Dear Sir or Madam,

This is my last newsletter and I thought it appropriate to remind you of some deficiencies in purchase agreements that I mentioned over 12 years ago yet I still see often even now.

I have retired as of July 1, 2023.

Giving Credit Only Where It’s Due

The first is credits on the statement of adjustments. Sometimes the agreement provides for a credit on the statement of adjustments if certain repairs are not done before closing, or if appliances are not replaced, etc., or sometimes just a credit for no apparent reason. These credits would appear on the adjustments just like credits for taxes and utilities. While they reduce the ultimate amount payable on closing, they do not reduce the sale price and therefore the amount of property transfer tax payable.

For example, a property is sold for $915,000.00 and the agreement says if the vendor doesn’t do something by closing there will be a $5,000 credit. Property transfer tax is payable on the fair market value of the property. The property transfer tax department would take the position that the fair market value is the sale price of $915,000, and would levy the tax on that amount and not $910,000. This means an additional $100 of tax. The contract should say that the price is reduced, not that a credit will be given.

Proper Property Disclosure

The second thing is the failure of a vendor to complete the property disclosure statement where the vendor is renting out the property. I have seen cases where the vendor crosses out the whole disclosure statement and writes “vendor not occupying unit”. In effect the vendor is saying he knows nothing about the property he owns. In my opinion this is not acceptable. Frankly, at a minimum it is laziness on the part of both agents and possibly negligence in not providing possibly vital information.

The vendor has ultimate control over the property and has an obligation to find out as much as he can so as to complete the property disclosure statement. He owns the property and can’t be willfully blind to its condition. Plus, he knows the amount of the strata fees, the name of the property management co., the parking stall and locker numbers.

Yours truly,