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Buying property in Canada - mortgage chains

Buying property in Canada - mortgage chains

Old Feb 7th 2021, 11:38 pm
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Default Re: Buying property in Canada - mortgage chains

That’s how we lost out on a property here years ago. We thought we had time to consider the offer we wanted to make. Within 24 hrs someone else had made an offer, it was accepted and the property was sold.
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Old Feb 8th 2021, 12:01 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by Siouxie View Post
1) Canada works on a principal similar to Scotland - when you make an offer it's legally binding, your 'chain' wouldn't work.
Errm, no. One can make offers that are conditional in any number of respects, e.g. subject to financing, subject to sale of the offerer's home, subject to clear title, subject to professional inspection, subject to the vendor's acceptance of the offer within a limited time period, etc. In a hot market, a conditional offer may not be of much interest to a vendor seeking to immediately crystallize a market price. In a more balanced market, there can be a protracted exchange of offers and counter-offers, in which the price, the conditions, and the maximum timeframe for each condition to be satisfied, are negotiated.

If one makes a conditional offer, and it is accepted by the vendor, it becomes binding on both parties only once the condition(s) are satisfied (or sometimes waived), within the timeframe specified for each condition.

Last edited by abner; Feb 8th 2021 at 12:04 pm.
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Old Feb 8th 2021, 1:09 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
If one makes a conditional offer, and it is accepted by the vendor, it becomes binding on both parties only once the condition(s) are satisfied (or sometimes waived), within the timeframe specified for each condition.
It is and has been a hot market here in London for the last 3 years. Most places here are now bought with unconditional offers(if you want a survey you get it done at the initial viewingat you own cist and risk). Our agent pretty much said that each condition will cost you $10k ( your conditional offer would need to be that much higher than a non conditional offer to have any chance of being considered).

The house we bought had 35 views on the 2 hour open house day and then attracted 12 firm offers, all above asking!
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Old Feb 8th 2021, 5:09 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
Errm, no. One can make offers that are conditional in any number of respects, e.g. subject to financing, subject to sale of the offerer's home, subject to clear title, subject to professional inspection, subject to the vendor's acceptance of the offer within a limited time period, etc. In a hot market, a conditional offer may not be of much interest to a vendor seeking to immediately crystallize a market price. In a more balanced market, there can be a protracted exchange of offers and counter-offers, in which the price, the conditions, and the maximum timeframe for each condition to be satisfied, are negotiated.

If one makes a conditional offer, and it is accepted by the vendor, it becomes binding on both parties only once the condition(s) are satisfied (or sometimes waived), within the timeframe specified for each condition.
Once accepted, even with conditions, the contract is legally binding on both parties, however the conditions allow for one party to cause the contract to be null and void under certain prescribed circumstances. Usually (unless there is a condition in favour of the vendor which is rare) the seller is locked in without an out right from acceptance. The way you phrased your last sentence suggests that either party can just change their mind during the conditional period - and they most certainly can not.
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Old Feb 8th 2021, 5:13 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by HGerchikov View Post
Once accepted, even with conditions, the contract is legally binding on both parties, however the conditions allow for one party to cause the contract to be null and void under certain prescribed circumstances. Usually (unless there is a condition in favour of the vendor which is rare) the seller is locked in without an out right from acceptance. The way you phrased your last sentence suggests that either party can just change their mind during the conditional period - and they most certainly can not.
+1

Having had a family member sue a vendor for non completion of contract and receive compensation from the judgement in their favour - they declined the option to force the sale as the vendor's wife was in poor health - I know this is true!
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Old Feb 9th 2021, 5:30 am
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by HGerchikov View Post
Once accepted, even with conditions, the contract is legally binding on both parties, however the conditions allow for one party to cause the contract to be null and void under certain prescribed circumstances. Usually (unless there is a condition in favour of the vendor which is rare) the seller is locked in without an out right from acceptance. The way you phrased your last sentence suggests that either party can just change their mind during the conditional period - and they most certainly can not.
Agreed. The way I phrased it was unintentionally imprecise. As long as all conditions are satisfied, within the stated timeframes provided for each, the contract becomes binding on both parties.

But I disagree with your characterization of "a condition in the favour of the vendor [being] rare". The time limit pertaining to any condition is as legally relevant as the condition itself. If a vendor is attracted by some relatively generous price offer, but with conditions--particularly if there is material doubt about the offeror's ability to complete the conditions--the vendor's acceptance (via counter-offer) is likely to include relatively tight time limits on those conditions being satisfied, so that the property can be re-offered to the market quickly if the conditions aren't met.

And there are also potential third-party "right of first refusal" clauses that the vendor may be obliged to honour, and thereby impose as part of any offer to sell (and which need to be maintained during the offer-to-purchase / counter-offer process). These not infrequently arise in contexts such as estate settlement, divorce, or dissolution of business partnerships.

Last edited by abner; Feb 9th 2021 at 5:34 am.
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Old Feb 9th 2021, 2:38 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
Agreed. The way I phrased it was unintentionally imprecise. As long as all conditions are satisfied, within the stated timeframes provided for each, the contract becomes binding on both parties.

But I disagree with your characterization of "a condition in the favour of the vendor [being] rare". The time limit pertaining to any condition is as legally relevant as the condition itself. If a vendor is attracted by some relatively generous price offer, but with conditions--particularly if there is material doubt about the offeror's ability to complete the conditions--the vendor's acceptance (via counter-offer) is likely to include relatively tight time limits on those conditions being satisfied, so that the property can be re-offered to the market quickly if the conditions aren't met.

And there are also potential third-party "right of first refusal" clauses that the vendor may be obliged to honour, and thereby impose as part of any offer to sell (and which need to be maintained during the offer-to-purchase / counter-offer process). These not infrequently arise in contexts such as estate settlement, divorce, or dissolution of business partnerships.
I agree there are many conditions that can be included for the Seller's benefit, it is just not all that common to see them in the residential real estate market in the GTA. I have been selling real estate in the area for the past 10 years and I can't think of any deal that has had a true seller condition. I had a couple of backup offers conditional on Seller being released from a previous contract and one with a probate clause - but those conditions are necessary for both parties before the deal can close and there is no seller discretion. In fact it is not that common to see any conditions at all at the moment. I am not sure what you are saying about changing the time limit on a condition. A shorter time frame to meet a condition on say getting a home inspection would be more appealing to the vendor but it is still a condition in favour of the Buyer - hence the wording 'This condition is included for the benefit of the Buyer'.
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Old Feb 11th 2021, 2:39 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by HGerchikov View Post
Once accepted, even with conditions, the contract is legally binding on both parties, however the conditions allow for one party to cause the contract to be null and void under certain prescribed circumstances. Usually (unless there is a condition in favour of the vendor which is rare) the seller is locked in without an out right from acceptance. The way you phrased your last sentence suggests that either party can just change their mind during the conditional period - and they most certainly can not.
We reported a couple of Realtors for accepting our offer on a property without telling us there was another offer which had been accepted.

We only found out after we removed our conditions and then discovered there was another offer ( from a client of the vendor's Realtor )

They, and our Realtor were suspended and fined.
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Old Feb 11th 2021, 4:59 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by Tangram View Post
We reported a couple of Realtors for accepting our offer on a property without telling us there was another offer which had been accepted.

We only found out after we removed our conditions and then discovered there was another offer ( from a client of the vendor's Realtor )

They, and our Realtor were suspended and fined.
There are a couple of circumstances where you can accept a second offer, one would be as a back up offer in case the first one fails on the conditions, however there are no circumstances under which the second buyer would not be made aware of the first offer. Did your Realtor know? If your offer wasn't conditional on the other offer falling through then I think you would have had as much right to the property as the first offer - how to land your seller in court 101. I accept that rules may be different in NB (Real Estate is regulated Provincially) but I can't imagine they are that different. I am hoping the fines were greater than the commission the Seller's realtor would have earned - but I suspect they weren't, good to hear they were suspended though.
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Old Feb 11th 2021, 7:00 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by HGerchikov View Post
There are a couple of circumstances where you can accept a second offer, one would be as a back up offer in case the first one fails on the conditions, however there are no circumstances under which the second buyer would not be made aware of the first offer. Did your Realtor know? If your offer wasn't conditional on the other offer falling through then I think you would have had as much right to the property as the first offer - how to land your seller in court 101. I accept that rules may be different in NB (Real Estate is regulated Provincially) but I can't imagine they are that different. I am hoping the fines were greater than the commission the Seller's realtor would have earned - but I suspect they weren't, good to hear they were suspended though.
We accepted a second offer ( full asking price on the second ) on our sale but made the second buyer fully aware there was another offer in for a couple of grand less than asking and they had first bite of the cherry if the conditions were satisfied, which they were fully aware of and happy with waiting to see if the first buyer dropped out.

In our case it wasn't conditional on the first buyer dropping out. Our realtor told us there had been an offer, not one that had been accepted and therefore ahead of us and nothing was written into our offer and contract.

Yes, it came as quite a shock when we removed our conditions to be informed a first offer had already removed their conditions as we didn't even know a contract existed.

Oh well, we reported them. The fine was not more than the commission and they had technically a couple of weeks off. Won't be using or interacting with them ever. In the end, the house we ended up with was far more suitable and required less ( zero ) alteration to make it work for us.

Last edited by Tangram; Feb 11th 2021 at 7:05 pm.
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Old Feb 11th 2021, 8:46 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by Tangram View Post
We accepted a second offer ( full asking price on the second ) on our sale but made the second buyer fully aware there was another offer in for a couple of grand less than asking and they had first bite of the cherry if the conditions were satisfied, which they were fully aware of and happy with waiting to see if the first buyer dropped out.

In our case it wasn't conditional on the first buyer dropping out. Our realtor told us there had been an offer, not one that had been accepted and therefore ahead of us and nothing was written into our offer and contract.

Yes, it came as quite a shock when we removed our conditions to be informed a first offer had already removed their conditions as we didn't even know a contract existed.

Oh well, we reported them. The fine was not more than the commission and they had technically a couple of weeks off. Won't be using or interacting with them ever. In the end, the house we ended up with was far more suitable and required less ( zero ) alteration to make it work for us.
I am not sure how it works in NB but in Ontario the other offer would not have been ahead of you, the Seller would have effectively sold their house twice and would be on the hook for considerable damages to the person who didn't end up moving in. I would be surprised if it is different in NB. The punishment on errant realtors is unbelievably light given how much money can be made out of one deal, I belong to a few facebook realtor groups who really want the penalties to be increased as this kind of behaviour reflects badly on all and there are a lot of great agents out there.

Delighted to read that it worked out in the end and you ended up with a better place.
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Old Feb 15th 2021, 6:51 am
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by HGerchikov View Post
...I can't think of any deal that has had a true seller condition. I had a couple of backup offers conditional on Seller being released from a previous contract and one with a probate clause - but those conditions are necessary for both parties before the deal can close and there is no seller discretion.
But the buyer didn't introduce those clauses, in the examples you cite, did they?

I think you're a bit confused about what a "true seller condition" might be. In both cases you cite, the seller withholds unconditional acceptance of an offer until some legal impediment constraining the seller is remedied, subject to some legal event which has nothing to do with the buyer.

How is that different from a buyer's "subject to finance" clause, or similar, as a "buyer's condition"?

Last edited by abner; Feb 15th 2021 at 7:10 am.
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Old Feb 15th 2021, 3:56 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
But the buyer didn't introduce those clauses, in the examples you cite, did they?

I think you're a bit confused about what a "true seller condition" might be. In both cases you cite, the seller withholds unconditional acceptance of an offer until some legal impediment constraining the seller is remedied, subject to some legal event which has nothing to do with the buyer.

How is that different from a buyer's "subject to finance" clause, or similar, as a "buyer's condition"?
In a backup offer the Buyer usually does include the clause for the Seller to be released because they know its a backup offer and that clause has to be there. The difference between a clause requiring Seller to be released from a previous offer and one for the Buyer to obtain financing is that the Buyer can decide not to fulfill that condition and can waive it as it at his discretion - a Seller has no control over whether he is released from the previous offer - that is at the discretion of the original buyer. An example of a true Seller condition would be Conditional on Seller's Lawyer Review, in this case a Seller can decide that actually he isn't bothered about his lawyer reviewing it and can waive (or cancel) the condition without meeting it - he does not have this option with either a probate clause or a release from previous contract clause.
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Old Feb 15th 2021, 5:42 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
But the buyer didn't introduce those clauses, in the examples you cite, did they?

I think you're a bit confused about what a "true seller condition" might be. In both cases you cite, the seller withholds unconditional acceptance of an offer until some legal impediment constraining the seller is remedied, subject to some legal event which has nothing to do with the buyer.

How is that different from a buyer's "subject to finance" clause, or similar, as a "buyer's condition"?
I'm confused - don't you live in Australia? Have you been a Real Estate Agent in Canada? Wondering where you are obtaining your information from..
Handy hint - HGerchikov is a Real Estate Agent in Ontario of many years standing (and a damn good one at that!)

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Old Feb 15th 2021, 6:47 pm
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Default Re: Buying property in Canada - mortgage chains

Originally Posted by abner View Post
But the buyer didn't introduce those clauses, in the examples you cite, did they?

I think you're a bit confused about what a "true seller condition" might be. In both cases you cite, the seller withholds unconditional acceptance of an offer until some legal impediment constraining the seller is remedied, subject to some legal event which has nothing to do with the buyer.

How is that different from a buyer's "subject to finance" clause, or similar, as a "buyer's condition"?
There is a category of Condition called a True Condition Precedent - definition is True Conditions Precedent

This is a sub-category of conditions precedent, but it is rather unique in nature. The condition benefits both parties. Examples might include the compliance with the provisions of the Planning Act or registration of a condominium.

That is not what I meant when I said a 'true Seller Condition' - I was not using the word true as a legal term but rather to describe a condition that is truly in the Seller's favour.
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