# Bad Real Estate Experience



## Alemap (Oct 27, 2018)

I want to tell my story and receive feedback, thank you.

I viewed a home in mid Oct. A day later I made an offer. This first offer was declined , but the sellers accepted the second offer. They requested a quick closing. I agreed with this condition. I had until late October to meet conditions ( cash deal so insurability and inspection). The closing was scheduled for mid November. I hired a house inspector, surveyer and lawyer. Upon inspection, there was one significant cost ( $7,000 ) and we went back to sellers for a compromise. They agreed to leave some furniture, we agreed to that compromise even though it was of much lesser value.

Late October we were notified that the sellers were terminating the sale. They would supply no reason why but would only say it was upon the advise of their lawyer. They would not even tell their own agent and refused to meet with their agent. There is a clause in the agreement which states something to the effect that both buyers and sellers have the right to terminate a deal upon “reasonable review “ by lawyer.
I am now out the money I spent and it seems I have no legal recourse because of this clause. I know this is not right but unless I am willing to spend 10-20 thousand dollars to fight it, and not guaranteed to win, I have no choice it seems but just accept the losses. I feel so sad that this has turned out this way. It seems the agreements are not worth the paper they are written on???


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## curioso (Nov 22, 2018)

Which province?

I cant offer legal advice but I dont think they can unilaterally terminate the without giving you cause. Any contract can be terminated if all parties involved agree to do a mutual release. Did you talk to your lawyer?


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## Rusty O'Toole (Feb 1, 2012)

I question that 'reasonable review by a lawyer' clause. I would ask specifically what was illegal. If there is nothing illegal you have an enforcable contract. Can't say more than that without reading the clause word for word.

If I were to drop a deal like that I would at least expect compensation for out of pocket expenses. If I wanted the property bad I might sue to enforce the contract.


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## Numbersman61 (Jan 26, 2015)

This “agreement” does not appear to be a normal MLS contract. I question if the “agent” was a licensed realtor. It is possible to do a real estate deal without a realtor but one has to be has to be proficient in understanding the terms in a legal document. Based on the limited information provided by the OP, it is unlikely that the buyer will be able to enforce the agreement or recover out of pocket costs. An expensive lesson. The OP’s lawyer may have been negligent in not explaining the terms but I expect he was not involved in negotiating terms of original agreement.


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## Longtimeago (Aug 8, 2018)

Not enough background info for anyone to give a real opinion on Alemap. I think you have to rely on the advice of your lawyer in this case. 'Reasonable review by a lawyer' to me simply means each party can have their lawyer review the agreement and IF there is something really untoward about the deal, they can withdraw. Whether they have to disclose what the issue is or not, I don't know.

If your lawyer found for example that there was in fact a property line dispute still unresolved between the current owner and a neighbour, that might constitute a valid reason for you to withdraw from the agreement without penalty. If the seller had found out you were in fact gay and did not want to sell to you for that reason, I would not think that was sufficient cause but then it would all fall on whether or not they were required to disclose their reason or not. So as I say, you really have to rely on the advice of your lawyer as to whether the seller can do this or not under the terms of the agreement. 

As for your out of pocket expenses, you are not the first nor will you be the last to spend money on the buying process and then not complete the sale. What for example if your lawyer had found there was a property line dispute? You would probably choose not to go ahead and you would have spent money on an inspection, your lawyer, etc. and would not be able to get that money back. You could withdraw without penalty but you would have no recourse to claim your expenses from the seller.

Some countries are far worse in this regard than Canada. In England for example, they have what they call 'gazumping' where you agree on a price but that agreement has a clause which says STC which stands for Subject To Contracts. That means both parties look over the deal and then finally exchange binding contracts. In the meantime, along comes someone who makes a higher offer and your offer is rejected. 

They also have 'property chains' which I find ridiculous. You make an agreement that is 'subject to the sale of your existing property'. In other words, if the buyer cannot close the sale of their existing house before they are due to close on the buying of your property, they can walk away from the agreement without penalty. So imagine a 'chain' of several house sales where just one in the chain walks because they could not get their existing house sold. Then every link in the chain beyond that suddenly collapses like a house of cards. 

Why anyone would sign an agreement that contains a 'subject to sale' clause is a mystery to me but it is in fact the norm in England. Why anyone would sign an agreement that is 'subject to contracts' and that allows gazumping is also a mystery to me but it is the norm in England. In any case, any money that has been spent on inspections, lawyers, etc. is gone and not recoverable.

It occurs to me that I would want to know what your real estate agent had to say about this clause. A real estate agent is licensed and does have an actual legal responsibility to you, to make sure you understand any contract you sign. It may be that you would have a case in saying your agent did not fulfill her/his duties to you and a claim to make against your agent, for your expenses. But that too could mean having to go to court over it and so the cost of that could negate any expenses you recouped. So I probably wouldn't go after the agent for the money but I might well decide to CHANGE agents before looking at any other houses.


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## Mechanic (Oct 29, 2013)

What Province is this in ? Your realtor should be answering your questions, as to the reasons for termination. If not, hopefully, you didn't get talked in to signing an exclusive representation agreement with your realtor.


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## Mukhang pera (Feb 26, 2016)

As LTA suggests, a bit thin on facts.

It sounds like the interim agreement had one or more "subject" clauses for the purchaser's benefit. It was, apparently, subject to a satisfactory home inspection. Generally such subject clauses must be removed a certain date. Failure to lift the subjects for any reason brings an end to the deal. Declaring the subjects satisfied or waived results in a binding deal. 

If, for example, an offer is made on Sept. 1 it might call for a closing on Oct. 15. If it is subject to the purchaser obtaining a mortgage, a home inspection, etc., that will be spelled out and an outside date for that to occur. Generally there is a fairly short fuse on subject removal dates since the property is effectively tied up while the purchaser seeks to get his ducks in a row. So, Sept. 15 might be set as subject removal date. If the purchaser does nothing by that date to indicate that the subjects have been satisfied, (or if not satisfied, then waived), then the deal collapses and the purchaser gets back any initial deposit paid. 

Another type of subject clause makes the contract proposed in the interim agreement subject to approval by the purchaser's lawyer. Not often seen, since the purchaser should be getting any desired legal help with the offer before it is presented.

But what of the vendor? Perhaps a vendor is confronted with an offer that is open for acceptance for a very short time, insufficient to seek legal advice. Perhaps the offer poses some complexities, such as in the case of a vendor who has shown a willingness to finance the deal. The offer might contain financing terms, but the vendor wants to obtain a legal opinion as to the acceptability of such terms. Then the vendor can make an acceptance, "subject to" lawyer's approval of the financing clauses. That is a subject that should have an early removal date. In short, the vendor should have to lift that subject before the date for removal of the purchaser subjects, since the purchaser will not want to waste money on home inspections and such if, in fact, his offer will be rejected.

Here, what is strikingly odd, is the vendor seems to have some kind of "evergreen" escape clause. Well, from the facts set out, both parties had the option at any time to retreat from the transaction by invoking the "reasonable review" by lawyer clause. Leaving aside for the moment the effect of such a clause, it seems a bit peculiar the the clause can apparently be brought into play right up until the deal is about to be consummated at the Land Title Office (or LRO for those working in land registry jurisdictions). It would have thought such a clause to have been spent by the time subject removal dates had passed.

As for the effect of the clause, it was perhaps the Achilles' heel of the deal _ab initio_. Here in BC, such clauses have been held to introduce an element of vagueness sufficient to render the contract unenforceable. See (link to full text follows):

SALE OF LAND — Contract — Enforceability • Conditions precedent — Parties making agreement for sale of land "subject to lawyer’s approval" and "subject to accountant approval" — Court finding those conditions too broad to be enforceable — Agreement therefore not a binding agreement of purchase and sale, but a revocable offer — Purchaser’s action for specific performance accordingly dismissed.

Jung v. GNR Property Management Inc. S.C., Josephson J., 2006 BCSC 1692, New Westminster S100068, November 15, 2006 , 19pp.

https://www.courts.gov.bc.ca/Jdb-txt/SC/06/16/2006BCSC1692.htm


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## lonewolf :) (Sep 13, 2016)

Alemap said:


> I am now out the money I spent and it seems I have no legal recourse because of this clause. I know this is not right but unless I am willing to spend 10-20 thousand dollars to fight it, and not guaranteed to win, I have no choice it seems but just accept the losses. I feel so sad that this has turned out this way. It seems the agreements are not worth the paper they are written on???


 I would lower the court costs by going to small claims court with no lawyer. Put small amount on table to win big. I do not think paying 10- 20 thousand is going to increase your odds of winning


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