This document discusses title requisitions and responses to title requisitions in commercial real estate transactions. It notes that while title requisition letters and responses appear simple, they require careful consideration as they can inadvertently change the terms of the deal. The document examines what makes a title requisition valid, noting it must identify a specific title deficiency and proposed solution. It also discusses the different types of title examinations and requisitions permitted under standard real estate agreements and the process for responding to invalid requisitions.
This document contains a chemistry test with 5 questions. Question 1 involves calculations about densities and masses of gold and sand. Question 2 involves solving math problems with significant figures. Question 3 asks about Michael Phelps' swimming speed in different units. Question 4 calculates the atomic weight of a gold sample with multiple isotopes. Question 5 completes a chart with information about atoms including protons, electrons, neutrons, and atomic weight.
Kayaks and canoes are human-powered watercraft. A kayak has a paddler sitting facing forward using a double-bladed paddle, while a canoe is open and uses a single-bladed paddle. Kayaking differs from canoeing in that kayakers sit facing forward with their legs in front, paddling with a double-bladed paddle on each side in rotation, whereas canoeists sit side-by-side and use a single-bladed paddle.
This document discusses the requirements for valid title requisitions in commercial real estate purchase agreements in Ontario. It begins by explaining that agreements generally allow the buyer a period to investigate title and raise valid requisitions. It then discusses what constitutes a valid title requisition according to case law, noting they must identify a specific title problem/deficiency and proposed solution. The document uses sample language from an OREA agreement to illustrate how it sets time periods for title examinations and contractual requisitions. It concludes by explaining that "good title" is a common law requirement, meaning title that can be enforced on an unwilling buyer without defects or risks of litigation.
This document discusses the historical development of a vendor's right to refuse to remedy valid requisitions made by a buyer in a real estate purchase contract. Originally, contracts gave vendors an unfettered right to rescind the contract if they were unable or unwilling to address valid requisitions. However, over time courts have applied equitable principles to rebalance the rights, recognizing that vendors cannot rescind in bad faith or for improper motives, and that contracts should not be interpreted to allow rescission at a vendor's "sweet will." The document examines key cases from the 1800s and 1900s that established vendors' obligation to act in good faith and not repudiate contracts for unreasonable justifications.
This document discusses a bankruptcy court case regarding the sale of an internet domain name. The key points are:
1) The debtor (Heath Global) had agreed to purchase the "Invest.com" domain name from Jim Magner for $2 million in installments over two years.
2) After Heath Global missed an installment payment, Magner sent a notice purporting to terminate the agreement based on a clause allowing termination if a payment was not cured within 7 days.
3) Before the 7-day cure period expired, Heath Global filed for bankruptcy. The bankruptcy court found the agreement had automatically terminated pre-petition.
4) On appeal, the district court found that the agreement
Learn all about the new TREC contract forms required Jan 2016. Power point can be used alone or with text book for 30 hour TREC approved pre-licensing class. www.createspace.com/5249273.
Show Me My Money (Reisenfeld & Company v. The Network Group Inc..docxedmondpburgess27164
Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)
Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text.
Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment.
CASE
13-3
REISENFELD & CO. v. THE NETWORK GROUP, INC.;
BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002)
Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick's Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld.
During this time, Network's sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease.
Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.
JUDGE BOOGS: . . .
A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. …
There is no disagreement as to the first two requirements. It is clear that Reisenfeld's work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … U.
This document contains a chemistry test with 5 questions. Question 1 involves calculations about densities and masses of gold and sand. Question 2 involves solving math problems with significant figures. Question 3 asks about Michael Phelps' swimming speed in different units. Question 4 calculates the atomic weight of a gold sample with multiple isotopes. Question 5 completes a chart with information about atoms including protons, electrons, neutrons, and atomic weight.
Kayaks and canoes are human-powered watercraft. A kayak has a paddler sitting facing forward using a double-bladed paddle, while a canoe is open and uses a single-bladed paddle. Kayaking differs from canoeing in that kayakers sit facing forward with their legs in front, paddling with a double-bladed paddle on each side in rotation, whereas canoeists sit side-by-side and use a single-bladed paddle.
This document discusses the requirements for valid title requisitions in commercial real estate purchase agreements in Ontario. It begins by explaining that agreements generally allow the buyer a period to investigate title and raise valid requisitions. It then discusses what constitutes a valid title requisition according to case law, noting they must identify a specific title problem/deficiency and proposed solution. The document uses sample language from an OREA agreement to illustrate how it sets time periods for title examinations and contractual requisitions. It concludes by explaining that "good title" is a common law requirement, meaning title that can be enforced on an unwilling buyer without defects or risks of litigation.
This document discusses the historical development of a vendor's right to refuse to remedy valid requisitions made by a buyer in a real estate purchase contract. Originally, contracts gave vendors an unfettered right to rescind the contract if they were unable or unwilling to address valid requisitions. However, over time courts have applied equitable principles to rebalance the rights, recognizing that vendors cannot rescind in bad faith or for improper motives, and that contracts should not be interpreted to allow rescission at a vendor's "sweet will." The document examines key cases from the 1800s and 1900s that established vendors' obligation to act in good faith and not repudiate contracts for unreasonable justifications.
This document discusses a bankruptcy court case regarding the sale of an internet domain name. The key points are:
1) The debtor (Heath Global) had agreed to purchase the "Invest.com" domain name from Jim Magner for $2 million in installments over two years.
2) After Heath Global missed an installment payment, Magner sent a notice purporting to terminate the agreement based on a clause allowing termination if a payment was not cured within 7 days.
3) Before the 7-day cure period expired, Heath Global filed for bankruptcy. The bankruptcy court found the agreement had automatically terminated pre-petition.
4) On appeal, the district court found that the agreement
Learn all about the new TREC contract forms required Jan 2016. Power point can be used alone or with text book for 30 hour TREC approved pre-licensing class. www.createspace.com/5249273.
Show Me My Money (Reisenfeld & Company v. The Network Group Inc..docxedmondpburgess27164
Show Me My Money (Reisenfeld & Company v. The Network Group Inc., p. 313)
Why does the court see this case as involving a quasi-contract as opposed to an actual contract? What other case law does the court rely on in finding precedent/support for compensating Reisenfeld? Does this decision appear to follow the golden rule guideline set forth in Chapter 2 (pp. 27 and 28)? Describe another example of an implied-in-fact or quasi-contract that you have experienced or is mentioned in the text.
Note: please read all the information correctly before you begin the assignment I have also copy and paste pages 27 and 28 that you would need to complete the assignment.
CASE
13-3
REISENFELD & CO. v. THE NETWORK GROUP, INC.;
BUILDERS SQUARE, INC.; KMART CORP. U.S. COURT OF APPEALS FOR THE SIXTH CIRCUIT 277 F.3d 856 U.S. App. (2002)
Network Group (“Network”) was contracted by BSI to assist in selling or subleasing closed Kmart stores in Ohio. A few years later, Network entered into a commission agreement with Reisenfeld, a real estate broker for Dick's Clothing and Sporting Goods (“Dicks”). Dicks then subleased two stores from BSI. According to executed assignment and assumption agreements signed in November of 1994, BSI was to pay a commission to Network. Network was then responsible, pursuant to the commission agreement with Reisenfeld, to pay a commission of $1 per square foot to Reisenfeld. There was no direct agreement made between BSI and Reisenfeld.
During this time, Network's sole shareholder was defrauding BSI. This shareholder was convicted of several criminal charges stemming from his fraudulent acts. Network was ordered by the district court to disgorge any commissions received from BSI, and BSI was relieved of any duty to pay additional commissions to Network. As such, Reisenfeld never received his commission related to the Dicks sublease.
Reisenfeld sued in state court for the $160,320 in commissions he had not been paid. In addition to suing Network, Reisenfeld also named BSI as a defendant. The suit alleged, among other things, that based on a theory of quasi-contracts, BSI was jointly and severally liable for the commission.
JUDGE BOOGS: . . .
A contract implied-in-law, or “quasi-contract,” is not a true contract, but instead a liability imposed by courts in order to prevent unjust enrichment. … Under Ohio law, there are three elements for a quasi-contract claim. There must be: (1) a benefit conferred by the plaintiff upon the defendant; (2) knowledge by the defendant of the benefit; and (3) retention of the benefit by the defendant under circumstances where it would be unjust to do so without payment. …
There is no disagreement as to the first two requirements. It is clear that Reisenfeld's work as broker benefited BSI and that BSI was aware of the work Reisenfeld was doing. The disagreement rests on the third requirement—whether it would be unjust for BSI to retain the benefit it received without paying Reisenfeld for it. … U.
Do building permits affect title to real estate?JoanneMarsh
1. The document discusses whether open building permits affect title to real estate, specifically considering a 2015 court decision.
2. It provides background on what building permits are, how buyers discover if all permits were obtained, and whether open permits affect a seller's title.
3. Historically, open permits were not considered title issues but "off-title matters." However, two 2013 court cases suggested open permits could be valid requisition issues, either as titles matters or precursors to work orders, and in some cases could affect the "root of title."
This is a presentation on the terms of a contract. It covers the general concepts of terms of a contract. It is ideal for beginner to intermediate level Contract Law students
This document discusses conditions precedent, representations, and warranties that are standard clauses in syndicated loan agreements. Conditions precedent are requirements that must be met before a borrower can draw down loan funds, such as providing documents showing authorization and financial ability. Representations and warranties provide contractual remedies if statements made about the borrower's legal/financial position are untrue. Both conditions precedent and representations/warranties aim to ensure everything is in order before funds are lent and allow calling back the loan if issues arise.
Asset Purchase Agreement
The attached draft aircraft purchase agreement has many, many drafting errors. There is legalese, provisions are way too long, and there is a total lack of craftsmanship. Please clean it up. Redraft the agreement to reflect the deal below. There will be a fair amount of revision. Do not use any supplementary sources, other than those distributed to you in our course. Do not draft provisions other than the ones I have specifically asked for or those that are required because of the cascade effect (text pages 342-343). Finally, please draft an agreement from the point of view of your client, the seller.
General Instructions
-
Draft an Agreement for Purchase and Sale of Assets (“Purchase Agreement”) for your client who wants to sell a law practice.
-
Focus on the material covered in class (textbook, class notes, TWEN, articles referenced, these instructions, Assignment, including Chapters 1-12, 14, 16-18 and Chapter 32;
plus
the Material Adverse Condition article on TWEN (“The MAC Clause: An Emperor With No Clothes”), and the following articles in the course reader: Parol Evidence after
Riverisland
; Liquidated Damages Clauses; and the Indemnity Primer.
-
Use the Aircraft Purchase Agreement, which is posted on TWEN, as the base document on which you will incorporate the information and the deal points.
-
Clean up all language used from the form by applying what we have covered (ie, use of “may”, “shall”, active form, no legalese…)
-
Do not include language that is clearly not requested.
-
If given information to specify a date or amount, calculate date or amount to get full credit.
-
13-page maximum for both documents, but the Promissory Note cannot be longer than 1 page.
-
I reserve the right to modify these instructions and deal points up to 1 week before the due date and time. I will accept the latest version you send me before the due date and time.
-
Due no later than 09:00 a.m. Saturday, November 5, 2016 by e-mail to
[email protected]
Deal Overview (may apply to purchase agreement or the Note exhibit)
-
Your California client, a limited liability partnership whose legal name is Bar None, LLP, but who does business as (dba) The Top Law Firm, wants to sell substantially all of the assets in connection with a law practice located at the building with an address of 3333 Sunset Blvd, Los Angeles, CA. As an LLP, your client is an entity in which the attorney-owners are partners, but no partner is liable to any creditor of the law firm nor is any partner liable for any negligence on the part of any other partner (i.e., each partner has limited liability). The managing partner is J.D. Advocate. The buyer, on the other hand, is Prince Law, but – because he also wants limited liability – he does not want to practice as a sole proprietor so he will create a California entity called Prince Law, P.C. and register it with the California State Bar and California Secretary of State. The LLP is registere.
Contracts are a part of our everyday life, arising in collaboration, trust, promise and credit.
How are contracts formed? What makes a contract enforceable? What happens when one party breaks a promise?
Specific performance, can parties contract outjoseph-omwenga
Specific performance is a court order requiring a party to fulfill their contractual obligations. It is a discretionary remedy granted when monetary damages are inadequate. Certain types of contracts, such as those involving land or unique goods, are more likely to receive specific performance. Parties can generally contract out of specific performance by including damages provisions or defenses to the remedy. However, courts may scrutinize such provisions between parties with unequal bargaining power.
1. Consideration is what each party provides in a contract, such as money for goods. Executed consideration involves a thing in return for a promise, while executory consideration involves promises to perform future acts.
2. A party cannot claim consideration for doing something they are already legally obligated to do. A contract also requires an unforeseen event that radically changes completion and is not caused by either party to discharge the contract due to frustration.
3. An offer must be clearly defined and accepted for a contract to form, and an offer can end through rejection, lapse of time, or revocation. Acceptance generally occurs when a letter is posted, not received.
This document provides an overview of specific performance as an equitable remedy for breach of contract involving the sale of real property in New York. It discusses how specific performance can be used to enforce a contract when money damages are insufficient, such as when a buyer defaults on payment or a seller fails to make required property disclosures. The document outlines the factors courts consider in determining whether to grant specific performance, including whether the plaintiff substantially performed their contractual obligations and was ready, willing, and able to perform at the time of contracting. It also distinguishes specific performance from injunctions and identifies the elements a plaintiff must prove to obtain specific performance as a remedy for breach of a real estate contract.
This document discusses key concepts relating to contracts under Philippine law. It defines important terms like cause, motive, inadequacy of cause, and reformation. It also discusses requisites of a valid contract, effects of false cause, distinguishing objects and causes in contracts of sale, and when reformation of a written contract is permitted compared to annulment. Several problems are presented relating to determining the legality of contracts and eligibility for reformation in cases of mutual mistake.
Unit 2 Section 4 Review of Colorado Contract LawBy the end of .docxlillie234567
Unit 2 Section 4 Review of Colorado Contract Law
By the end of this unit, you will be able to:
· Describe the Conway-Bogue court case and summarize the ruling of the Colorado Supreme Court
· Compare and contrast the CO Fair Housing Act and the Federal Fair Housing Act
· Explain Common-Interest Ownership and its requirements
· Describe CO Statutory Relationships
There are several core case laws and statutes affecting the practice of real estate in Colorado. They are presented here in summary format along with the reference for further investigation.
Click here to read the following section in the Colorado Revised Statutes:
· CRS 38-10-108
End of Page
Unit 2-4 Conway-Bogue
Conway–Bogue is the shortened name of one of the parties to a major case law opinion by the Colorado Supreme Court in 1957. The lawyers in the Denver Bar Association sued the Conway-Bogue Realty Investment Company to prevent what the lawyers considered real estate broker infringement on their practice of law.
The Supreme Court determined that many of the
acts performed by real estate brokers do constitute the practice of law. This includes preparing deeds, leases, completing standard and approved contract forms, etc., and giving explanation or advice as to the legal effect of these forms.
It also concluded that
licensed real estate brokers may prepare these sale, loan, and leasing documents (that normally only attorneys-at-law may prepare)
only for their own customers in transactions in which they are acting as a real estate broker.
The courts said it reached its decision based on:
1. A scarcity of lawyers in many parts of the state. (
Remember, this was in the 1950’s.)
2. A 50+-year history of the public seeking brokers rather than lawyers to conduct real estate transactions.
3. No record of any public or lawyer harm from the (then) current practice.
4. No move by the legislature to stop this “alleged evil” practice.
The Court found that
to prohibit brokers from this limited practice of law would “not be in the public interest.”
End of Page
Unit 2-4 Conway-Bogue
The Colorado Association of REALTORS® legal counsel cautioned its members that the broker’s activity must be limited as to:
1. Brokers must be
connected to the transaction as broker.
2. Brokers
may not charge for legal document preparation.
3. Brokers may only prepare “
commonly used, printed, standard and approved forms.”
(Instructor’s Note: This is the precursor to Rule F-7 and the Commission-approved forms in required use today.)
Clearly, brokers
must NOT prepare:
1. Legal documents as a business, courtesy or favor, whether paid or not, when not connected to the transaction as a broker.
2. Documents that are not on standard and approved printed forms.
3. Wills or other legal documents beyond those customary in a real estate transaction.
C..
This note considers whether a contract term can exclude all liability for latent defects and limit liability to defect repair or replacement. The clause is based on clause 36.9 from MF/1, the Model Form of conditions for electrical, electronic and mechanical plant from IMechE/IET.
The relevant cases are British Fermentation Products v Compair Reavell [1999] 2 All ER (Comm) 389 and in BHP Petroleum v British Steel [2000]2 All ER (Comm) 133.
The note was prepared by Sarah fox, 500 Words Ltd. She has reviewed, adapted, advised and trained on the MF/1 form of contract.
www.500words.co.uk
Matthew Professional CV experienced Government LiaisonMattGardner52
As an experienced Government Liaison, I have demonstrated expertise in Corporate Governance. My skill set includes senior-level management in Contract Management, Legal Support, and Diplomatic Relations. I have also gained proficiency as a Corporate Liaison, utilizing my strong background in accounting, finance, and legal, with a Bachelor's degree (B.A.) from California State University. My Administrative Skills further strengthen my ability to contribute to the growth and success of any organization.
What are the common challenges faced by women lawyers working in the legal pr...lawyersonia
The legal profession, which has historically been male-dominated, has experienced a significant increase in the number of women entering the field over the past few decades. Despite this progress, women lawyers continue to encounter various challenges as they strive for top positions.
Do building permits affect title to real estate?JoanneMarsh
1. The document discusses whether open building permits affect title to real estate, specifically considering a 2015 court decision.
2. It provides background on what building permits are, how buyers discover if all permits were obtained, and whether open permits affect a seller's title.
3. Historically, open permits were not considered title issues but "off-title matters." However, two 2013 court cases suggested open permits could be valid requisition issues, either as titles matters or precursors to work orders, and in some cases could affect the "root of title."
This is a presentation on the terms of a contract. It covers the general concepts of terms of a contract. It is ideal for beginner to intermediate level Contract Law students
This document discusses conditions precedent, representations, and warranties that are standard clauses in syndicated loan agreements. Conditions precedent are requirements that must be met before a borrower can draw down loan funds, such as providing documents showing authorization and financial ability. Representations and warranties provide contractual remedies if statements made about the borrower's legal/financial position are untrue. Both conditions precedent and representations/warranties aim to ensure everything is in order before funds are lent and allow calling back the loan if issues arise.
Asset Purchase Agreement
The attached draft aircraft purchase agreement has many, many drafting errors. There is legalese, provisions are way too long, and there is a total lack of craftsmanship. Please clean it up. Redraft the agreement to reflect the deal below. There will be a fair amount of revision. Do not use any supplementary sources, other than those distributed to you in our course. Do not draft provisions other than the ones I have specifically asked for or those that are required because of the cascade effect (text pages 342-343). Finally, please draft an agreement from the point of view of your client, the seller.
General Instructions
-
Draft an Agreement for Purchase and Sale of Assets (“Purchase Agreement”) for your client who wants to sell a law practice.
-
Focus on the material covered in class (textbook, class notes, TWEN, articles referenced, these instructions, Assignment, including Chapters 1-12, 14, 16-18 and Chapter 32;
plus
the Material Adverse Condition article on TWEN (“The MAC Clause: An Emperor With No Clothes”), and the following articles in the course reader: Parol Evidence after
Riverisland
; Liquidated Damages Clauses; and the Indemnity Primer.
-
Use the Aircraft Purchase Agreement, which is posted on TWEN, as the base document on which you will incorporate the information and the deal points.
-
Clean up all language used from the form by applying what we have covered (ie, use of “may”, “shall”, active form, no legalese…)
-
Do not include language that is clearly not requested.
-
If given information to specify a date or amount, calculate date or amount to get full credit.
-
13-page maximum for both documents, but the Promissory Note cannot be longer than 1 page.
-
I reserve the right to modify these instructions and deal points up to 1 week before the due date and time. I will accept the latest version you send me before the due date and time.
-
Due no later than 09:00 a.m. Saturday, November 5, 2016 by e-mail to
[email protected]
Deal Overview (may apply to purchase agreement or the Note exhibit)
-
Your California client, a limited liability partnership whose legal name is Bar None, LLP, but who does business as (dba) The Top Law Firm, wants to sell substantially all of the assets in connection with a law practice located at the building with an address of 3333 Sunset Blvd, Los Angeles, CA. As an LLP, your client is an entity in which the attorney-owners are partners, but no partner is liable to any creditor of the law firm nor is any partner liable for any negligence on the part of any other partner (i.e., each partner has limited liability). The managing partner is J.D. Advocate. The buyer, on the other hand, is Prince Law, but – because he also wants limited liability – he does not want to practice as a sole proprietor so he will create a California entity called Prince Law, P.C. and register it with the California State Bar and California Secretary of State. The LLP is registere.
Contracts are a part of our everyday life, arising in collaboration, trust, promise and credit.
How are contracts formed? What makes a contract enforceable? What happens when one party breaks a promise?
Specific performance, can parties contract outjoseph-omwenga
Specific performance is a court order requiring a party to fulfill their contractual obligations. It is a discretionary remedy granted when monetary damages are inadequate. Certain types of contracts, such as those involving land or unique goods, are more likely to receive specific performance. Parties can generally contract out of specific performance by including damages provisions or defenses to the remedy. However, courts may scrutinize such provisions between parties with unequal bargaining power.
1. Consideration is what each party provides in a contract, such as money for goods. Executed consideration involves a thing in return for a promise, while executory consideration involves promises to perform future acts.
2. A party cannot claim consideration for doing something they are already legally obligated to do. A contract also requires an unforeseen event that radically changes completion and is not caused by either party to discharge the contract due to frustration.
3. An offer must be clearly defined and accepted for a contract to form, and an offer can end through rejection, lapse of time, or revocation. Acceptance generally occurs when a letter is posted, not received.
This document provides an overview of specific performance as an equitable remedy for breach of contract involving the sale of real property in New York. It discusses how specific performance can be used to enforce a contract when money damages are insufficient, such as when a buyer defaults on payment or a seller fails to make required property disclosures. The document outlines the factors courts consider in determining whether to grant specific performance, including whether the plaintiff substantially performed their contractual obligations and was ready, willing, and able to perform at the time of contracting. It also distinguishes specific performance from injunctions and identifies the elements a plaintiff must prove to obtain specific performance as a remedy for breach of a real estate contract.
This document discusses key concepts relating to contracts under Philippine law. It defines important terms like cause, motive, inadequacy of cause, and reformation. It also discusses requisites of a valid contract, effects of false cause, distinguishing objects and causes in contracts of sale, and when reformation of a written contract is permitted compared to annulment. Several problems are presented relating to determining the legality of contracts and eligibility for reformation in cases of mutual mistake.
Unit 2 Section 4 Review of Colorado Contract LawBy the end of .docxlillie234567
Unit 2 Section 4 Review of Colorado Contract Law
By the end of this unit, you will be able to:
· Describe the Conway-Bogue court case and summarize the ruling of the Colorado Supreme Court
· Compare and contrast the CO Fair Housing Act and the Federal Fair Housing Act
· Explain Common-Interest Ownership and its requirements
· Describe CO Statutory Relationships
There are several core case laws and statutes affecting the practice of real estate in Colorado. They are presented here in summary format along with the reference for further investigation.
Click here to read the following section in the Colorado Revised Statutes:
· CRS 38-10-108
End of Page
Unit 2-4 Conway-Bogue
Conway–Bogue is the shortened name of one of the parties to a major case law opinion by the Colorado Supreme Court in 1957. The lawyers in the Denver Bar Association sued the Conway-Bogue Realty Investment Company to prevent what the lawyers considered real estate broker infringement on their practice of law.
The Supreme Court determined that many of the
acts performed by real estate brokers do constitute the practice of law. This includes preparing deeds, leases, completing standard and approved contract forms, etc., and giving explanation or advice as to the legal effect of these forms.
It also concluded that
licensed real estate brokers may prepare these sale, loan, and leasing documents (that normally only attorneys-at-law may prepare)
only for their own customers in transactions in which they are acting as a real estate broker.
The courts said it reached its decision based on:
1. A scarcity of lawyers in many parts of the state. (
Remember, this was in the 1950’s.)
2. A 50+-year history of the public seeking brokers rather than lawyers to conduct real estate transactions.
3. No record of any public or lawyer harm from the (then) current practice.
4. No move by the legislature to stop this “alleged evil” practice.
The Court found that
to prohibit brokers from this limited practice of law would “not be in the public interest.”
End of Page
Unit 2-4 Conway-Bogue
The Colorado Association of REALTORS® legal counsel cautioned its members that the broker’s activity must be limited as to:
1. Brokers must be
connected to the transaction as broker.
2. Brokers
may not charge for legal document preparation.
3. Brokers may only prepare “
commonly used, printed, standard and approved forms.”
(Instructor’s Note: This is the precursor to Rule F-7 and the Commission-approved forms in required use today.)
Clearly, brokers
must NOT prepare:
1. Legal documents as a business, courtesy or favor, whether paid or not, when not connected to the transaction as a broker.
2. Documents that are not on standard and approved printed forms.
3. Wills or other legal documents beyond those customary in a real estate transaction.
C..
This note considers whether a contract term can exclude all liability for latent defects and limit liability to defect repair or replacement. The clause is based on clause 36.9 from MF/1, the Model Form of conditions for electrical, electronic and mechanical plant from IMechE/IET.
The relevant cases are British Fermentation Products v Compair Reavell [1999] 2 All ER (Comm) 389 and in BHP Petroleum v British Steel [2000]2 All ER (Comm) 133.
The note was prepared by Sarah fox, 500 Words Ltd. She has reviewed, adapted, advised and trained on the MF/1 form of contract.
www.500words.co.uk
Matthew Professional CV experienced Government LiaisonMattGardner52
As an experienced Government Liaison, I have demonstrated expertise in Corporate Governance. My skill set includes senior-level management in Contract Management, Legal Support, and Diplomatic Relations. I have also gained proficiency as a Corporate Liaison, utilizing my strong background in accounting, finance, and legal, with a Bachelor's degree (B.A.) from California State University. My Administrative Skills further strengthen my ability to contribute to the growth and success of any organization.
What are the common challenges faced by women lawyers working in the legal pr...lawyersonia
The legal profession, which has historically been male-dominated, has experienced a significant increase in the number of women entering the field over the past few decades. Despite this progress, women lawyers continue to encounter various challenges as they strive for top positions.
Synopsis On Annual General Meeting/Extra Ordinary General Meeting With Ordinary And Special Businesses And Ordinary And Special Resolutions with Companies (Postal Ballot) Regulations, 2018
Business law for the students of undergraduate level. The presentation contains the summary of all the chapters under the syllabus of State University, Contract Act, Sale of Goods Act, Negotiable Instrument Act, Partnership Act, Limited Liability Act, Consumer Protection Act.
Guide on the use of Artificial Intelligence-based tools by lawyers and law fi...Massimo Talia
This guide aims to provide information on how lawyers will be able to use the opportunities provided by AI tools and how such tools could help the business processes of small firms. Its objective is to provide lawyers with some background to understand what they can and cannot realistically expect from these products. This guide aims to give a reference point for small law practices in the EU
against which they can evaluate those classes of AI applications that are probably the most relevant for them.
Genocide in International Criminal Law.pptxMasoudZamani13
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Lifting the Corporate Veil. Power Point Presentationseri bangash
"Lifting the Corporate Veil" is a legal concept that refers to the judicial act of disregarding the separate legal personality of a corporation or limited liability company (LLC). Normally, a corporation is considered a legal entity separate from its shareholders or members, meaning that the personal assets of shareholders or members are protected from the liabilities of the corporation. However, there are certain situations where courts may decide to "pierce" or "lift" the corporate veil, holding shareholders or members personally liable for the debts or actions of the corporation.
Here are some common scenarios in which courts might lift the corporate veil:
Fraud or Illegality: If shareholders or members use the corporate structure to perpetrate fraud, evade legal obligations, or engage in illegal activities, courts may disregard the corporate entity and hold those individuals personally liable.
Undercapitalization: If a corporation is formed with insufficient capital to conduct its intended business and meet its foreseeable liabilities, and this lack of capitalization results in harm to creditors or other parties, courts may lift the corporate veil to hold shareholders or members liable.
Failure to Observe Corporate Formalities: Corporations and LLCs are required to observe certain formalities, such as holding regular meetings, maintaining separate financial records, and avoiding commingling of personal and corporate assets. If these formalities are not observed and the corporate structure is used as a mere façade, courts may disregard the corporate entity.
Alter Ego: If there is such a unity of interest and ownership between the corporation and its shareholders or members that the separate personalities of the corporation and the individuals no longer exist, courts may treat the corporation as the alter ego of its owners and hold them personally liable.
Group Enterprises: In some cases, where multiple corporations are closely related or form part of a single economic unit, courts may pierce the corporate veil to achieve equity, particularly if one corporation's actions harm creditors or other stakeholders and the corporate structure is being used to shield culpable parties from liability.
Lifting the Corporate Veil. Power Point Presentation
Please satisfy yourself
1. “Please Satisfy Yourself”
(and other passive aggressive answers to invalid requisitions)
Simon Crawford, Partner, Bennett Jones LLP
Carolin Jumaa, Student at Law, Bennett Jones LLP
Title requisitions, and responses to title requisitions, are often evidenced by two simple letters
back and forth between solicitors; and yet, in the content of those two letters is the meat of the
real estate transaction. Those letters evidence that two solicitors have put their mind to the
fundamental issue of whether the seller of the real estate can convey what it bargained to convey
in the purchase agreement.
In fact, so important is the content of the requisition letter and the response to the requisition
letter, that the Law Society of Upper Canada has set out in Commentary 5.3 to Rule 6.1-1 of its
Rules of Professional Conduct that “a lawyer may not assign to a non-lawyer the ultimate
responsibility for review of a title search report…or signing a letter of requisition”.
The reason why the letter of requisition, and a response to such letter, are fundamental lawyer
tasks, is because they are anything but routine. They are anything but standard. And they are
anything but obvious. There are, in fact, highly customized.
The problem however, is the answers given to requisitions are so often, the same stock answers,
that practitioners have forgotten (or become indifferent to) the meaning behind the words.
This paper, although it may wind in various directions, has at its heart, the question: “How does
one respond to an invalid requisition?”. And the circuitous route that we will take to get to that
answer, starts with understanding the nature of requisitions, and what makes a requisition valid
in the first place.
But before we get there, I would like to write one message on a piece of paper for you and ask
that you fold it in tuck it in your pocket for when you next respond to a requisition letter, and the
message is this: “Do not, by your response to requisitions, prejudice your client’s rights, or
adversely modify its obligations, under the purchase agreement”. This really, is the golden rule.
2. 2
A solicitor can, by wrongly addressing a requisition, inadvertently change the deal for the seller,
and to do so may amount to negligence.
When it comes to title matters, commercial real estate purchase agreements generally fall into
two categories: (a) those that afford the buyer a period of time to investigate title and in which
to make valid requisitions (in which case the seller is afforded an opportunity to respond, subject
to an underlying obligation to deliver so-called good title);1
and (b) those that afford the buyer
with a due diligence period for all manner of investigation, including title, in which period the
buyer investigates title, raises its concerns, and ultimately, subject to interim negotiation, either
"takes it or leaves it" on the due diligence date.
This paper ignores the former, as those transactions invariably lead to a due diligence date
“discussion” to resolve title matters in the context of waiver and possible transactional
concessions. This discussion is focused instead on the requisition structure.
A Valid Requisition Letter
Being as we are focused on how to respond to invalid requisitions, it follows that we should
appreciate what makes a requisition valid in the first place. There is no shortage of confusion and
debate over what constitutes a valid requisition, and more particularly, what constitutes a valid
title requisition.
Firstly, in order to be valid, a title requisition must identify a specific problem or deficiency with
respect to title, and should set out a solution or action that, if implemented by the seller, would
correct that problem or deficiency.2
The Court in Doross Construction Co. v. Kaiser informed us
that a buyer:
1
For the sake of clarity, "buyer" and "seller" are used in this paper, except when directly quoting from others that use "purchaser" or "vendor".
2
Stykolt v, Maynard, [1942] O.R. 250 [Stykolt]. Here, the court held that a letter containing multiple requisitions did not contain any valid objection
to title because it had been written without any reference to the particular contract or title.
3. 3
"must be specific as to requisitions and is required to make searches and
cannot in a general way require assurances."3
The number of the instrument, its date, its description, what it purports to do, a description of
the particular deficiency, and a request for a specific solution, are all required for a valid
requisition, and should the requisition be disputed, would be required to support an application
under the Vendors and Purchasers Act.4
Under section 3 of the Vendors and Purchasers Act, a
vendor or purchaser “may at any time and from time to time apply to the Superior Court of Justice
in respect of any requisition or objection or any claim for compensation or any other question
arising out of or connected with the contract, except a question affecting the existence or validity
of the contract, and the court may make such order upon the application as may be considered
just.”5
These determinations will bind the immediate transaction but have no effect on future
dealings concerning the same transaction.6
Secondly, the purchase agreement must set out a time period for such requisition to be made in
order to be valid, failing which, the buyer must accept such deficiency, unless it goes to the root
of title. If the purchase agreement does not set out a time period, Section 4 of the Vendors and
Purchasers Act injects into the contract a thirty day period from the date of the contract.
Requisitions must be delivered within the specified time, not just mailed by then.7
3
1981 CarswellOnt 3227, 11 A.C.W.S. (2d) 114 at 9. In this case, the newly constructed building was .1 of a foot too close to the property line as
set out in the municipal zoning bylaws. The buyer's solicitor sent a "boilerplate" letter requesting assurances that all bylaws and
statutes were complied with on the day of closing. The court held that the buyer could not rely on the vague language of the
requisitions.
4
Donahue, Quinn and Grandilli, Real Estate Practice in Ontario, 8th ed (Toronto: LexisNexis, 2016) at 253.
5
RSO 1990, c V.2, s 3.
6
Ibid.
7
Stykolt, supra at note 2.
4. 4
So, based upon these two simple rules, a prudent response to any requisition that does not satisfy
these criteria, should start with the words to the effect of: “Your requisition is invalid and the
Seller denies the Buyer’s right to make such requisition”. The answer is not “please satisfy
yourself”. The answer is not “The Buyer does not wish to satisfy your requisition”. In providing
an answer to an invalid requisition, the Buyer’s counsel should be careful to hit “on the nose”
that the basis for the denial is that the underlying requisition is flawed and invalid, not that the
Seller is unable or unwilling to satisfy it. Furthermore, even if the Seller is willing to accommodate
the Buyer on the requested point, a prudent lawyer will still expressly deny the validity of the
requisition, reserve the Seller’s right to do nothing about the requisitioned issue, and set out
what the Seller proposes to do, without liability for failure to do so.
Title Requisitions and other Permitted Requisitions
It helps to consider the standard requisition language, and for illustrative purposes we will use
the 2016 title and requisition language from Ontario Real Estate Association ("OREA") form for
the purposes of this discussion.
The OREA form provides for two types of requisitions: title requisitions and other contractual
requisitions, which is to say, requisitions as to matters that are not title, but are specifically
included in the contract and stated to be the subject matter of a valid requisition. Section 8 of
the OREA form agreement sets out the investigation and requisition regime as follows:
8. TITLE SEARCH: Buyer shall be allowed until 6:00 p.m. on the ..................... day
of.................................................................., 20................, (Requisition Date) to
examine the title to the property at his own expense and until the earlier of: (i)
thirty days from the later of the Requisition Date or the date on which the
conditions in this Agreement are fulfilled or otherwise waived or; (ii) five days prior
to completion, to satisfy himself that there are no outstanding work orders or
deficiency notices affecting the property, that its present use
(................................................................) may be lawfully continued and that the
principal building may be insured against risk of fire. Seller hereby consents to the
5. 5
municipality or other governmental agencies releasing to Buyer details of all
outstanding work orders and deficiency notices affecting the property, and Seller
agrees to execute and deliver such further authorizations in this regard as Buyer
may reasonably require.
The first thing that you will notice is that two types of examinations are contemplated by the
contract, and two time frames in which to conduct them. Title examinations are allowed to be
made until the set requisition date. Examinations as to outstanding work orders, deficiency
notices, the insurability of the property, and as to whether its present use may be lawfully
continued, may be made for a period after that, and in any event not later than five days prior to
the completion date. The additional time period is considered reasonable given that some of
these so-called "off-title" investigations require third party governmental authorities to process
written requests for information and to disclose the contents of their file on the property to the
buyer.
The purpose of Section 8 of the Agreement is primarily to set out the dates for the various periods
of investigation. Section 10 of the Agreement then sets out how these dates trigger contractual
rights and obligations of the parties:
10. TITLE: Provided that the title to the property is good and free from all
registered restrictions, charges, liens, and encumbrances except as otherwise
specifically provided in this Agreement and save and except for (a) any registered
restrictions or covenants that run with the land providing that such are complied
with; (b) any registered municipal agreements and registered agreements with
publicly regulated utilities providing such have been complied with, or security has
been posted to ensure compliance and completion, as evidenced by a letter from
the relevant municipality or regulated utility; (c) any minor easements for the
supply of domestic utility or telephone services to the property or adjacent
properties; and (d) any easements for drainage, storm or sanitary sewers, public
utility lines, telephone lines, cable television lines or other services which do not
materially affect the use of the property. If within the specified times referred to
6. 6
in paragraph 8 any valid objection to title or to any outstanding work order or
deficiency notice, or to the fact the said present use may not lawfully be
continued, or that the principal building may not be insured against risk of fire is
made in writing to Seller and which Seller is unable or unwilling to remove, remedy
or satisfy or obtain insurance save and except against risk of fire (Title Insurance)
in favour of the Buyer and any mortgagee, (with all related costs at the expense
of the Seller), and which Buyer will not waive, this Agreement notwithstanding
any intermediate acts or negotiations in respect of such objections, shall be at an
end and all monies paid shall be returned without interest or deduction and Seller,
Listing Brokerage and Co-operating Brokerage shall not be liable for any costs or
damages. Save as to any valid objection so made by such day and except for any
objection going to the root of the title, Buyer shall be conclusively deemed to have
accepted Seller's title to the property.
Good Title is a Condition of Closing
In order to understand Section 10, we first need to parse its grammar. The Ontario Superior Court
of Justice held that "provided that" can convey "the creation of a condition precedent that is to
attach to an earlier provision, an exception to such a provision, a qualification of it, and
clarification by excluding a specific inference that might possibly be drawn from its terms."8
So,
if we accept then, that Section 10's opening proviso constitutes a condition of closing in favour
of the buyer,9
then we might paraphrase it as stating "the obligation of the Purchaser to complete
the transaction is conditional upon title to the property being good and free…".
8
John Gardner & Karen Gardner, 5th ed, Sanagan's Encyclopedia of Words and Phrases Legal Maxims, (Toronto: Thompson Reuters, 2016), sub
verbo “provided that”, citing Midas Realty Corp. of Canada Inc. v. Galvic Investments Ltd. (2008), 2008 CarswellOnt 3087 (Ont. S.C.J.).
9
Blacks Law Dictionary - The word used in introducing a proviso (which see.) Ordinarily it signifies or expresses a condition; but this is not
invariable, for, according to the context, it may import a covenant, or a limitation or qualification, or a restraint, modification, or
exception to something which precedes. See Stanley v. Colt 5 Wall. 166. 18 L. Ed. 502; Stoel v. Flanders, 68 Wis. 256, 32 N. W. 114;
7. 7
The words "provided that the title to the property is good" are a reiteration of what exists at
common law despite this provision, as the common law has long held that any sale of land is
conditional upon the seller's good title, even if it is not explicitly stated in the contract. Which is
to say, the condition of good title is always implied by the common law.10
The balance of that sentence then states that title must be two things. Firstly, title must be good,
and secondly it must be free from all restrictions and encumbrances except for the four
categories of permitted encumbrances described in subparagraphs (a) through (d). So it is a two
part test. The second part of the test is more concrete within the four corners of the agreement,
as it says that title shall be subject to no encumbrances other than a list of so-called permitted
encumbrances. However, the first part of the test, requiring that title also be good, means that
we must look at the common law. The court in Joydan Developments Ltd. v. Hilite Holdings Ltd.
tells us that the failure to deliver good title occurs when “the purchaser could not have that which
he contracted for and, as such, could not be compelled to take that which he did not mean to
have.” 11
Good Title: More than Just Semantics
When determining what constitutes good title, the courts look primarily into whether title
can actually be transferred as promised, and stems from the fundamental common law rule that
“if a vendor contracts to sell land without any saving condition as to the nature of the title he is
Robertson v. Caw, 3 Barb. (N. Y.) 418; Pasehall v. Passmore, 15 Pa. 308; Carroll v. State, 58 Ala. 396; Colt v. Hubbard, 33 Conn. 281;
Woodruff v. Woodruff, 44 N. J. Eq. 349, 16 Atl. 4, 1 L. R. A. 380.
10
McNiven v. Pigott, [1914] O.J. No. 8, 22 D.L.R. 141 at 14 and 16 (H.C.Div.). The court cited from Flureau v. Thornhill (1776), 2 W. Bl. 1078 to hold
that "the principle is laid down that a contract for sale of land is merely upon condition, frequently expressed, always implied, that
the seller has a good title. If the seller has no title or a defective title, and is acting without collusion, the prospective buyer is entitled
to no satisfaction for the loss of his bargain." This was supported by Bain v. Fothergill (1874), L.E. 7 H.L. 158, where "it was laid down
that the rule in the earlier case must be taken to be without exception, unless the plaintiff could shew sufficient to entitle him to
recover damages in an action for deceit."
11
[1972] O.J. No 2008 [1973] 1 O.R. 482 (H.J.C.) at 16.
8. 8
to confer upon the purchaser, the law implies that it is incumbent on him to make out a good
title in fee simple.”12
As with most tests, it is dependent upon the facts of each particular case; however, the
common thread is determining whether the seller is actually able to grant that for which the
purchaser bargained. A defect in title relates to the quality of the seller's ownership and not the
quality of the actual land.13
Good title is title that can be forced upon an unwilling future buyer
of the property,14
does not have palpable defects, grave doubts, clouds, or the reasonable threat
of litigation or hazard to mar peaceful possession. 15
Pennel J. in Zender put it this way:
"The vendor must show a good title, that being a marketable title. A marketable
title is one which can at all times and under all circumstances be forced upon an
unwilling purchaser who is not compelled to take a title which would expose him
to litigation or hazard".16
12
Armstrong v. Nason (1895), 25 SCR 263 at 268.
13
Armitage v Liptay, [1976] O.J. No. 2144, 12 O.R. (2d) 543 (Ont. H.C.J.) at 15, aff'd Armitage v Liptay, [1977] O.J. No. 2278, 16 O.R. (2d) 223 (Ont.
C.A.). The court cites and adopts the unreported decision in Frank Street Holdings Ltd. v. Caravatta et al to hold that "A vendor must
show a good title. This means a merchantable or a marketable title: one which at all times and under all circumstances can be forced
upon an unwilling buyer who is not compelled to take a title which would expose him to litigation or hazard: one which is free from
litigation, palpable defects and grave doubts and couples a certainty of peaceful possession with a certainty that no flaw will appear
to disturb its market value."
14
Zender v Ball, (1975) 5 O.R. (2d) 747 at 17 [Zender];.
15
Armitage, supra note 13. Similarly, Paul Perell, Real Estate Transactions, 2d ed (Toronto, Ontario: Thomson Reuters Canada Ltd., 2014) at pg.
78 [Real Estate Transactions] mentions the following cases: Pyrke v. Waddingham (1852), 68 E.R. 813 (Ch.); 663865 Ontario Ltd. V.
Docherty, [1995] O.J. No. 956 (Ont. Gen. Div.); Holmes v. Graham (1978), 90 D.L.R. (3d) 474 (Ont. C.A.); and Caruana v. Duca Community
Credit Union Ltd. (1994), 20 O.R. (3d) 563 (Ont. C.A.). One point that should be noted however, is that, while the obligation to deliver
good title is in the contract and is implied by common law, it can be contracted out of: Zender, supra note 14.
16
Zender, supra at note 14.
9. 9
Di Castri would add that good title is also one which is free from palpable defects and grave
doubts and couples a certainty of peaceful possession with a certainty that no flaw will appear
to disturb its market value.”17
Marketable Title v. Marketable Property
As we discuss under the context of the analysis of the Macdonald v. Chicago Title case later in
this article, there has to be a bright line drawn between title and non-title issues when reading
this marketability test. With respect to Pennel J., I would almost want to further clarify the test
as follows (emphasized words mine):
"The vendor must show a good title, that being a marketable title, which for
clarity, is to be distinguished from a marketable property. A marketable title is
one a title to a property which can at all times and under all circumstances be
forced upon an unwilling purchaser who is not compelled to take a title which
would expose him to litigation that relates to the validity of such title or peaceful
possession or hazard that relates to the validity of such title or peaceful
possession".
There are many reasons why a property can be rendered unmarketable, including physical
defects, non-compliance with zoning setbacks or safety requirements, faulty construction,
ongoing litigation with tenants or neighbours, or other deficiencies. However, these are not title
matters, with the possible exception of litigation which goes specifically to title. So, if you are
answering a requisition that purports to characterize a matter that goes the marketable nature
of the property, instead of the marketability of title (and such matter is not otherwise permitted
to be requisitioned by the agreement) the appropriate response of buyer’s counsel is to expressly
deny the validity of such requisition. This is not to say that all non-title requisitions are invalid
under the standard form language.
17
JV Di Castri, The Law of Vendor and Purchaser, 3d ed (Toronto: Thomson Reuters, 2016) at Ch 14, Div VIII, §625.
10. 10
Title Requisitions v. Non-Title Requisitions
If you recall, I have taken the position that while the obligation of the vendor to deliver "good
title" is set out in the contract of purchase and sale, it is also an implied condition of the sale of
real estate at common law. Consequently, although it can be a matter of contract, the right to
make a requisition as to title exists at common law, and failing an express provision of the
purchase agreement, is to be made within 30 days of the agreement date, as set out above.
Accordingly, title requisitions, and the right to make them, can be distinguished from other types
of requisitions on the simple basis that they are inherent in every contract for the purchase and
sale of real estate. Therefore, it becomes particularly important that we are able to distinguish a
title requisition from a non-title requisition.
Contractual Requisitions vs. Title Requisitions
Section 10 permits requisitions on only two subject matters: title (to the extent that it is not
"good"), and a specific list of non-title matters, such as work orders and deficiency notices; which
is to say, that the contract has "elevated" these specifically listed items to the level of importance
of title matters, for the purposes of allowing the buyer to requisition their rectification, failing
which, the right of termination is triggered. We generally include these other, contractually
permitted, non-title requisitions, under the banner "matters of contractual requisitions".
Section 10 of the OREA form contains only four matters of contractual requisition: "any
outstanding work order or deficiency notice, or to the fact the said present use may not lawfully
be continued, or that the principal building may not be insured against risk of fire". That's it.
That's all. And so where a requisition is neither one of title nor goes to one of the four issues, it
is not a valid requisition under the terms of the contract.
As a consequence, there has been more than a little judicial confusion over the years as to what
constitutes a valid title requisition. The underlying problem, generally speaking, is that there are
things that can affect the value or usefulness of a property for a buyer, and which are not title
matters, and where they are not specifically listed in the contract as being a matter of contractual
requisition, the buyer is not able to requisition their rectification or removal.
11. 11
And so, as a general matter, what the courts have said is that there is title, and then there is the
list of off title (contractual requisition) matters that are set out in the purchase agreement, and
if you haven't added them to the list, they do not constitute valid requisitions. So, if you are
buyer's counsel, consider that the list:
1. does not include open building permits;18
2. does not include a lack of building permits if no deficiency notice has been issued;19
3. does not include zoning matters, unless the facts are that the said present use may not
lawfully be continued. Which means that if the buyer has different intentions for the
property, or the zoning matters do not go to the issue of the lawfulness of the current
use, they may not be validly requisitioned.
4. does not include restrictions under conservation authorities restricting further
development on the land.20
These matters are neither title matters, nor are they matters that, by virtue of the contract, have
been elevated to the level of title matters.
For example, the court in Brar v. Smith found that the fact that the seller was using the property
for business when it was not appropriately zoned for that was not an issue that went to title
because the buyers should have done their own due diligence, checked what the land was zoned
for, and not assumed that because a commercial-looking sign was on the property that the zoning
18
Thomas v. Carreno 2013 ONSC 1495 [Carreno], discussed in further detail below.
19
MacDonald v. Chicago Title 2015 ONCA 842 [MacDonald], discussed in further detail below.
20
Palen v. Millson (1987) 63 O.R. (2d) 89 (Ont. Dist. Ct.); 665284 Ontario Ltd. v. Ricci (1992) 23 R.P.R. (2d) 221 (Ont. Gen. Div.). In both of these
cases, the courts held that restrictions placing the land under the power of a conservation authority were not valid grounds to refuse
to complete the purchase because they did not go to the root of title if they are not explicitly mentioned in the contract.
12. 12
would be adequate for their purposes without asking anyone.21
On its face, this decision is
correct, which is why the modern form of OREA agreement specifically provides for the
contractual requisition "or to the fact the said present use may not lawfully be continued", so
that a purchaser has the ability to conduct its due diligence on permitted uses and to requisition
the vendor should the existing use not be permitted by existing zoning. In Kolan v. Solicitor, the
Court stated that:
"in the case of zoning by-laws or planning controls, and in my opinion also in the
case of failure to conform with housing by-laws, to affect the marketability of the
title they must be expressly mentioned in the contract of sale as grounds for
avoidance".22
And so, the general position of the courts is that zoning matters are not title matters and may
only be requisitioned if expressly mentioned in the agreement, or as some courts put it, if
elevated by the contract to the level of importance as title matters. 23
21
[2014] OJ No 4959.
22
Kolan v. Solicitor, [1970] 1 OR 41; aff'd by the Court of Appeal, [1970] 2 OR 686 [Kolan].
23
Kolan, Ibid; Jackson v. Nicholson, [1979] O.J. No. 4321 [Jackson]; Innes v. Van de Weerdhof, [1970 ] O.J. No. 1453 [Innes]. In Jackson, the deal
to purchase a house fell through when it turned out that an earlier owner had added a sunroom without municipal permission. The
request for specific performance was upheld by the court because "the authorities are clear that a requisition for non-compliance with
a zoning is not a matter of title, let alone a matter going to the "root of title" (…) At best, a zoning by-law is a "matter affecting the
land." In Innes, the solicitors acting for the buyers of a house and a 48.5 acre Christmas-tree farm in Collingwood found out from the
municipality that there was a zoning by-law in effect on the property. This took the form of a 400 foot frontage buffer zone requirement
on each boundary road. Because of discussions around this by-law, the buyers refused to close. The court rejected the proposition
that a by-law issue goes to title and the buyers could not rescind the contract on that basis. However, see Ridgely v. Nielson [2007]
O.J. No. 1699, 53 R.P.R. (4th
) 1 (SCJ) in which case the court took into consideration the buyer's future intended use of the property in
determining whether a valid title requisition had been made.
13. 13
Then in 2013 there was a judicial hiccup (or two).
The Superior Court of Justice in 2013 heard the case 1854822 v. Estate of Manuel Martins24
which
involved the urgent request from the buyer of the real estate for an order of the Court that the
seller had "not shown good title in the premises" on closing because there was an active building
permit regarding work proposed to be done to the garage. During the requisition period, the
buyer had requisitioned that the open building permit be closed, and the seller had responded
that that request was not a valid requisition. The seller took the position that, having regard to
the language in the standard form of OREA purchase agreement, an open building permit is
neither a work order nor a deficiency notice, inasmuch as a building permit constitutes
permission to do work, not a requirement to do that work. The seller also stressed that not only
was a permit purely permissive in nature, but that no work had actually been commenced by the
seller in furtherance of the open building permit.
The Court found that a building permit, even if not acted upon (or even if only acted on to a small
extent), not only affects title but goes to the "root of title". Its rationale was that "the existence
of an open building permit which enables the city to inspect premises and make work orders does
make a difference to the buyer" ... and "clearly an inspector has the authority under the Building
Code Act to make an order that certain work be undertaken immediately to bring the garage into
compliance with the code". The implications of this finding are significant, because it not only
stands for the proposition that open building permits can be validly requisitioned as title matters,
but that they are not merely clouds on title or minor defects — they go to the "root of title".
With deference, hogwash. An active building permit can only be validly requisitioned under the
contract if the parties have added it to the list of matters that can be validly requisitioned.
Another 2013 case from the Ontario Superior Court considered a situation in which, in
accordance with a customary requisition process, the buyer requisitioned, in a timely fashion,
24
2013 ONSC 4310 [Estate of Manuel Martins].
14. 14
evidence that an open building permit had been closed.25
The seller made efforts to close the
permit in time but was unable to prior to closing. The standard OREA form purchase agreement
would have allowed the buyer to terminate the agreement had there existed "valid objections to
title, or to any outstanding work order or deficiency notice" made by the buyer within the
requisition period (or any requisition after such period that went to the root of title) that the
"Seller is unwilling or unable to remove, remedy or satisfy or obtain [title] insurance" for. At
closing, the seller denied that the buyer could refuse to close because of the open building permit
on the basis that an open building permit is not a "valid objection to title, or to any outstanding
work order or deficiency notice", but in any event (despite such denial) the seller obtained a
commitment from a title insurer (for the benefit of the buyer) to insure over the issue. The seller
obtained this policy by agreeing with the title insurer to set aside in escrow $100,000 to attend
to the problem.
The Court found in favour of the seller (and the buyer lost their deposit) on the basis that title
insurance was made available, and that the requisition provision in the agreement did not permit
termination where the valid requisition was insurable by title insurance. What the Court
appeared to do in this case, was to accept that an open building was a valid requisition
(presumably, either as a title matter or as a "precursor to a work order"). Interestingly, on appeal,
the Ontario Court of Appeal dismissed the buyer's appeal for the return of its deposit, and found
that the lower Court had concluded correctly that "the requisition in relation to the open building
permit could be satisfactorily answered by a commitment to provide title insurance as
contemplated by the Agreement of Purchase and Sale", which is to say, that the Court of Appeal
also tacitly acknowledged the validity of the underlying requisition.
So what happened in 2013? Results-based legal decisions. These decisions are a direct result of
courts struggling to find a way in which to shoehorn building permits into the "title" category.
Bad law. And being as we are on the topic of bad law, our discussion of title and building permits
25
Carreno, supra at note 18.
15. 15
would not be complete without a rant on the 2014 case of MacDonald26
which was based on the
following undisputed facts:
(a) the MacDonalds acquired a home without knowledge that the seller had removed
load bearing walls in the home without a building permit;
(b) the MacDonalds had purchased an owner's policy from Chicago Title;
(c) some years later, the City of Toronto determined that the home was unsafe as a
consequence of such wall being removed, and issued an order to the MacDonalds
to remedy the problem by installing shoring to "temporarily support the floor
structure"; and
(d) Chicago Title refused coverage.
The Court considered coverage under Section 11 of the policy which provided coverage where:
"[y]our title is unmarketable, which allows another person to refuse to perform a contract to
purchase, to lease, or to make a mortgage loan." The Ontario Superior Court found that the Title
Marketability Coverage did not cover the MacDonalds for their loss, but this was reversed at the
Court of Appeal which held that the lower court had adopted an "an unduly restrictive
interpretation of the coverage provisions in the Title Policy".
The Court stated that marketable meant, under the terms of Section 11, that "a potential buyer
can refuse to close an agreement of purchase and sale on learning of the defect". The Court found
that Chicago Title had not disputed that the condition of the property would allow a potential
buyer to refuse to close a purchase transaction, implying that the insurer had effectively
conceded that the test was met. And in addition, the Court denied Chicago Title's position that
the cause of the problem was the faulty construction (a "latent defect in construction") and
26
MacDonald, supra at note 19.
16. 16
instead found that the "unmarketability" of title was the direct result of the failure of the prior
owner to obtain a building permit.
The court's approach in MacDonald has effectively blended the two concepts of unmarketability
of title and unmarketability of property. The latter is more often associated with ancillary building
or land defects (work orders, zoning compliance, deficiency notices and the like). Returning to
basics, title to real property is different from the real property itself. Putting aside historical
semantics of property law for a moment, there remains a difference between what constitutes
one's title to land, and the land and building itself. And the marketability of title and the
marketability of land and building are two very different things.
Curiously, in this case, even though it was a matter of the interpretation of an insurance contract,
the same thing happened as has been happening in the canon of title requisition law cases – the
court labelled a non-title issue (in this case building permits, or lack thereof) as a title issue
because it could not find a place where it had been separately addressed in the contract.
So, to salvage the purpose of this paper, which is to consider responses to invalid requisitions,
what is buyer’s counsel to do with a requisition that is not a valid title requisition but otherwise
is addressing a matter of real estate-related diligence such as zoning or permits? The short
answer is deny, deny, deny. But the better reasoned answer is to first determine if the non-title
requisition is with respect to a matter that has been “elevated” by the contact to the level of
importance of title, such that it may be validly requisition. If it hasn’t, buyer’s counsel should then
carefully consider the case law to determine if the scope of “title issues” and the “marketability
of title” has been broadened (rightly or wrongly) by the courts to capture the requisitioned issue.
The answer to this enquiry is neither always intuitive nor consistent, which of course is why we
get paid to consider it, and to take a position.
Root of Title
Much of this discussion has been focused on the distinction between title and contractual
requisitions. But there is a subcategory of "title matters" that we cannot ignore. Returning once
more to the OREA form, we note that matters that go "to the root of title" may be requisitioned
17. 17
up to closing and, if not remedied, can give right to contractual rescission. What then is the
difference between a title issue and a root of title issue?
If you recall, the Estate of Manuel Martins (in which the court determined that the lack of building
permit constitutes a "root of title" issue) provided us with an example of how the courts have
confused matters of title generally. In Jakmar Developments Ltd. v. Smith, the court analyzed a
line of cases determining requisitions and held that:
"[i]n all the cases ... where an objection to title is made after the date for
requisitions was permitted it was a case where the seller could give no title at all
and the defect could not be discovered as a result of the usual search of title".27
Which is to say, that a failure in the root of title is a fundamental failure of the seller to be able
to convey title. Think of such fundamental problems as: the seller does not exist, does not have
the authority to sell the property, does not own and cannot compel the sale of the property, or
is prevented by law from selling the property. It amounts to a lack of consideration, which is why
it is a matter that can ultimately frustrate the contract up to closing. While the jurisprudence has
not yet articulated a universal rule as to what constitutes a requisition going to the root of title,
some judicial interpretations of particular circumstances include violations of the Planning Act or
zoning by-laws,28
property that has escheated to the Crown, vendors without proper authority
or capacity to confer title29
, undisclosed encroachments onto common roadways or railways,30
and outstanding executions. It is also important to note that the defect may only concern part
of the property and may still go to the root of title.31
Again, returning to the purpose of this paper,
27
Jakmar Developments Ltd. v. Smith, [1973] 1 O.R.(2d) 87 at 43.
28
Innes v Van de Weerdhoff, [1970] 2 O.R. 334.
29
Re Tanqueray-Williamson a Landau, (1882), 20 Ch. D. 465.
30
Martin v. Kellogg 1932] O.R. 274; Heifetz v Gural, 1950] O.W.N. 854.; Re Mountroy Limited and Christiansen, [1955] O.R. 352; Brow v Laffradi,
[1961] O.W.N. 263.
31
Zender, supra at note 14.
18. 18
any requisition that is made following the date permitted by the agreement of purchase for
requisitions should be expressly denied by the Seller’s counsel, unless such requisitions go to the
root of title.
Requisitions that are a Matter of Conveyancing
This is a subject that most real estate practitioners have either forgotten or never knew existed,
although (for good measure) in preparing this discussion I went back and looked at my 2001 LSUC
materials from when I taught the bar admission course, and this subject merited its own
paragraph in those materials. So if you don't know this, sadly you have no excuse.
There is a seldom-invoked common law line of cases that have described a category of valid
requisitions that are a matter of conveyancing. These are extra-contractual requisitions that can
be made as a matter of common law. They are requisitions that do not arise from the requisition
provisions of the contract, and are therefore not constrained by the periods set out therein or in
the Vendor and Purchaser's Act, for valid requisitions. They can be made up to closing.
In O’Neil v Arnew, the court explained: “A matter of conveyance as opposed to one of title is an
encumbrance which the vendor is able to pay off and discharge by virtue of his own interest in,
or his own power over the property, or by the concurrence of a party which the vendor can
compel.”32
If the vendor is unable to obtain the relevant discharge as of right, the requisition
must be an objection to title according to the principles espoused in Sidebotham v. Barrington:
“Where an interest is vested in a party to secure a right, the satisfaction of which right entitles
the party who has sold the estate to call for a conveyance, then the Court considers it a question
of conveyance only."33
What we know about these requisitions is:
1. they are not title requisitions;
32
Practical Property: Requisitions – Objections to Title (1982), Lawyers’ Insurance Association of Nova Scotia at 2-3.
33
Sidebotham v. Barrington (1841), 3 Beav. 524 at p. 528
19. 19
2. they do not go to the root of title;
3. they are not requisitions that could have been made as matters of contractual
requisition; and
4. they are requisitions "which the vendor alone or with other persons whose
concurrence he can require is in a position to convey the title to the property. They
assume that the vendor has a right to make title or to cause it to be made and are
concerned with the satisfaction of the right."34
Which is to say, that (for example) if there is an offending instrument registered against title to
the property that is within the unilateral authority of the seller to delete from the title, the matter
need not be raised by the requisition date.
Paul Perell in Real Estate Transactions, has determined that following have been held to be
matters of conveyance: 35
• Obtaining the discharge of an open mortgage. In Toth v. Ho, where the court distinguished
an open mortgage from a closed one because the latter "is by its very nature not one
which the mortgagor can compel a discharge be granted," unlike an open mortgage.36
34
Law Society's Special Lectures by William Howland, as quoted in Majak Properties Ltd. v. Bloomburg, (1976) 13 O.R. (2d) 447 (Majak). In Majak,
the court looked at three main requisitions (1) a right of way over the property; (2) a consent of all mortgagees to registration of a
plan of subdivision; and (3) a bar of dower of the wives. The court held that contractual limitation of time for delivery of objections to
title do not apply to matters of conveyance nor to objections going to the root of title, but that those three main requisitions did not
fall into either category.
35
Real Estate Transactions, supra at note 15 at 104.
36
(1998), 26 R.R.R. (3d) 76 (Ont. Gen. Div) at 7. In this case, the agreement of purchase and sale had an annulment clause for cases where the
seller could not make title as well as a separate schedule providing that the sellers would discharge all mortgages on title. There was
a closed mortgage on title; the question was whether the sellers could therefore invoke their annulment clause – i.e. whether the
existence of a closed mortgage constituted a requisition on title or a requisition on conveyance.
20. 20
• Obtaining an affidavit of execution on a mortgage discharge.37
• Lifting a writ of execution against the seller.38
• Obtaining an estate tax release, or an estate or succession duty release.39
• Producing a mortgage statement where the seller has undertaken to produce it.40
• Obtaining a survey.41
• Obtaining a discharge of a construction lien.42
Answering Performance Requisitions
So we are clear, I have made up the term “Performance Requisitions” and I differentiate these
requisitions from contractual requisitions as follows. Contractual requisitions, as I use the term
above, refers to matters that, in the requisition section of the purchase agreement are non-title
matters that are specifically permitted to be the subject of a requisition. They are built into the
requisition provision as being matters that are as important as title matters, for the purposes of
37
Zender, supra at note 14.
38
Farantos Development Ltd. v. Canadian Permanent Trust Co. (1975), 7 O.R. (2d) 721 (Ont. H.C.) at 60. Here, the court stated that "[i]n my view
the obtaining of succession duty and estate tax releases or consents, and the discharging or lifting of the two executions, are matters
of conveyance only and are not matters of title. They relate to encumbrances which the estate had the right to pay off and discharge
before the closing date."
39
Ibid.
40
272393 Ontario Ltd. v. 225596 Holdings Ltd. (1976), 1 R.P.R. 101 (Ont. H.C.) at 31, aff'd (1977), 2 R.P.R. 245 (Ont. C.A.), leave to appeal refused
(1978), 20 N.R. 449 (note ) (S.C.C.). In this case, the buyer was held to be entitled to rely on the seller's solicitor's undertaking to
produce the mortgage statements. Since he had not done so, the buyer was entitled to refuse to close.
41
McCauley v. McVey, [1980] 1 S.C.R. 165 (S.C.C.) at 5. Here, McVey unintentionally did not give the surveyor enough time to produce a survey
by the closing date, but the court held that the survey obligation was "more a matter of conveyancing than of title, and it is clear that
a seller cannot justify a refusal to complete by relying on a matter of conveyancing that is within his power to correct."
42
Grant v. Tiercel Digital Ltd. (1993), 32 R.P.R. (2d) 51 (Ont. Gen. Div) aff'd 1994 CarswellOnt 4539 (Ont. C.A.). There were several construction
liens registered against the property, the buyer was aware of them and the closing was postponed several times as the seller
attempted to settle the liens. The seller eventually cancelled the agreement on the basis that the liens had not been settled on time
and the court held that construction liens were a matter of conveyance and not a matter of title.
21. 21
the rescission provision of the agreement. Performance requisitions, on the other hand, are
requests in a requisition letter that the Seller perform provisions of the contract on or before
closing (sometimes with modifications or requests as to how such performance is to occur). No
doubt, in a few, years, when this paper has been cited a half dozen times (as good or bad
commentary) the term “performance requisitions” will engrain itself in the legal lexicon.
In any event, I think of performance requisitions as written requests in a requisition letter
to deliver closing deliveries or to otherwise satisfy closing conditions that are otherwise
specifically contemplated by the purchase agreement. It is not uncommon for a requisition letter
to requisition any number of closing deliveries or documents that are otherwise mandated by or
addressed by the purchase agreement, and I would venture that a seller’s solicitor who does
anything other than deny these requisitions on the basis of being invalid, opens the door to
inadvertently amending or modifying the terms of the purchase agreement or the terms of the
Seller’s performance thereof. For example, if the purchase agreement contains a description of
a seller delivery (let us say, a declaration of possession) to be delivered on closing, and the buyer’s
requisition letter requisitions any number of (non-possession) statements to be inserted in that
declaration, the seller’s counsel runs the risk of expanding the scope of what the seller has agreed
to deliver if it does not deny the buyer’s requisition. Buyers’ counsel often take the kitchen sink
approach to requisition letters. They ask for everything that they might want delivered or
performed on or before closing, whether or not it constitutes a valid requisition, in effect making
their requisition into something of a closing agenda.
In my view, these types of requisitions should be answered something like this: “The Seller
hereby denies your right to make this requisition pursuant to Section __ of the Agreement, as it
is an invalid requisition pursuant to such section. To the extent that the Seller has any obligation
with respect to the subject matter of such requisition, such obligation is as set out in in the
Agreement and is not to be modified hereby”.
22. 22
Negotiating the Requisition Provision
Let us return to the OREA form then. As you will recall, we discussed in the context of Section 8,
that there were two categories of investigations that the Buyer is permitted to make and two
different timelines in which the Buyer is permitted to make them, with the exception of "root of
title" matters, which can be raised up to the date of closing.
Section 10 sets out what the rights of the buyer and the seller are in this requisition process:
If within the specified times referred to in paragraph 8 any valid objection to title
or to any outstanding work order or deficiency notice, or to the fact the said
present use may not lawfully be continued, … is made in writing to Seller and
which Seller is unable or unwilling to remove, remedy or satisfy or obtain
insurance save and except against risk of fire (Title Insurance) in favour of the
Buyer and any mortgagee, (with all related costs at the expense of the Seller), and
which Buyer will not waive, this Agreement notwithstanding any intermediate acts
or negotiations in respect of such objections, shall be at an end and all monies
paid shall be returned without interest or deduction and Seller… shall not be liable
for any costs or damages.
Here is a recap of this provision:
1. Contractually, the buyer is allowed to make a valid objection to title (which means that
title is either not "good title" or is subject to an encumbrance that was not permitted) or
to the four other specified issues: outstanding work orders, deficiency notices,
(un)insurability of the property, or to the fact that the present use may not be continued;
2. The objection must be in writing; and
3. The seller must be unable or unwilling to remove, remedy or satisfy it or to obtain title
insurance to address it; and
4. The Buyer shall not have waived its objection; then
23. 23
5. The agreement is terminated, the deposit is returned to the buyer, and the buyer has no
further liability for costs and damages.
Now that we understand the mechanics of the OREA form of agreement respecting requisitions,
it is important to be aware that the provision is, in its standard form, inherently seller friendly,
and we will pause here to identify a couple of things that buyer's counsel must be mindful of each
time this provision is tabled.
Firstly, the right to terminate the agreement only arises if a valid requisition has been made. One
might make the argument that if a seller has made the business decision to sell a commercial
property, then that seller should be prepared to address, at its cost, all valid requisitions. If the
seller wanted the Buyer to accept any encumbrance that did not fit neatly into the (a) through
(d) categories of permitted encumbrances, then it had opportunity to otherwise specifically set
out those additional encumbrances in a schedule and rely on the preambular language of
Section 10 that says "except as otherwise provided in this agreement."
So in going to market with such title, and having had the opportunity to add to the general
permitted encumbrances of Section 10, it stands to reason that the seller should not be able to
avoid the cost of rectifying a requisition because it is "unwilling" to remedy or satisfy the
situation. Buyer's counsel is well advised to consider removing "unwilling" on this basis, so as to
reinforce the positive obligation on the seller to deliver what it has bargained for, at its cost. The
notion of it being able to skewer the transaction because it is "unable" to remedy the situation is
likely reasonable, although a buyer may want to qualify "unable" as not including "unable" due
to any requirement to pay or expend monies to do so.
Secondly, the manner of rectification in Section 10 has been broadened in recent years to allow
the seller to remedy or rectify the issue by buying title insurance for the buyer and its mortgagee.
Again, buyer's counsel would do well to consider striking this out. While title insurance often
facilitates closing, it is not always the right fix, and the effect of the "fix" depends not only on the
facts of the deficiency, but on the intentions of the buyer for the property. This provision also
24. 24
encourages a seller to do a cost analysis to determine whether fixing the deficiency or insuring
over it is the cheaper response: again, not necessarily what is in the buyer's best interest.
Lastly, and I have alluded to this above, seller's counsel in signing off on this form of
purchase and sale agreement, must recognize that this is its opportunity to ensure that all
encumbrances on title to the property, or otherwise that the seller is aware of, are (if not covered
squarely in Section 10(a) through (d)), set out in a schedule, so as to be captured by the list of
permitted encumbrances. Of course, buyer's counsel has a reciprocal duty in this regard. A buyer
may well argue that a standard form OREA purchase agreement should contain no specific list of
encumbrances, because that forces the purchaser to conduct its title and encumbrance due
diligence before executing the purchase agreement.
Good Faith
This is a good place to interject and remind ourselves of that there is a duty of good faith that
informs the obligations of the parties. The purchaser has a duty of good faith when sending
requisition letters;43
and the seller has a duty of good faith when responding. In the seminal case
Mason v. Freedman, a seller who sought to repudiate his contract because his wife had not
provided a bar of dower was not able to rely on the rescission clause because he had made no
efforts to ask her to do so. The court said that a "vendor who seeks to take advantage of the
clause must exercise his right reasonably and in good faith and not in a capricious or arbitrary
manner."44
Therefore, notwithstanding the language "unwilling" in the contract, a buyer who has
made a valid requisition still has stable footing to argue that the seller must act in good faith in
its determination that it is unwilling to rectify a matter set out in a valid requisition. As Middleton
J. in Hurley v. Roy so eloquently put it:
43
Halsbury's Laws of Canada, "Real Property", (Markham, ON: Lexis Nexis Canada, 2012) at para HRP-199, "(b) Requisitions".
44
Mason v. Freedman, [1958] S.C.R. 483, 14 D.L.R. (2d) 529 ( S.C.C.) at para 6, as cited in Bhasin v. Hrynew 2014 SCC 71 at 51 when the court
considered the duty of good faith arising where a contractual power is used to evade a contractual duty.
25. 25
"this provision was not intended to make the contract one which the vendor can
repudiate at his sweet will. The policy of the Court ought to be in favour of the
enforcement of honest bargains…".45
The test for whether the seller has satisfied its obligation to perform its obligations in respect of
valid requisitions was explored in 11 Suntract Holdings Ltd. v. Chassis Service & Hydraulics Ltd.,46
and was distilled in to two main concepts. The seller may only rescind the contract for failing to
satisfy a valid requisition if (1) the seller's conduct doesn't evidence recklessness in entering into
the contact (i.e. knowingly bargaining for something it could not satisfy) and (2) if the seller made
bona fide efforts to remedy the validly requisitioned issue. This reminds us of our discussion
above. Sellers should not knowingly bargain to deliver "good title" subject only to certain
encumbrances if they are aware that they will be unable to satisfy certain valid requisitions,
should they be made. A court may subsequently disentitle them from repudiating the contract
no matter whether they are "unwilling or unable" to remediate the issue, on the basis of this
overriding common law duty to act in good faith.
A rigid adherence to the rule in Re Dai and Kaness Investment Ltd. may no longer be pragmatic:
"performance of the contract of purchase and sale must be precise and exact and ... the vendor
is entitled to insist strictly upon the transaction described in the agreement".47
More recently,
courts have relaxed Re Dai, focusing instead on the substance of the agreement, i.e.
“substantially what the purchaser has contracted to get”,48
and framing the test as follows: “In
determining whether a purchaser should take subject to a defect, it is not helpful to classify the
defect as latent or patent. The correct test to apply is whether the purchaser, if required to accept
45
50 O.L.R. 281, 64 D.L.R. 375.
46
[1997] O.J. No. 5003, 36 O.R. (3d) 328 (Gen Div).
47
Re Dai and Kaness Investment Ltd, 1979 CarswellOnt 1462.
48
Bowes v Vaux, (1918) 43 O.L.R. 521 quoting from Rutherford v Acton-Adams, [19151 A.C. 866.
26. 26
the title, would be purchasing property which is materially different from that which he
bargained for ... ”.49
Which is to say, that in the context of both requisitioned issues, and the
responses thereto, courts may consider whether the parties have acted in good faith with a view
to causing the conveyance of an interest that is “not materially different” from that bargained
for.
However, all this said, there is no suggestion that duty to act in good faith imposes on a Seller the
obligation to address invalid requisitions in order to accommodate the Buyer, which is why in any
response to a requisition letter, Seller’s counsel is well advised to draw a bright line between
those requisitions that it believes to be invalid and those that it considers to be valid.
49
Re Stieglitz and Prestolite Battery Division, (1981) 31 O.R. (2d) 655.
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