Using the ''Counter-Proposal to a Promise to Purchase'' to respond to a Promise to Purchase or a Counter-Proposal

The mandatory form entitled Counter-proposal to a Promise to purchase has the advantage that it can be used by both the seller and the buyer, though its name can suggest that it can only be used to reply to a promise to purchase. In fact, it is also used to notify the other party that its Counter-proposal to a Promise to purchase has been refused and to submit a new proposal. The counter-proposal is in itself a new promise to purchase or to sell, depending on whether it emanates from the buyer or the seller. However, the Counter-proposal to a Promise to purchase form must not be used to renegotiate the terms of a promise to purchase that has already been accepted (for example, to renegotiate the selling price due to defects uncovered during the building inspection). To change the terms of a promise to purchase that has already been signed by the parties, the rules state that the Amendments form must be used.

Any change to a promise (other than an enhancement prior to acceptance) must be made using a Counter-proposal form

When one of the parties wishes to change an element of the promise presented to it (other than to enhance its promise to purchase prior to acceptance) – even to make only a minor clarification – the licensee must fill out a Counter-proposal form. For example, if a seller wishes to accept a promise to purchase for a price beyond his expectations but wants to keep a chandelier that was unfortunately not excluded from the sale, he must ask his broker to have it excluded. Since the promise to purchase is a whole and cannot be both accepted and changed, a Counter-proposal form must be used to reply to the buyer, which means that the promise to purchase actually has to be refused. In the previous example, the seller cannot accept the promise to purchase and add that the chandelier is not for sale. To exclude it from the sale, the licensee must fill out a Counter-proposal to a Promise to purchase form.

Enhancements

In the event that the party would rather like to enhance its promise to purchase prior to acceptance, the licensee must use the mandatory form Enhancements prior to acceptance designed specifically for this purpose. The enhancements will be part of the promise to purchase.

The buyer may wish to enhance his offer several times by submitting multiple Enhancements prior to acceptance forms, one after the other. However, this practice is not recommended as it may cause confusion when the offer to purchase is eventually accepted. Despite this recommendation, if the buyer still wishes to re-enhance his offer, the licensee must advise the buyer that this latest enhancement does not automatically cancel the previous ones. Therefore, the licensee shall indicate on the new Enhancements prior to acceptance form that the previous forms will be replaced, while retaining the benefits offered in clause B2.2 of the previous forms and specifying that the new price offered will replace all previous price enhancements.

After the expiration of the Promise to purchase

The mandatory form Promise to purchase includes an acceptance deadline. Failure to accept a promise to purchase within the period stipulated renders the transaction null and void. This does not mean however that a seller who wishes to reply to the promise to purchase using a counter-proposal must do so within this deadline. Since the counter-proposal is the equivalent of a new promise to contract, it can be presented even after the expiration of the acceptance deadline of the promise to purchase. The same goes for a counter-proposal presented in response to another counter-proposal. However, it should always be done within a reasonable time frame, following receipt of the promise to which it replies. This deadline can vary depending on circumstances, but it will be expressed in terms of days, not weeks or months. If some of the deadlines provided in the promise to purchase and its annexes are indicated by a date rather than a number of days from the date of acceptance, the new applicable dates will have to be reproduced on the counter-proposal.

Furthermore, to protect the buyer, the Counter-proposal form should not be used to reactivate a refused promise to purchase or whose acceptance deadline has expired, unless this refusal or expiry of acceptance deadline is very recent. If it is a longer time frame, the licensee should instead complete a new promise to purchase on behalf of the buyer. This would allow the buyer to go through the terms and conditions of the initial promise to purchase which, for various reasons, might no longer suit him or which he cannot remember any more.

For any questions, feel free to contact the OACIQ Info center by email at info@oaciq.com or by phone at 450 462-9800 or 1 800 440-7170.