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May 2022

Buyer Beware: A Cautionary Note on Unconditional Agreements of Purchase and Sale

By Ridhima Pathak

In this market, the pressures of purchasing a home are high. Amidst soaring prices and bidding wars, buyers are often led to submit unconditional offers on properties. This may increase the chances of a successful offer, but it comes with its risks. An unconditional offer means that if the offer is accepted by the seller, the buyer must be prepared to purchase the property.

There is no room for negotiations after the offer has been accepted, which is why it is essential for buyers to confirm what they are buying in the Agreement of Purchase and Sale. Often, clients come to us with a concern over misrepresentation of information in an MLS Listing such as:

  • the description of certain items does not match the property;
  • the MLS listing includes more chattels i.e. appliances than the agreement;
  • the MLS listing notes dimensions for rooms which do not correspond with the actual size of the room;
  • the MLS listing notes utilities included in the condominium fees, that are not actually included; and/or
  • the MLS listing notes a parking spot which is not noted in the agreement.

The above-noted examples are common day-to-day scenarios. That is why it is critical to note that MLS Listings are not binding.

The recent case of Lamba v. Mitchell reinforces the same specifically in relation to the square footage of a home. The buyers did not close the deal because the dimensions were misstated in the MLS listing. The question is whether the buyers are entitled to rescind the agreement based on this incorrect information.[1]

The court ruled in favour of the sellers. The buyers had conducted a pre-inspection of the home, had prior knowledge of floor plans in a brochure, and that it was the buyer’s responsibility to verify the measurements. That the discrepancy of the square footage, either big or small, could not be used as a reason to terminate the transaction.[2]

This case serves as a warning for buyers to review the Agreement of Purchase and Sale prior to signing and placing an unconditional offer. Any item that is agreed upon must be stated in the Agreement of Purchase and Sale. There is no other legal recourse or action that can be taken in these situations.

This post was written by Ridhima Pathak, a qualified real estate lawyer with SorbaraLAW. Ridhima can be reached at 365-509-2029.

[1] Lamba v Mitchell 2021, ONSC 1612.

[2] Ibid.

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