The importance of providing sufficient timelines in clause R2.3

The Longpas-Valoin couple have lived in a charming condo for a few years now. One morning in May, they learn that they will become parents in a few months and decide to purchase a larger property. They like a certain property that is for sale in their neighbourhood. They contact the real estate broker, Mrs. Venbiens, whose name appears on the sign placed in front of the property.

Mrs. Venbiens provides them with information about the property and tells them from the onset that she represents the seller and that, as such, she must protect and promote the interests of her selling client. She adds that she can inform and advise them objectively, including by guiding them with the standard clauses to include in their promise to purchase, but that she will not disclose any confidential or strategic information concerning her selling client.

Mrs. Venbiens also tells them that a promise to purchase has already been accepted on the property, conditional upon the sale of the prospective buyer’s property. The Longpas-Valoin couple decide to visit the property anyway, and later to present a promise to purchase with the help of Mrs. Venbiens.

This raises the following questions:

What are the timelines to be respected and the clauses to be completed to avoid jeopardizing the transaction?

In clause 6.2 of the promise to purchase, a period of fifteen (15) days is allowed to obtain a copy of the undertaking by a mortgage lender to grant a loan. In clause 8.1, the period allotted for the building inspection is ten (10) days. Since Mrs. Valoin’s cousin has made them a very interesting offer on their condo, which they accepted, and since they will soon be going before the notary to finalize this transaction, they don’t have to make their promise to purchase conditional upon the sale of their own property. Mrs. Venbiens must still inform the couple of the need to complete clause R2.3 of the form "Annex R – Residential immovable" and to cross-reference this form in clause 13.1 of the promise to purchase, because there is already an accepted promise to purchase on the property, conditional upon the sale of the prospective buyer’s property.

Mrs. Venbiens must also take the time to explain clause R2.3 to them as well as the time period to enter in this clause, which must be longer than the longest period indicated in their own promise to purchase.

As we saw, the period indicated in clause 6.2 is fifteen (15) days. In the absence of proof of such an undertaking by a mortgage lender, clause 6.3 provides a mechanism by which the seller has five (5) days following the expiry of the period set out in clause 6.2 to take a position. The total period is therefore twenty (20) days.

As for clause 8.1 regarding inspection, the period allotted is ten (10) days. Following the expiry of this period, if the buyer is not satisfied with the inspection, he must notify the seller in writing and give him a copy of the inspection report within four (4) days following the expiry of the ten (10) day period. The promise to purchase becomes null and void upon receipt by the seller of this notification together with a copy of the inspection report. The total period in clause 8.1 is therefore fourteen (14) days.

Mrs. Venbiens remembers that there is another period that she must plan for in order not to jeopardize the transaction. What is this period?

The agent from the OACIQ Info Centre explains the following to her: in this case, since the longest period is the one concerning the mortgage undertaking, i.e. twenty (20) days, an additional period of three (3) days must be added for the 72-hour notice (clause R2.2) and another two (2) days must be added to allow the seller to send the notices to both parties. With this explanation, Mrs. Venbiens concludes that the period entered in clause R2.3 must be at least twenty-five (25) days.

Therefore she explains to the Longpas-Valoin couple that if the seller accepts their promise to purchase, the time periods in which they must fulfill their conditions will begin to run from the acceptance of their promise to purchase. And finally, she mentions to them that as soon as all the conditions of their promise to purchase are fulfilled (except for the signing of the deed of sale), the seller will take, at his own expense, reasonable steps to obtain cancellation of the first, previously-accepted promise to purchase on his immovable, by sending the 72-hour notice (clause R2.2).

To this effect, Mrs. Venbiens remembers that she can use the form "Notice and follow-up on fulfilment of conditions" and check clause AV4.7 as a means to issue the 72-hour notice to the first prospective buyer, in accordance with clause R2.2.