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August 1st, 2018
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What About Contracts?
What is a contract and when is it legally binding?
A contract is a legally binding agreement between two or more parties and describes the rights and obligations of the parties to the contract. Where a contract has been properly drafted and signed by the parties to the contract, and where the terms are clear and the contract is not for an illegal purpose, it is likely a Canadian court would consider the contract valid and enforceable. Only the parties to a contract can sue or be sued under the terms of that contract.

Before you sign a contract:
As a general rule, Canadian courts expect that if you have signed a contract, you have agreed to it and you will therefore be bound by its terms. You may not be protected if you claim you did not understand what you were signing. Always make sure you understand a contract before you sign it.

Remember:
  • Never sign a contract if you don’t understand it.
  • Before you sign a contract, consult your REALTOR®, your REALTOR®’s managing broker, and/or your lawyer for advice.
Standard Form Contracts:
The real estate contracts used by REALTORS® are standard form contracts. The wording and terms of these contracts have been prepared by lawyers and have been tested in Canadian courts.

Canceling a Contract:
If you have signed a standard form Multiple Listing Contract, Exclusive Listing Contract or Exclusive Buyer Agency Contract and you wish to cancel the contract early, you can only do so if the other party to the contract (your REALTOR®’s company) agrees. The Real Estate Board cannot require its members to cancel listing or buyer agency contracts early.

If you have signed a contract to buy or sell a property (contract of purchase and sale) and wish to cancel it you should seek legal advice without delay. REALTORS® are not parties to these contracts and therefore cannot cancel them unless the contracting parties agree, in writing, to do so.

If you have a concern about a contract, here is what you should do:
  1. Discuss your concerns directly with your REALTOR® and ask for a resolution of the issues that are bothering you. Keep written notes and make your instructions in writing.
  2. If your concerns are not addressed, contact your REALTOR®’s managing broker to ask for assistance. Make meeting requests in writing and advise the managing broker why you want to see him/her in advance.
  3. If your concerns are not resolved, contact your lawyer to discuss your options.
  4. The Real Estate Board cannot unilaterally cancel your listing or buyer agency contract. It can assist you with problems or disputes by contacting your REALTOR®’s managing broker to make him/her aware of your concerns.
What happens if a buyer or seller doesn’t fulfill the terms of a contract?
Even though your REALTOR® may have drafted the contract to sell or buy a property for you, s/he is not a party to that contract. A REALTOR® cannot force his/her client to fulfill the terms of a contract with the buyer or seller. If the buyer or seller does not fulfill the commitments they have made in the contract, you may have legal recourse and should seek legal advice.

Here are examples of common issues for which the buyer or seller (not the REALTOR®) is responsible:
  • Buyer does not close the sale.
  • Buyer does not remove the contract’s subject clauses.
  • Seller does not close the sale.
  • Seller does not remove the contract’s subject clauses.
  • Property is left untidy or dirty by the seller.
  • Seller has removed items that were included in the contract.
  • Transaction does not close on time.
  • Appliances break down or a previously unknown property defect reveals itself after closing.
Your REALTOR® and his/her brokerage may be able to assist you to resolve this type of complaint. Typically your REALTOR® will contact the other party’s REALTOR® or brokerage and let them know about your concerns and ask them for assistance in resolving your concern. As noted, your REALTOR® cannot force the other party to do what they said they would do in the contract. (For this, you need the assistance of a lawyer or the Courts.)