Almost Canadian

Make that the Realtor should have. The lawyers only usually get involved about a week before completion - by that time, the contract is, normally, legally binding.

MB-Realtor

I'm not sure how this could be picked up without the Seller letting everyone know.

When I list a house, I get a copy of the title, in addition to the owners details it also shows any loans or liens on the property, but it only shows the original amount of the loan, when the loan was taken out, it does not show what the outstanding amount is now. If the loans are recent you can make a guess as to the outstanding amount, but not always.

Hopefully you will only be delayed a few days for completion, and suffer no great loss.

In situations like this it is usually the Realtors who lose out, as their accounts get paid last, and if there is nothing left to pay them with they are so out of luck.

I hope everything will work out OK for you.

Almost Canadian

What sort of advice is this? Completion was set for yesterday, how soon to completion do you advise clients to instruct a lawyer?

To the OP - the seller has been unable to complete, which means they are in breach of contract. All usual remedies for breach will be available and, depending upon the terms of your contract, you may be in an even better position.

You will be able to recover all expenses and losses that you have incurred as a result of the breach. The test is - would such losses have been in the contemplation of the parties at the time the contract was entered into? i.e., legal fees, moving expenses, any rent you will incur as a result of not being able to move in etc., etc. In addition, if a similar house will now cost you more to obtain (unlikely in the current climate) you would be able to recover the difference.

The real issue here is your lender. The seller will be unable to provide you with a "clear" title, due to not being able to pay off the current mortgage. Now your lawyer knows this, the lender is likely to refuse him/her permission to forward their money to the seller, as their mortgage will remain on title with priority over yours.

The seller needs to obtain bridging financing to enable them to pay off their mortgage, which will obviously have a cost. You need to "persuade" them that the costs of allowing you to sue them, will be way more than the cost of obtaining bridging financing. They will struggle to obtain bridging financing but that is their problem not yours.

You need to contact a good, aggressive litigation lawyer that will act straight away - not a typical Canadian one that will require a huge retainer and will not do anything for a week or two. You need to act quickly and decisively.

Best of luck

MB-Realtor

The sellers lawyer normally contacts the lenders to find out the amount to be paid to clear the mortgage. Its not normally something that a Realtor would do, we tend to rely on our clients to say "I need $$$,$$$$ to pay off the mortgage so I cant sell for less than that"

The contract is legally binding, and if taken to court I am sure that the buyers would win, BUT as it looks like the sellers have no money this would be a pointless action and only cost the buyer more money. Not good.

This is not a problem we have had to deal with in the last 6 years, but I am afraid this will be happening more often.

Its certainly a question I will now be asking, so thanks to the OP for bringing this unfortunate situation to my notice.

MB-Realtor

We fax out the contract to both the lawyers the same day or at the latest the next working day after the contract goes "firm". Its then up to them how quickly they get to work on it.

Almost Canadian

I am well aware as to what usually happens, I was just amazed that another poster had indicated that the OP would not have incurred lawyer's fees as they "..hadn't done anything".

On the title issue, I would suggest that the realtor is sued as well (likely to be more solvent than the seller is).

There must have been some form of red flag issue on the title. All secured financing would have been on the title and it wouldn't have taken too much working out to come to the conclusion that the seller was in negative equity or close to it. In which case, the OP's realtor should have made the relevant enquiries. Seller's realtor is likely not to have done anything wrong.

MB-Realtor

No it is not the responsibility of the Buyers Realtor to investigate this, the contract states that the seller is able to deliver clear title to the buyer.

The Buyers Realtor (nor the Sellers Realtor) is able to find out the amount of any loan(s) as quite simply the Banks will only communicate this information to the sellers lawyer (who also represents the Bank)

The person(s) at fault here is the Seller.

Almost Canadian

Yes the seller is at fault, but I would argue that the buyer's realtor has been negligent. Buyer's, particularly immigrants that are not familiar with procedure, are entitled to assume that their realtor will act in their best interest, (as all realtors constantly state) which means looking at the title and advising accordingly. If the OP entered the contract knowing the position, having been so advised by their realtor, then the realtor is off the hook. If they weren't informed this by their realtor, I would feel confident that a Court would find for the buyers against their realtor.

I am talking about advice given before the contract was entered into. Your reliance upon the provisions of the contract is more than a little concerning. Are you saying that, in such a situation, you wouldn't have advised the buyer accordingly?

As I have said on numerous occasions, in 10 years of practice in England, I never sued an estate agent, in less than 10 months of litigation practice in Alberta, I have sued lots of realtors, usually for negligent acts/omissions as stated above.

Please explain how the OP's problems could have escaped the notice of their realtor? How could the title not have shown potential problems?

Almost Canadian

I have never known a lawyer be instructed by the bank of the seller on a sale. Yes, banks often instruct the same lawyer as the buyer's lawyer on a purchase, but not on a sale. All the bank wants is repayment of the mortgage, that is not the lawyer's obligation but the seller's. The seller's lawyer will usually give an undertaking to the purchaser's lawyer to discharge the mortgage, but this is not the same as "representing the bank."

MB-Realtor

The sellers lawyer has to make sure that the monies are distributed to the sellers lender and that the mortgage is satisfactorily discharged, so that their client can comply with the contract they signed that promised clear title. The lender relies on the sellers lawyer for this transaction so in that way they represent the lender.

The lender will only communicate the private and confidential details of the loan to the sellers lawyer.

Novocastrian

Haha. Please read up on the Canadian Constitution.

<apologies for the cross thread reference but your ignorance of correct procedure rankles still>

MB-Realtor

With any contract to purchase we as Realtors have to work within the law of contract. There are many areas where we have to rely on what the seller tells us, far too many for any reasonable person to expect us to be able to check-up on:-

The seller tells us:-

Never had any problems with the basement.
No the roof has never leaked.
Yes we own the water heater.
No thats not a crack house next door.
There are no encroachments.
No I've never grown dope here.
No there are no old oil tanks buried in my garden.
Yes we have 6" walls with the best insulation.

etc.etc.etc.etc........


You are expecting way too much if you expect anybody to check and double check every Statement made by a Seller. All we can do is to prepare a contract that covers these items, and rely on the honesty of the seller to abide by the contract. Just like every contract ever signed by anybody, for anything.

Unfortunately people lie, thats why we have contracts and courts of law.


AS to the Buyers Realtor being negligent by not checking title, that is simply not part of our remit here in MB, it may be different elsewhere, the Lawyers deal with title, not the Buyers Realtors.

I can see some responsibility on the Sellers Realtor if they knew there was a problem and not disclosing it, but as they have no way of actually finding out the amount of the loan remaining, other than relying on their clients statements, how can you hold them responsible if their client lied to them?

You have sued more Realtors here than the UK, well quite simply because you can, due to the fact that we actually have a fiduciary duty to our clients, while in the UK agents only advertise property and do not have the same obligations and responsibilities we do under most Provincial real estate acts.

Don't get me wrong, I think we should be able to make those sort of inquiries, but if we can't get the information from the source, but the lawyers can, who should carry the responsibility?

MB-Realtor

There are times when I, as a Buyers Agent do take it upon myself to pull title, and that is when I am preparing an offer on a "private sale" home, as there is no sellers agent involved. I have to know that I am dealing with the Seller and that that there are no Homestead Act issues.

It is custom and practice here in MB to rely on the Sellers Agent to have checked title. But this is always done upon listing, during the selling process the Sellers may re-mortgage their home without advising the Agent.

Here in MB it is the legal responsibility of the Lawyers to check title, not the Realtors.

agr

This is a fascinating debate. Can we set up a poll so we can vote on who we think is at fault?

Serious point, is there a contract between the buyer and his agent if the seller is paying the fees?

Ahem, just going to double-check the title of the house I'm buying (my realtor obtained it early because she thought that as a new immigrant I needed every kind of reassurance I could get).

MB-Realtor

There does not have to be a written contract between you and your Realtor to establish a client relationship with fiduciary duty owed to you by the Realtor.

I'm pleased that your Realtor pulled title for you when you bought your home.