Signing an Agreement of Purchase and Sale of Property in Ontario
Signing an Agreement of purchase and sale of property in Ontario can be a complicated process. The Ontario Real Estate Association’s (OREA) standard document is lengthy and consists of many sections. For such an Agreement to be legal, the signing parties need to be identified in compliance with the ‘Statute of Frauds.’ Therefore, for the purpose of this article, we look at the various entities that can be ‘party’ to the agreement, i.e. who can sign such an agreement and what is required in each case?
Individual registered property owners must be correctly identified
The full and correct legal names of all the registered property owners must be stated. The Seller is referred to as the ‘Vendor’ and providing they are informed, extra buyers can be added to the agreement even after it has been signed with no extra amendment. The Seller’s legal capacity may need to be stated too, if they are not the registered property owners, as in the case of a Bank or debt collection sale.
Parties representing Corporations
Certain precautions need to be taken when an individual represents a corporation in the signing of an Agreement of purchase and sale. Directors and officers of the corporation usually have the power to bind it to the agreement, but to be sure, include the following:
- A resolution of the corporate board of Directors agreeing to it…
- A statement authorizing the representative to bind the corporation to it…
- A warranty stating that the representative has the authority to bind the corporation to it…
- Ensure that the signing parties include an officer or Director of the corporation.
Corporations not yet formed
Even corporate entities not yet formed can be represented by another party in an Agreement of purchase and sale. It must be stated that they have the right to transfer the agreement to the corporation, who must adopt that agreement within a reasonable time of coming into being. If they don’t the onus falls on the buyer to honour the agreement (unless otherwise stated).
Partnerships as the purchasers
Unless the purchase of property is outside of its normal scope of business, when a Partnership is the purchaser it is best to have all the partners sign the agreement.
Enlist the help of a legal advisor
There are many aspects that need to be considered in an Agreement of purchase and sale of property in Ontario. As the purchase of property is often yours, or your company’s, biggest investment, when signing such an agreement it is best to seek the advice of a competent legal advisor specializing in Real Estate. They can also be consulted to assist with the entire signing process, as in this article we have only really dealt with the signing parties themselves.