normally will be reflected in the amount that the Buyer offers for the property) and the Buyer and Buyer s Brokerage should acknowledge this as well. AGEN-1 Where, as a result of the Buyer s Brokerage being paid exclusively by the Buyer, the Seller s Brokerage agrees to reduce the total commission payable under the Exclusive Seller s Brokerage Contract in this particular situation, i.e., the amount of the commission that was being offered to the Buyer s Brokerage, the following wording might be utilized on the ASR Amendment of an Exclusive Seller s/landlord s Brokerage Contract. Seller to Only Pay Seller s Brokerage The Seller s Brokerage agrees to reduce the commission payable by the Seller to % of the sale price. 1

AGEN-2 Buyer Pays Buyer s Brokerage Seller, Seller s Brokerage, Buyer and Buyer s Brokerage acknowledge that provided this sale closes, the total commission payable to the Buyer s Brokerage is being paid exclusively by the Buyer. Where the Seller s Brokerage and the Buyer s Brokerage are both involved in paying of commission, the Seller and Buyer must acknowledge that the Buyer s agent is being paid by both. AGEN-3 Buyer s Agent Paid by Both the Seller s and Buyer s Brokerages Seller and Buyer acknowledge that the Buyer s agent is being paid commission by both the Seller s Brokerage and the Buyer s Brokerage. Where a Limited Dual Agency relationship is in effect the Brokerage must disclose all commissions being paid by the Seller and Buyer. AGEN-4 Limited Dual Agency/Disclosure of Payment The Seller and Buyer acknowledge that the Seller s and Buyer s Brokerage is being paid commission in the amount of $ by the Seller and commission in the amount of $ by the Buyer. Occurs when offices belong to the same corporate franchises but are not part of the same Brokerage. 2

AGEN-5 Not in Limited Dual Agency Buyer and Seller acknowledge that although the Buyer s Brokerage and the Seller s Brokerage operate within the same corporate franchise, they are separate Brokerages, and therefore are not in a Limited Dual Agency relationship with the Buyer or Seller. The transaction may include a client (to whom agency obligations are owed) and a customer (to whom no agency obligations are owed, but the obligations to exercise care and skill, provide a limited duty of care, and ensure honestly exists). This type of relationship is known as single agency. AGEN-6 Single Agency/Buyer as Customer and Seller as Client The Buyer hereby acknowledges that the Brokerage is the Agent of the Seller, representing the interest of the Seller, and the Buyer consents to proceed with this transaction, as an unrepresented party. AGEN-7 Single Agency/Seller as Customer and Buyer as Client The Seller hereby acknowledges that the Brokerage is the Agent of the Buyer, representing the interest of the Buyer, and the Seller consents to proceed with this transaction, as an unrepresented party. REGISTRANT DISCLOSURE REQUIRED Disclosure required for the acquisition, disposition, rental or lease of real estate involving the registrant, an associate, or an immediate family member. Utilization of the mandatory form, Disclosure of Interest in Trade. 3

AGEN-8 Registrant Disclosure Use of Disclosure of Interest in Trade form 4

BUILDINGS/CONSTRUCTION BUILD/CONST-1 Condition Obtaining Building Permit This offer is subject to the Buyer determining, at the Buyer s expense, that a building permit for the structure indicated on Schedule attached is available with respect to the property by, 20. BUILD/CONST-2 Walk-Through Inspection Deficiency List Clause The Buyer and the Seller (or technical representative of the Seller) together will conduct a walk-through inspection of the property no later than (number of days) before the Completion Date. Immediately after completion of the walk-through inspection, a deficiency list of mutually agreed upon items to be remedied by the Seller will be completed. The list will include a mutually agreed upon value of the deficiencies to be remedied. Both the Buyer and the Seller will sign, date, and retain a copy of the deficiency list. BUILD/CONST-3 Seller to Complete/Repair Deficiencies The Seller at his expense will complete and/or repair the items specified on the attached deficiencies list and valued at $. The list forms a part of this contract. The quality of workmanship and materials used will be equal to or better than that of the surrounding construction. The Buyer will hold back from the sale proceeds the amount specified in the deficiency list until all the deficiencies specified in the deficiency list are completed, and will place this holdback in the conveyancer s trust account. 5

BUILD/CONST-4 Confirmation New Home Warranty The Seller confirms being registered with the Saskatchewan New Home Warranty Program, and that the building (or the building to be built) on the property is (or will be) covered by the Warranty offered by that program. BUILD/CONST-5 Seller Warranty Against Structural Defects The Seller warrants the building against major structural defects (as defined herein) to a maximum of $(amount) for (number of years) year(s) from date of occupancy by the Buyer. Major structural defects means defects which adversely affect the load-bearing portion of the improvements. BUILD/CONST-6 Seller Warranty Work/Materials The Seller warrants the building against defects in quality of work and materials (as defined herein) to a maximum of $(amount) for (number of years) year(s) from the date of occupancy by the Buyers. Quality of work and materials means those incorporated into the construction by the Seller, its employees, and those trades and others contracted directly by the Seller. 6

CONDOMINIUM CONDO-1 Condominium Plan Not Registered/Contract Signed It is a fundamental term of this contract that a condominium plan for the property, in the form shown to the Buyer at the time of the signing of this contract, be fully registered in the appropriate Land Title Registry by Completion Date, whereby the Condominium Corporation is created when the titles are issued for the units. 7

DEPOSITS/PAYMENTS INITIAL DEPOSIT The Real Estate Act (Section 71(1)) contemplates that brokerages deposit into a trust account all money received by the brokerage in trust for other persons in connection with a trade in real estate, within two business days after the later of: i) the day on which an offer to purchase is accepted; and ii) the day on which the money is received by the brokerage. When there is a delay in receiving the deposit (authorized by the Buyer and Seller) the following clauses and phrases could be utilized. DEP/PAY-1 Deposit Trust Account Deposit to be placed in trust within hours of acceptance of this offer. DEP/PAY-2 Amount of Deposit Buyer to provide a deposit in the amount of $, by, 20. DEP/PAY-3 Conditional on Deposit This offer is subject to the Buyer providing a deposit in the amount of $, by, 20. 8

DEP/PAY-4 No Deposit Provided If the Buyer fails to pay the deposit money as required by this contract, the Seller may, at the Seller s option, terminate this contract. NSF DEPOSIT CHEQUES If a Buyer s cheque is returned NSF or is otherwise dishonoured, the Seller must be informed of this situation without delay. The Seller will then decide as to what course of action will be followed. DEPOSIT INCREASE To be used to add a further amount to the initial deposit. DEP/PAY-5 Deposit Increase On Removal of Condition(s) The Buyer will increase the deposit to $ upon removal of financing condition(s). DEP/PAY-6 Conditional on Deposit Increase This offer is subject to the Buyer increasing the deposit to $, by, 20. DEPOSITS TO BEAR INTEREST You should check with your manager as to the minimum amount of time and money your company requires in order to pay interest on a deposit. (Also, you may need your Buyer s or Seller s SIN for income tax purposes with respect to investing deposit monies; that information does not appear in the offer.) The Broker (Buyer s or Seller s) is required to have a Social Insurance Number before paying interest on deposits. 9

DEP/PAY-7 Deposit Interest Bearing This deposit is to be placed in an interest bearing account with the interest accruing to the benefit of the (Buyer/Seller). DEPOSITS HELD BY A PARTY OTHER THAN A REAL ESTATE BROKER Members may encounter Sellers, usually developers or builders, who require that deposits be payable to them or their legal representative. In addition, Buyers for whatever reason may want their deposit held by their lawyer, etc. It is suggested that legal advice be attained by the Buyer/Seller in these circumstances. DEP/PAY-8 Conditional on Lawyer Approval/Holding of Deposit This offer is subject to the (Buyer s/seller s) lawyer approving by, 20, the arrangements for holding the deposit money in this transaction. 10

ENVIRONMENTAL ENV-1 Agricultural Activities Acknowledgement The Buyer acknowledges that the property lies within, partially within, adjacent to or within kilometres of an area zoned, used or identified for agricultural and food production activities and that such activities occur in the area. These activities may include intrusive operations that cause discomfort and inconveniences that involve, but not limited to dust, noise, flies, light, odour, smoke, traffic, vibration, operating of machinery during any 24 hour period, storage and utilization of manure and the application by spraying or otherwise or chemical fertilizers, soil amendments, herbicides and pesticides. POTENTIAL ENVIRONMENTAL RISKS Members may encounter hazardous conditions that can affect the personal well-being of the buyer or seller. Examples include: asbestos, mould, lead, radon and contaminated lands. ENV-2 Buyer Accepts Building/Property in Present Condition The Seller discloses and the Buyer acknowledges, that the building/property contains (describe condition) and the Buyer accepts the building/property in this condition. ENV-3 Seller s Remedy of Condition The Seller discloses that although (describe condition) was known to have been in/on the building/property, such (condition) to the best of his/her knowledge was removed/remedied on, 20. As proof of the removal/remedy, the Seller attaches the following documents: 11

ENV-4 Non-existence of Condition The Seller discloses that the building/property was tested for (describe condition) on, 20, by (name of testing contractor/government authority). The results of the test indicated that no (describe condition) was present in/on the building/property. As proof of such testing, the Seller attaches the following documents: : ENV-5 Condition Acceptable Level The Seller discloses that the building/property was tested for (describe condition) on, 20, by (name of testing contractor/government authority). The results of such testing indicated that is acceptable and accordingly, no further action has been taken. As proof of such testing, the Seller attaches the following documents: ENV-6 Conditional on Site Inspection/Report This offer is subject to the Buyer receiving and being satisfied with a site inspection and report from (inspecting body/expert tester/government authority), concerning (describe condition) by, 20. 12

ENV-7 Growth or Manufacture of Illegal Substances Acknowledgement The Buyer acknowledges that the use of the property and buildings and structures thereon may have been for the growth or manufacture of illegal substances and acknowledges that the Seller makes no representations and/or warranties with respect to the state of repair of the premises and the Buyer accepts the property and the buildings and structures thereon in their present state and in an as is condition. ENV-8 No Growth or Manufacture of Illegal Substances Warranty The Seller represents and warrants that during the time the Seller has owned the property, the use of the property and the buildings and structures thereon has not been for the growth or manufacture of any illegal substances, and that to the best of the Seller s knowledge and belief, the use of the property and the buildings and structures thereon has never been for the growth or manufacture of illegal substances. ENV-9 No Illegal Activity Warranty The Seller represents and warrants that during the time the Seller has owned the property, the property and the buildings and structures thereon have not been used for any criminal use or activity, and that to the best of the Seller s knowledge the property and the buildings and structures thereon have never been used for any criminal use or activity. 13

ENV-10 Condition Oil Tank Aboveground or Underground This offer is subject to the Buyer obtaining a report stating that the tank system in, on or about the property is in a safe operating condition and complies with the regulatory requirements of The Hazardous Substances and Waste Dangerous Goods Regulations under The Environmental Management and Protection Act, 2002, and any other applicable regulations by, 20. ENV-11 Underground Tank Seller Has Removed The Buyer acknowledges that there was an underground fuel tank on the property that has been removed and the Seller agrees to provide to the Buyer at the Seller s expense by no later than, 20, evidence that the fuel oil tank has been removed, the soil surrounding the underground fuel oil tank has been assessed for contamination, cleaned and any contamination removed according to applicable regulatory regulations. ENV-12 Underground Tank Seller to Remove The Seller agrees, at the Seller s expense, to have the underground fuel oil tank on the property removed from the property by, 20, and thereafter to have the soil surrounding the underground fuel oil tank assessed for contamination and any contamination cleaned and removed according to applicable regulatory regulations, and to provide evidence of such. The grading and the landscaping on the property to be restored to its original condition or comparable condition prior to the removal of the said fuel oil tank. 14

ESTATE SALE EST-SAL-1 Conditional on Letters Probate/Consent This offer is subject to the Seller receiving Letters Probate and either a consent to the sale by all beneficiaries or a court order approving the sale by, 20. In instances where the completion of Letters Probate and the transfer of the title are delayed, possession may still be given. Certain factors now become very important to the entire transaction; e.g., the Buyer has to be concerned with the length of time his or her interest rate will be held for their mortgage, as significant time may pass before the mortgage is put in place. 15

GOODS AND SERVICES TAX CLAUSES (GST) NOTE 1: GST is applicable to: new properties; substantially renovated properties; properties where input tax credits have been claimed. NOTE 2: NOTE 3: The sale of large parcels of land and vacant land can be subject to capital gains and/or GST. This can depend upon: present and future use; who is selling and who is buying. EXPERT ADVICE SHOULD BE SOUGHT. Registrants are responsible for the accuracy of any advice they may provide concerning the application of GST to real estate transactions. Both the Buyer and the Seller should be advised that if they have any questions regarding GST liability, exemptions, or their right to apply for a rebate, they should contact a lawyer, accountant or the nearest Canada Revenue Agency (CRA) office which can also provide the registrant with current information. GST-1 Conditional on Buyer/Seller Receiving and Approving GST Information This offer is subject to the Buyer/Seller receiving and approving information or professional advice concerning his/her GST liability, GST exemptions, or GST rebates by,, 20. 16

GST: NEW HOUSING REBATES Registrants should be aware that GST is payable not only on new homes (including strata units and manufactured homes) but also on substantially renovated homes (i.e., more than 90% or more of the interior has been removed or replaced), as well. The GST New Housing Rebate falls under the Excise Act (Canada). Sellers of new homes use various ways to present the GST and the New Housing Rebate to prospective Buyers. There are now at least four different combinations that Buyers may face. Price includes GST; rebate to Builder Price includes GST; rebate to Buyer GST over purchase price, rebate to Buyer GST over purchase price, rebate to Builder It is the Buyer, however, who ultimately pays the GST, whether it is included in the purchase price or added to the price. It is also the Buyer who is entitled to the New Housing Rebate, which the Buyer can claim directly from CRA or assign to the Seller, who can claim it from CRA. If the rebate is transferred to the Seller, negotiations between the Seller and the Buyer should result in a saving to the Buyer of the equivalent amount in the purchase price; however, it is expressed as either GST included in, or added to, the purchase price. In the written Contract, registrants must clearly indicate whether or not GST is included and who is being paid the rebate (if applicable). Registrants should leave the calculation of the exact amounts to the lawyer acting as conveyancer (just as the lawyer calculates tax and utility adjustments, etc.). 17

GST-2 Buyer to Pay GST The Buyer confirms having received independent GST advice concerning the obligation to pay GST and will be responsible to pay any GST and apply for any new home rebate in connection with this transaction. SELLER S AGREEMENT TO PAY GST Many developers/builders have their own pre-printed GST clauses. A registrant working with an interested Buyer should ask for these clauses in advance of the offer and have the Buyer discuss them with independent counsel. GST-3 Seller to Pay GST/Buyer to Assign Rebate The Seller will pay any GST in connection with this transaction, and the Buyer will assign any new home rebate to the Seller. GST-4 Eligibility for GST Rebate The Buyer confirms that he or she is purchasing the property for use as a principle residence and hereby is entitled to the GST New Housing Rebate. The Seller and Buyer agree that the purchase price includes GST based on the Buyer assigning the Rebate to the Seller, and that the price reflects the credit given by the Seller to the Buyer for this assignment. The Buyer agrees to sign the Rebate application and any other documents necessary to have the Rebate paid or credited to the Seller. 18

AGRICULTURAL SALES Many agricultural sales attract GST. Both the Buyer and Seller need to be aware of what transpires if GST is payable and whether it is included in the purchase price or not. GST-5 GST Not Included The purchase price does not include GST. In the event that GST is payable and the Buyer is not a GST registrant, then the Buyer shall remit the applicable GST to the Seller s laywer on or before completion date. COMMERCIAL SALES All sales of commercial properties are subject to tax. A number of different clauses and phrases have been drafted to accommodate commercial sales and GST. GST-6 GST in Addition To If this transaction is subject to GST, then such GST shall be in addition to and not included in the purchase price, and GST shall be collected and remitted in accordance with applicable legislation. GST-7 Not Subject to GST The Seller warrants that this transaction is not subject to GST and agrees to provide on or before closing to the Buyer or Buyer s solicitor a certificate satisfactory to the Buyer or Buyer s solicitor certifying that the transaction is not subject to GST. 19

GST-8 Buyer to Remit GST No GST shall be paid by the Buyer to the Seller on closing provided the Buyer shall provide a GST enrolment and undertake to self assess and remit as required by the applicable legislation. 20

INSPECTION OF PROPERTY INSP-1 Condition Inspection of Property by a Home Inspector This offer is subject to the inspection of the subject property by a home inspector at the Buyer s own expense, and the obtaining of a report satisfactory to the Buyer by, 20. The Buyer may choose for various reasons, rather than to check out the entire property to focus in on specific areas such as the furnace or chimney, type of insulation, fireplace, plumbing, the electrical system, air quality, etc., by other appropriate inspection agencies including SaskEnergy, a plumbing firm or an electrical firm, etc. INSP-2 Condition Inspection of Property by a Home Inspector - Condo This offer is subject to the inspection of the unit and common elements by a home inspector at the Buyer s expense, and the obtaining of a report satisfactory to the Buyer by, 20. INSP-3 Buyer Right of Re-Inspection The Buyer shall have the right to inspect the property (specify number) further time(s) prior to completion, at a mutually agreed upon time, provided that prior notice is given to the Seller. The Seller agrees to provide access to the property for the purpose of this inspection(s). 21

INSURANCE FIRE INSURANCE The inability of a Buyer to purchase fire/property insurance is not a prevalent problem in today s marketplace, but it does occur. Consideration should be given to a clause that confirms that the property and the Buyer qualify for insurance coverage. INS-1 Approval of Fire/Property Insurance This offer is subject to the Buyer obtaining approval for fire/property insurance on the property located at, satisfactory to the Buyer, by, 20. INS-2 Buyer Acknowledgement of Woodstove/Fireplace The Buyer acknowledges that the (woodstove/fireplace) installed on the property may not be approved for legal use and may render any fire insurance void. INS-3 Conditional on Confirmation of Valid Insurance for Wood Stove/Fireplace This offer is subject to the Buyer obtaining confirmation from their insurance agent by, 20, that the installed on the property will not void their fire insurance coverage. 22

MORTGAGES MORT-1 Conditional on New Mortgage see Residential Contract of Purchase and Sale. ARRANGE NEW MORTGAGE WITH EXISTING MORTGAGEE This is used when the Seller and/or Buyer find it is advantageous to have the Buyer use the same lender (e.g., avoiding a substantial payout penalty for the Seller). MORT-2 Conditional on New Mortgage with Existing Mortgagee This offer is subject to the Buyer being able to refinance with the present mortgagee, namely: and arrange by, 20, a first mortgage in the amount of $, year amortization, year term at %, principal and interest payments of approximately per month. SELLER TO PAY PREPAYMENT CHARGES This is applicable when there exists a payout penalty or charge on the part of the Seller to discharge a mortgage. MORT-3 Discharge of Existing Mortgage Seller to Pay The Seller acknowledges that there may be a penalty to discharge the existing mortgage and agrees to pay any costs, expenses or penalties incurred in discharging the existing mortgage. ASSUMPTION OF EXISTING MORTGAGE (MORTGAGEE APPROVAL) This is applicable when the Mortgagee must approve the Buyer to assume the existing mortgage. 23

MORT-4 Conditional on Assumption of Existing Mortgage (Mortgagee Approval) This offer is subject to the Buyer being approved to assume the existing mortgage held by, by, 20, in the amount of $, year amortization, year term, ending, 20, at %, principal and interest payments of approximately $ per month. ASSUMPTION OF EXISTING MORTGAGE (NO APPROVAL) This is applicable when the Mortgagee is not required to approve the Buyer, i.e., a non-qualifying assumption of mortgage. MORT-5 Assumption of Existing Mortgage (No Approval) The Buyer agrees to assume an existing mortgage held by, in the amount of $, year amortization, year term, ending, 20, at %, principal and interest payments of approximately $ per month. MORTGAGE COVENANTS/ASSUMPTION OF MORTGAGE The Sellers and Buyers should be advised regarding the assumption of a mortgage that the personal covenant of the original Mortgagor (Seller) may still apply following the assumption of the Mortgage by the Buyer (with no prior approval given by the lender). SELLER TAKE BACK MORTGAGE It is recommended that preparation of all Seller Take Back mortgages be referred to the Seller s lawyer to ensure that the Seller is adequately secured. 24

MORT-6 Conditional on Seller Take Back Mortgage This offer is subject to the Seller taking back a mortgage by, 20, in the amount of, interest rate of % per annum, monthly payments of including principle and interest, and to run for a term of years from the date of completion of this transaction. NOTE: Without a prepayment privilege, the borrower does not have any automatic right to early discharge of the Mortgage or prepayment of principle (i.e., it must be clearly stated). AGREEMENT FOR SALE OR LEASE WITH OPTION TO PURCHASE It is suggested that the Seller get legal advice in regard to drawing up these contracts as there are many underlying issues that the Seller needs to consider and incorporate into the contract for the Seller s protection (as well as the Buyer s), particularly with respect to the difficulties and expense that the Seller will be put to in enforcing the Agreement and in removing the Buyer from the property if the Buyer stops making payments, etc. MORT-7 Conditional on Legal Advice Agreement for Sale The Seller agrees to carry the remaining balance of $ by way of an Agreement for Sale at an interest rate of %, year amortization, year term, principle and interest payments of approximately $ per month. The parties agree to sign a formal Agreement for Sale. This offer is subject to the Buyer and Seller receiving satisfactory legal advice with respect to the Agreement for Sale by, 20. 25

MORT-8 Conditional on Legal Advice-Lease with Option to Purchase This offer is subject to the parties negotiating and executing a formal agreement with the benefit of legal advice by, 20. MORT-9 Buyer to Bear Costs Agreement for Sale or Seller Take Back Mortgage The Buyer will bear the costs of drawing up the (Agreement for Sale or Seller s Take Back Mortgage), including legal costs. MORT-10 Buyer Credit Report This offer is subject to the Seller being satisfied concerning the personal and/or credit worthiness of the Buyer by, 20. MORT-11 Payment In Advance The principle balance may be paid at any time, in whole or in part, without notice, bonus or penalty. NO FINANCING This is suggested to protect the Buyer when the property is being purchased without a mortgage (thus in many cases with no appraisal). MORT-12 Conditional on the Appraisal Equal Greater Purchase Price This offer is subject to the property at appraising at a value equal to, or greater than, the purchase price by, 20. 26

FINDER S FEE In the event a Finder s Fee is received from a lending institute or mortgage broker, the real estate professional must include an acknowledgement in that regard. MORT-13 Buyer Acknowledges Finder Fee Buyer acknowledges that the Buyer s Brokerage may receive a Finder s Fee in the amount of $ in connection with the arranging of financing for the Buyer. MORT-14 Conditional on Seller Taking Buyer s Property In Trade This offer is subject to the Seller entering into an unconditional Contract of Purchase and Sale with the Buyer for the purchase of the Buyer s property described as (describe property) by, 20. 27

PROPERTY CONDITION DISCLOSURE STATEMENT PCDS-1 Incorporation of Property Condition Disclosure Statement/Contract The attached Property Condition Disclosure Statement dated, 20, is incorporated into and forms part of this contract. PCDS-2 Conditional on Incorporation of Property Disclosure Statement/Contract This offer is subject to the Buyer receiving and being satisfied with the Property Condition Disclosure Statement which shall then be incorporated into and form part of this contract by, 20. 28

REAL PROPERTY REPORT RPR-1 Seller to Provide Existing Real Property Report Seller to provide existing Real Property Report to the Buyer by, 20. RPR-2 Conditional on Seller to Provide New Real Property Report This offer is subject to the Seller providing a new Real Property Report of the said property by, 20 at the Seller s expense. RPR-3 Buyer to Obtain Real Property Report The Buyer acknowledges that a new Real Property Report may be required for purposes of financing and agrees to obtain said report at the Buyer s expense. 29

RELATIVE/ADVISOR/LEGAL/FINANCIAL APPROVAL APP-1 Conditional on Contract Approval This offer is subject to approval of the contract by by, 20. APP-2 Conditional on Viewing by Third Party This offer is subject to the viewing of the property being satisfactory to, by, 20. APP-3 Conditional on Legal Advice This offer is subject to receiving legal advice satisfactory to the Buyer/Seller by, 20. APP-4 Conditional on Financial Advice This offer is subject to receiving financial advice satisfactory to the Buyer/Seller by, 20. 30

RENT/SALE OF PROPERTY NOTE: RENT-1 The following rental clauses have been developed for the sale of small rental properties (e.g., duplexes, 4-plexes, etc.). For large multi-unit complexes special conditions apply and expert assistance should be sought. Confidentiality of Disclosed Rental Information The Buyer will hold in strict confidence any knowledge about the rent of the property, financial documents, leases, and such other records of the property which the Buyer obtains from this Agreement or any other source, subject only to the use of such information in order to obtain professional advice. RENT-2 Seller Warranty Tenancy Information The Seller warrants the Tenant is (tenant s name) who occupies (whole house, basement etc.) ; the monthly rent is $ (amount) including (e.g., utilities included) ; payable on (day of the month rent is due) ; a security deposit of $ was taken on, 20 and the last rental increase was on, 20. The seller warrants that the tenancy is (month to month/a fixed term lease ending, 20 ). 31

RENT-3 Seller Warranty Tenancy Information The Seller represents and warrants, to the best of the Seller s knowledge and belief, that the current and actual rents are: Unit Current Rent Last Increase (Date/Amount) NOTE: RENT-4 Additional categories may be used to expand tenancy information: Unit #, Name, Date, Security Deposit Amount and Tenancy (items included in rent), etc. No Rent Increases Pending Completion of Sale Pending completion, the Seller shall not give any notices of rent increases to the tenants. RENT-5 Notices to Tenants of New Owner Upon completion, the Seller shall provide the Buyer with a notice to all tenants advising them of the new owner and requiring all future rents to be paid as the Buyer directs. The Seller will pay to the Buyer any rent paid to the Seller in error or in violation of the direction for a period of months following completion, after which period the Seller may refuse to accept rent from tenants or return it to them. 32

RENT-6 Buyer Assumption of Existing Tenancy The Buyer agrees to assume the existing tenancies, as set out in the attached Schedule, which the Seller warrants are the only tenancies affecting the property. RENT-7 Conditional on Seller as Tenant This offer is subject to the Seller and Buyer entering into a tenancy agreement by, 20, for the Seller to occupy the premises as a tenant until, 20. RENT-8 Seller Notice to Tenant(s) The Seller will give legal notice to the tenant(s) to vacate the premises upon removal of all conditions by, 20. RENT-9 Conditional on Documentation/Legality of Suite This offer is subject to the Buyer receiving and being satisfied with documentation provided from concerning the legality of the suite by, 20. RENT-10 Unauthorized Accommodation The Buyer is aware that the property contains unauthorized accommodation and has been informed of the consequences of such ownership and the potential loss of income should the rental use be discontinued. 33

SALE OF BUYER S PROPERTY SBP-1 Conditional on Sale of Buyer s Property This offer is subject to the sale of the Buyer s property at by, 20. An Option Clause Form is used to allow the Seller to accept a conditional offer on their property with the provision that if a better second offer comes in, the Buyer with Offer #1 has a pre-determined number of hours to remove all conditions or the Seller is free to accept Offer #2. When the Seller wishes to exercise their rights as outlined in the Option Clause Form, the X Hour Notice will be utilized. Notice given to the Buyer s Agent is deemed to have been given to the principle (Buyer). SBP-2 Conditional on Sale of Buyer s Property - Option Clause This offer is subject to the sale of the Buyer s property at by, 20, with a hour clause in effect. See attached Option Clause Form. SBP-3 Conditional on Sale of Buyer s Property/to be Listed - Option Clause This offer is subject to the sale of the Buyer s property at by, 20, which will be listed with the appropriate Multiple Listing Service by, 20, through (name of Brokerage), with a hour clause in effect. See attached Option Clause Form. 34

COMPLETION OF SALE OF BUYER S PROPERTY This occurs when the Buyer s property has an offer on it and is waiting on condition(s) removal (i.e., a conditional offer). SBP-4 Conditional on Completion of Sale of Buyer s Property This offer is subject to the completion of sale of the Buyer s property at, by, 20. BACK-UP CONTRACT OF PURCHASE AND SALE This clause is for use in situations where the Seller has previously accepted an offer on a property and is waiting for the conditions to be removed (i.e., a conditional offer) and considers Offer #2 as a back up offer in the event that the first offer does not complete. SBP-5 Conditional on Seller s Release From Previous Offer to Purchase This offer is subject to the Seller being released by the Buyer from all obligations under the previously accepted Contract of Purchase and Sale by, 20. SELLER PURCHASE This clause is to allow the Seller the opportunity to purchase a home before being obligated to sell his present property. SBP-6 Conditional on Seller Purchase This offer is subject to the Seller purchasing a new home by, 20. 35

SEWER/WATER NOTE: Sale of Property with a well and/or septic system involves specific knowledge of the system. There is a difference in a well s performance depending on many variables, e.g., the amount available water, the delivery capacity of the well system, the amount of water that can be delivered over a certain period of time, and seasonable variables. The type of well, drilled, bored, or dug can also affect performance. Expert advice should be sought. SEW/WAT-1 Water Supply Seller to Provide Bacteriological Analysis The Seller agrees to supply to the Buyer by, 20, a Certificate of Bacteriological Analysis of Drinking Water from indicating that there is no significant evidence of bacterial contamination. NOTE: This clause should only be used where the Seller knows that the Seller can provide a safe report, a recent report would be a good indicator. SEW/WAT-2 Conditional on Buyer Acceptance of Quality/Quantity of Water This offer is subject to the Buyer, at the Buyer s expense, receiving and being satisfied with an inspection and report from concerning the quantity and quality of water supply by, 20. NOTE: In addition to the Bacteriological Analysis, the buyer may want to include additional warranties/conditions concerning water quality, e.g., nitrates, chemicals or other contaminants. 36

SEW/WAT-3 Water Supply All Well Types Warranty The Seller represents and warrants, to the best of the Seller s knowledge and belief, that, during the Seller s occupancy of the property, the pump and all related equipment serving the said property have performed adequately, and will be in good working order on closing and are currently capable of delivering not less than gallons per minute (GPM) on the continuous basis of not less than hours. NOTE: If the Seller does not know the current status of the well, the Seller should be advised to verify through a professional well inspection as the current water supply can vary from the original well record. The supply of water is contingent on many variables, e.g., the actual amount of water in the well, the capacity of the well system to deliver the water and over what length of time will the GPM be sustained. SEW/WAT-4 Seller s Warranty/Proper Installation of Sewage System The Seller warrants that the sewage system was installed, inspected and approved by the (appropriate authority). SEW/WAT-5 Sewage System Good Working Order - Warranty The Seller represents and warrants, to the best of the Seller s knowledge and belief, that, during the Seller s occupancy of the building, the sewage system has been and will be in good working order on closing. 37

SEW/WAT-6 Conditional on Buyer Acceptance of Septic System This offer is subject to the Buyer receiving and being satisfied with an inspection and report from concerning the septic system by, 20. 38

SWIMMING POOLS SWIM-1 Seller Warrants Condition of Pool The Seller warrants that the swimming pool and equipment are now, and on the completion date shall be, in good working order. SWIM-2 Seller Warrants Legislative Compliance The Seller warrants to the best of the Seller s knowledge and belief that the swimming pool, its equipment, and the fencing of the said pool comply with all applicable by-laws, regulations and legislation. SWIM-3 Seller Responsible for Winterizing Pool The Seller agrees to winterize the swimming pool and equipment prior to completion and shall be responsible for any costs or expenses incurred by the Buyer if the swimming pool and equipment are not properly winterized provided that the Buyer gives written notice of claim to the Seller not later than, 20. 39

TITLE TITLE-1 Buyer Acceptance of Information on Title The Buyer acknowledges and accepts that (easement, covenant, etc.) exists, and is aware that it may affect the Buyer s use of the property. 40

UREA FORMALDEHYDE INSULATION (UFFI) UFFI-1 Acknowledgement UFFI Present in Building The Seller discloses and the Buyer acknowledges that the building contains urea formaldehyde foam insulation. The Buyer accepts the property in that state and further acknowledges that the Seller does not warrant the quality or quantity of the insulation or the quality of its installation. UFFI-2 The Seller Has No Knowledge of UFFI The Seller has no knowledge as to whether the property has been insulated with urea formaldehyde foam insulation and specifically makes no warranty in this regard. NOTE: Applicable where Seller has no personal knowledge of UFFI (i.e., a corporation handling a company transfer, Seller selling under Power of Sale, etc.). The Buyer may consider making the Offer conditional on an inspection for UFFI. UFFI-3 UFFI Found But Corrective Action Taken The Seller represents and warrants that the building was insulated with urea formaldehyde foam insulation but has undergone the following corrective actions:. NOTE: Details of all corrective action should be inserted in the space provided or supporting documentation attached as a Schedule. 41

UFFI-4 UFFI Removed from Building The Seller represents and warrants that, although urea formaldehyde foam insulation (UFFI) was installed in the building, such UFFI was removed in,, by, and the Seller further warrants that, to the best of his knowledge, no UFFI has been installed in the building since such removal. As evidence of the removal, the Seller attaches the following documents as Schedule which shall form part of this agreement of purchase and sale. UFFI-5 UFFI Test Performed with Negative Result The Seller represents and warrants that the building was tested for the presence of urea formaldehyde form insulation (UFFI) on the day of, by, and the result of such testing indicated that no UFFI was present in the building, and on the basis of such results the Seller provides this warranty. This clause applies only to UFFI and does not, in any way, include the testing of urea formaldehyde emissions from sources other than UFFI. As evidence of such testing, the Seller attaches the following documents as Schedule which shall form part of this agreement of purchase and sale:. UFFI-6 UFFI Test Positive But Within Acceptable Limits The Seller acknowledges that the building contains urea formaldehyde foam insulation (UFFI) and was tested for the presence of emissions from UFFI on the day of, 20, by, and the results of such testing indicated that emissions from UFFI are within the acceptable limits and no further actions have been taken. As evidence of such testing, the Seller attaches the following documents as Schedule which shall form part of this Contract of Purchase and Sale:. 42

ZONING ZON-1 Conditional on Buyer Confirmation of Zoning This offer is subject to the Buyer confirming by, 20, that the zoning is (desired zoning). ZON-2 Conditional on Buyer Acquiring Zoning Changes This offer is subject to the Buyer at his/her expense obtaining final approval of zoning change from (current zoning) to (desired zoning) by, 20. The Seller will co-operate with the Buyer in the zoning application process. ZON-3 Zoning Warranty by the Seller The Seller warrants that the lands are zoned as under bylaw for the municipality of. 43

2. INVESTMENT, COMMERCIAL AND INDUSTRIAL PROPERTIES NOTE: The clauses included herein are very basic in nature, and are not intended to provide the large scope of clauses and phrases required to trade in these areas of real estate. Expert advice should be sought. ICI-1 Conditional on Lawyer s Approval of Documentation This offer is subject to Buyer s/seller s lawyer approving the form of the documentation by, 20. ICI-2 Conditional on Lawyer s Approval of Contract This offer is subject to Buyer s/seller s lawyer approving the terms and conditions of the contract by, 20. ICI-3 Conditional on Approval of Financial Statements This offer is subject to the Buyer reviewing the Financial Statements with the Buyer s accountant and approving them by, 20. 44

ICI-4 Buyer Purchasing Business Assets The Buyer is buying the assets of the business known as and located at, Saskatchewan. Purchase price includes all assets, goods and chattels (but not real property) listed as included in the sale of the business, except inventory on hand. This offer is subject to the Buyer receiving and approving the list of assets by, 20. ICI-5 Conditional on Buyer Approval Upon Receipt/Financial Statements This offer is subject to the Buyer receiving, perusing and being satisfied with a complete and current set of financial statements including a profit and loss statement showing revenue and expenses for the last 12 months (not more than 120 days old), a statement of assets and liabilities and a list of fixtures, goods, chattels, rights and other assets not included in this transaction, by, 20. ICI-6 Seller Warrants No Financial Statements The Seller warrants that there are no financial statements and will provide to the Buyer a Statement under Oath setting forth the terms and conditions of the possession of the premises together with any subletting of the premises, the liabilities of the business and any books of account in his possession. This offer is subject to the Buyer receiving, perusing and being satisfied with the Statement under Oath by, 20. 45

SALE OF INVENTORY WHERE INCLUDED IN PURCHASE PRICE This clause is used where the total price includes inventory, because the parties have a reasonable idea what the inventory value is likely to be on completion. ICI-7 Inventory Included in Purchase Price The inventory included in the sale price is as follows: (describe inventory or how the amount of inventory to be left on possession date is to be determined). ICI-8 Inventory Not Included in Purchase Price The inventory will be purchased by the Buyer with the purchase price to be $, (or) to be determined as follows: (describe how purchase price will be calculated on closing). ICI-9 Conditional on Determination of Inventory Purchase price (select either includes or does not include) (select either inventory or stock). This offer is subject to the Seller and Buyer and their respective advisors establishing an agreed method for the purpose of valuing the inventory/stock and completing the inventory/stock taking by, 20. The Seller will allow reasonable access to the Buyer for purposes of reviewing the Inventory for purposes of this condition. 46

SUBJECT TO BUYER ARRANGING NEW LEASE This is when the existing lease of the business is about to expire. ICI-10 Conditional on Buyer Arranging Satisfactory Lease This offer is subject to the Buyer arranging a lease for the premises satisfactory to the Buyer by, 20. ICI-11 Conditional on Buyer Approving/Assuming Existing Lease The Buyer will assume all payments, obligations and covenants of the existing lease covering the premises of the business being purchased. This offer is subject to the Buyer receiving, perusing and being satisfied with the lease by, 20. In almost all instances whereby the Buyer is taking over an existing lease, the Landlord will need to approve the assignment or sub-lease; see following clause. ICI-12 Conditional on Landlord Approval/Assignment of Lease This offer is subject to the Landlord s written approval of the assignment/of lease by, 20. ICI-13 Conditional on Buyer Approval/Franchise Agreement This offer is subject to the Buyer receiving, perusing and being satisfied with the franchise agreement by, 20. 47

ICI-14 Conditional on Franchisor s Approval/Assignment of Franchise This offer is subject to the Franchisor s written approval of the assignment of the franchise by, 20. 48

B. COMPLETION GUIDELINES FOR THE SEVEN MANDATORY FORMS 1. RESIDENTIAL CONTRACT OF PURCHASE AND SALE INTRODUCTION Writing offers requires learning to adapt the basic structure or formula to the circumstance at hand. The variables including Buyers, Sellers, conditions, terms, etc., are unique to each situation. The practitioner must understand why certain clauses and phrases are utilized in particular situations and be able to interpret this terminology to the client or customer. In addition, the practitioner must be able to explain the pre-printed portion of the contract to ensure that the client or customer understands the essence of the contract. The salesperson must remember that he or she is committing to writing the exact terms of the Buyer s intent and it must be expressed in clear, concise, unambiguous language. Section 58(1) of The Real Estate Act states that any offer to purchase property obtained by a registrant must be in writing, dated and signed by the Buyer in the presence of a witness. Section 58 also demands that all Residential Contracts of Purchase and Sale clearly show prior to the execution by the Buyer: the date on which the offer is made; the names and addresses of the Buyer and Seller; the street address or legal description of the real estate; the price offered by the Buyer and the terms and conditions of the offer; the amount of the deposit, if any, made at the time of the offer and whether or not that deposit is to form part of the price; a brief description and list of any chattels that are to be included in the price; 49

the date of possession by the Buyer and whether possession is to be vacant or otherwise; the date of adjustments; the time and date by which the offer is to be accepted; the name, address and telephone number of the Brokerage; and any other information prescribed in the bylaws. CONSIDERATIONS/INCLUSIONS a) Buyer i. Identification Ensure identification is accurate, and in the manner to appear on the title. Must meet FINTRAC requirements; i.e., required to keep an Identification Information Record for every real estate transaction you are involved in. ii. Deposit Explain to the Buyer that the deposit is generally held by the Buyer s Brokerage. If a further deposit is to be placed upon removal of any subject to conditions, it must be specified in the offer. If the Buyers expect to receive interest from this deposit, it must be stated as such. Must meet FINTRAC requirements; i.e., required to keep a Receipt of Funds Record on receipt of funds in any form or amount. iii. Possession Date Look at a calendar before inserting this date. If it occurs on a non-business day, the preceding business day becomes the appropriate date for monies to change hands, etc. 50

iv. Fixtures/Chattels Do not rely on the listing agreement. Specify on the offer to purchase what fixtures/chattels are to be included. If appropriate, describe the chattels to ensure proper identification. v. Representation/Warranties Do not rely on any verbal representations and/or warranties. To be enforceable they must be included in the offer to purchase. Inform your Buyer of the existence and useage of the Ancillary Services in the Purchase of Residential Real Estate form which is a Commission mandatory form. b) Seller i. Registered Owners Ensure that the registered owners, as appearing on the title, are the Sellers actually involved in the transaction. The Sellers should be advised that their acceptance of the offer to purchase constitutes a binding agreement to sell the property. Must meet FINTRAC requirements (Identification Information Record required). ii. Counter Offer It is imperative to specify a time period for which the counter offer shall remain open for acceptance. iii. Possession Date Ensure this date is accurate. Consult a calendar for any holidays or weekends. iv. Deposit Advise the Sellers that the deposit is usually held by the Buyer s Brokerage unless otherwise specified. If the Sellers expect to receive interest from this deposit, it must be stated as such. 51

Must meet FINTRAC requirements (if deposit is held by the Seller s Brokerage). v. Legal Description of Property Ensure that the property is accurately described. vi. Fixtures/Chattels Ensure that all fixtures and chattels to remain are listed and included on the offer to purchase or counter offer. vii. Subject to Clauses Ensure that these clauses are as specific as possible and include a date of removal. viii. Maintenance The Sellers should be aware that they are obligated to maintain the property up to the closing date. 52

2. COUNTER OFFER TO RESIDENTIAL CONTRACT OF PURCHASE AND SALE If the offer is not acceptable to the Seller they may elect to write a Counter Offer and thus keep the negotiating process in motion. The Seller will indicate on the Counter Offer any amendments, exceptions or additions that they desire to make to the contract. In effect, a Counter Offer to Residential Contract of Purchase and Sale is an offer from the Seller to the Buyer and as such, it is a new contract. There are no guarantees that the Buyer will accept the Counter Offer, and the Seller should be made aware of the risks of writing a Counter Offer for trivial reasons (i.e., the Seller may end up with no contract at all). The Seller must get back to the Buyer prior to the time allotted for the offer to be accepted otherwise the offer becomes null and void. As with the Residential Contract of Purchase and Sale, a Counter Offer can be revoked before acceptance has been communicated. Upon acceptance by the Buyer, the Counter Offer is appropriately signed and witnessed and the contract now consists of the original offer and the Counter Offer. If the Counter Offer is not accepted by the Buyer but he or she wishes to continue the negotiating process, a new Residential Contract of Purchase and Sale is written and the process resumes. Do not counter a counter or revise the Seller s Counter Offer by crossing out, adding, and initialling the changes, write a new offer. 53

3. NOTICE TO REMOVE CONDITION(S) ON RESIDENTIAL CONTRACT OF PURCHASE AND SALE Conditions or subject to clauses are utilized in contracts to protect the party who is writing the contract, be it the Buyer or Seller. The party that drafts the condition(s) is the party that must remove the condition, which is often based upon the approval or actions of a third party (e.g., a lending institution, a home inspection, etc.). The clause must be drafted in objective terms setting out exactly what events must occur and what criteria must be satisfied to remove the clause. To draft an objective subject to clause, practitioners must determine the factors on which the Buyer will be basing the buying decision, and reduce those factors to writing within the clause. When removing conditions, re-state the conditions being removed on the notice to remove form so that the party is absolutely clear on what they are removing. Writing on the form all conditions are removed places the practitioner at risk for liability if the party in the future states that he or she did not intend to remove all conditions and did not know specifically what conditions were being removed at the time the form was signed. The Supreme Court of Canada has ruled that if a Buyer wants to remove a condition upon the happening of the event that is out of control of the Buyer, the Buyer may not unilaterally remove the condition. Both parties must agree to a waiver, and in the event that they both do not agree, the contract is terminated. Therefore, under the circumstances where such a condition cannot be simply waived, and the Buyer wants to waive the condition, both the Buyer and the Seller must consent and sign the appropriate waiver. The Saskatchewan Real Estate Commission amended the Removal of Conditions form to remove the word waived (i.e., to voluntarily relinquish a right) and replace it with the word removed. The Commission agrees that a party can only unilaterally remove a condition that is completely within the Seller s or 54

Buyer s control to do so. Under no circumstances can a Seller or Buyer unilaterally waive a condition. If a condition is to be waived, then an amendment to the offer to purchase must be completed by both the Seller and Buyer. Failure to notify the Seller of the removal of conditions will in most instances void the Contract, freeing up the Seller to sell his home to another Buyer. When more than one condition exists, and when each condition has a different expiry date, the practitioner may fill out a number of different forms to remove conditions, by re-writing the condition as written on the original Residential Contract of Purchase and Sale. Do not add clauses that are vague or meaningless which may add liability to the practitioner such as sale is now final. 55

4. SCHEDULE C (Specified Terms for Contract of Purchase and Sale of a Condominium Unit) When dealing with Buyers on a re-sale condominium, a Schedule C will be utilized. The clause relating to Schedule C is pre-printed on the mandatory form, Residential Contract of Purchase and Sale under #3, Additional Terms: 3.1 For Condominiums, the attached Schedule C forms part of this contract. Schedule C asks the Seller to provide a variety of information including an estoppel certificate, financial statements, condominium bylaws, etc. The onus is on the Seller to provide to the Buyer the information contained within the Schedule C within 10 days of accepting the offer. Once the Schedule C is received by the Buyer, the Buyer signs and dates the receipt of the information. The Buyer now has an additional 5 days to review the information provided through Schedule C and to decide whether to accept or rescind the Contract. (Unlike new project sales of Condominiums, the re-sale Seller is not legally bound to agree to this period if they choose not to.) Basically, if the Buyer does not rescind the contract within 5 days it is deemed that the Buyer as accepted all of the information provided on Schedule C. The Buyer s signature (or Buyer s Brokerage, or Buyer s Solicitor) and dating of the receipt of the information contained within Schedule C is very significant as, once signed, the clock starts ticking for the 5 days that the buyer has to rescind the contract. Remember that even though all conditions may have been removed from the offer to purchase, the Buyer still has the 5 days after receipt of Schedule C to accept or rescind the contract (i.e., the sale is not final). 56

5. DISCLOSURE OF INTEREST IN TRADE The rules under The Real Estate Act required this disclosure to be presented to a buyer or seller (as the case may be) before any agreement for the acquisition, disposition, rental or lease of real estate is entered into where the seller, landlord or buyer is registered under the Act or where a registrant is providing services relating to a trade in real estate to or on behalf of a party to a trade in real estate who is an associate or an immediate family member. (See The Real Estate Act, Section 65, and Bylaw 103.1.) Therefore, if the registrant is selling or buying real estate, the Disclosure of Interest in Trade must be completed. The reason for this disclosure is because of the additional real estate knowledge that the registrant possesses as opposed to the general public. It would be an unfair advantage for the registrant if the public were not aware of the registrant s profession and inherent knowledge. In addition, if the registrant s spouse (or an associate) is buying or selling real estate, the spouse must complete the Disclosure of Interest in Trade as he or she is viewed as an associate of the registrant. Given that the spouse may be unaware of The Real Estate Act, the onus to ensure spousal disclosure is obviously on the registrant. Spouse is defined as a husband or wife, or as a person with whom the registrant cohabits or has children. In addition, there are disclosure requirements for registrants when they are trading in real estate with an immediate family member. Registrants are required to provide a Disclosure of Interest in Trade form to a buyer or seller, as the case may be, identifying the family member and the registrant s relationship to the immediate family member when acting for them in a real estate transaction. When a registrant is acting on behalf of an immediate family member in the purchase of real estate the disclosure must be made to the seller prior to the seller accepting an offer to purchase. When the registrant is acting on behalf of an immediate family member in the sale of real estate the disclosure must be made to the buyer prior to the seller receiving an offer to purchase. 57

The paraphrased definition of an immediate family member includes the spouse, parents, children, brother(s) or sister(s) of the registrant. The definition includes individuals who have been adopted. The definitions of spouse includes persons who are married or persons who are in a common law relationship and have cohabited for a period of not less than two years (see Commission Bylaw 103.1). The disclosure of the special relationship between the registrant and the buyer or seller provides the other party to the transaction with the knowledge of the relationship and allows the other party to the transaction to determine if they require additional input from independent sources. The disclosure of the relationship should act as a risk reduction measure for the registrant and for the brokerage. There are several sections to the Disclosure of Interest in Trade, ensure that the proper sections are completed. 58

6. ANCILLARY SERVICES IN THE PURCHASE OF RESIDENTIAL REAL ESTATE The Commission has provided the mandatory form, Ancillary Services in the Purchase of Residential Real Estate, to be used for residential properties (4 units or less). This form provides the Buyer with the opportunity to choose what services he or she may require to complete their purchase. It is imperative that the Buyer be provided with the information regarding potential services to allow for an informed decision as to what services are required. Services that may be required by the Buyer include those provided by: engineers, home inspectors, electrical/mechanical inspectors, gas-line inspectors, water quality/quantity inspectors, etc. In many situations, the services chosen by the Buyer would be written up as conditions subject to the Buyer s approval by a specific date, e.g.: This offer is subject to the inspection of the subject property by a home inspector at the Buyer s own expense, and the obtaining of a report satisfactory to the Buyer by, 20. Even if the Buyer chooses not to request any additional services to be completed, the form must be presented, signed (witnessed) and dated to prove that he or she has had the opportunity to choose additional services. 59

7. AMENDMENT TO RESIDENTIAL CONTRACT OF PURCHASE AND SALE Occasionally, the Seller and Buyer will want to change some item on the Residential Contract of Purchase and Sale after it has been accepted. The Commission has provided a mandatory form for registrants called the Amendment to Residential Contract of Purchase and Sale. An amendment to the offer to purchase may be something such as: Possession date to be moved from June 19, 20XX to June 26, 20XX. Both parties, the Buyer and Seller, must agree to the changes in the amendment, sign the form and have their signatures duly witnessed. Both the Buyer and Seller must be provided with a copy of the form. 60

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ASSOCIATION OF SASKATCHEWAN REALTORS 2811 Estey Drive Saskatoon, SK S7J 2V8 Phone: 306.373.3350 Toll Free: 1.877.306.3350 FAX: 306.373.5377 Email: info@saskatchewanrealestate.com Website: www.saskatchewanrealestate.com 62