The importance of confirming the cancellation of a promise to purchase
Several clauses appearing particularly on the forms Promise to purchase1, Annex F2 and Annex R3 state that the Promise to purchase shall become null and void if one of the parties fails to comply with the deadline indicated therein. Clause 6.3 of the Promise to purchase is an excellent example of this situation.
Indeed, the last paragraph of this clause states that the Promise to purchase shall become null and void if the seller does not avail himself of the provisions under clause 6.3 within a period of 5 days following the expiry of the period provided for in clause 6.2 or following receipt of a notice of refusal from a mortgage lender. In this type of clause, the simple fact of the deadline expiring invalidates the Promise to purchase.
However, the broker should still, following the expiry of the deadline, advise his client to confirm this in writing to the other party. There have been situations in the past where the courts have interpreted the stance of the party that did not make clear its intention to consider the Promise null and void as an acceptance that a condition could be fulfilled although the deadline had expired. A written notice will avoid any ambiguity as to whether the Promise to purchase has indeed become null and void.
1 Clauses 6.3, 9.1, 10.5, 10.6, 14.1 of the Promise to purchase
2 Clauses F2.1, F2.3.3 of Annex F
3 Clauses R2.1, R2.2, R2.3, R2.4 of Annex R
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