Month: April 2020

COVID-19 Tips: Part 1

Don

Businessman Holding Model House In Palm Of Hand

 

BRIDGE FINANCING

With the current climate of social distancing, many financial institutions and banks have closed several branches, and reduced hours of operation. For example, the few Scotiabank branches operating have reduced their hours from 10:00 a.m. to 2:00 p.m., Monday through Friday. Banks are also reducing staff and limiting the number of clients allowed in their branches, creating longer wait times. Keeping all of this in mind, it is our strong recommendation that if you have a client who is purchasing and selling, you strongly encourage them to bridge finance, and not close both of their properties on the same day. Bridge financing eases the stress and tension on clients when trying to close two transactions on the same day. Unfortunately, banks have severely limited the ability for a seamless buy and sell on the same day, and depending on the financial institution, the channels in which mortgage funds, etc. need to pass through are also limited. Therefore, separating a client’s purchase and sale with time and bridge financing is key to ensuring a smooth purchase and sale.

MULTI-RESIDENTIAL TRANSACTIONS

With many municipal offices closed or working with a limited team remotely, obtaining building and zoning compliance letters for multi-residential purchases have become difficult, if not impossible during this time. Therefore, we cannot confirm whether a property is legally zoned as a specific type of dwelling. A great tip we recommend is to seek the report and documentation from the seller when they purchased the property! At the time of closing, the seller should have received their own compliance letter from the municipality via their lawyer, confirming the legal use of the property. This is a great tool for realtors representing a seller of a multi-residential property to confirm its current use, and for buyers during the time of municipal office closures.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience. If you have any suggestions for future topics please let us know.

Prepared by Donald J. Travers, Solicitor with Paquette Travers

Toll-Free:1-877-744-2281    www.paquettetravers.com

COVID-19

Don

covid 19 real estate

At this point in time, we are not sure what the COVID-19 is going to do to the volume of real estate deals. Right now, we are busy; however, with many people wisely following the government orders to stay at home, self-distance and so much of the economy has shut down, we expect to see a market slowdown as a result of the Pandemic.

Unfortunately, many people bought firm just a month ago, because that was the days of no conditions. Now Buyers find themselves in the predicament of not being able to sell their existing home in a COVID-19 market, without the ability to show their homes. New Buyers are obviously very nervous to commit to purchasing homes in these uncertain times.

So, what happens if people do not complete these purchases because they cannot sell their existing home?

Well, there is no general principle of law to my knowledge that would apply to a Pandemic. In this situation, what would govern would be a matter of contract, and the terms of the Agreement of Purchase and Sale would govern the situation. Unless Time is of the Essence is waived, the Buyer would be in breach of the Agreement of Purchase and Sale and would have to close, since no law suspends private contract time periods.

Then there is the question of whether Force Majeure would give the Buyer an out of the contract. Unfortunately, Force Majeure is a matter of contract and is not found in residential Agreements of Purchase and Sale, so would not be applicable to residential deals. It also does not appear to apply to a Pandemic, since no mention is made of it when it has been part of a contract.

The third option would be a claim that the Agreement of Purchase and Sale is frustrated because it can not be performed through no fault of the Buyer. This would be an equitable remedy. However, delay or drop in value, or economic loss, or failure to sell would not be considered conditions which would enable a claim for frustration of the Agreement of Purchase and Sale.

The courts we expect will not take kindly to parties that take advantage of legal technicalities in these trying COVID-19 times. It is important that we all act responsibly and fairly. However, the Pandemic, is not going to get buyers out of their Agreements of Purchase and Sale.

Knowledge is Power, which results in more business!

If you have any questions or concerns, please feel free to contact us at your convenience. If you have any suggestions for future topics please let us know.

Prepared by Donald J. Travers, Solicitor with Paquette Travers

Toll-Free:1-877-744-2281 www.paquettetravers.com