Real Estate

When a contract is not a contract

By Tony Poland, Associate Editor

Until you cross all the t’s and dot all the i’s, a contract is nothing more than an unenforceable piece of paper, says Toronto real estate lawyer Daniel Bernstein.

Referring to a news report about a couple who suddenly discovered the deal they made to buy a home was no longer valid because they didn’t sign back on some changes, Bernstein says it’s important to remember that when you modify any contract “it’s a brand new agreement.”

“I would have thought that this was common knowledge,” says Bernstein, a founding member of Weltman Bernstein. “If you have a contract and you make one change, both parties have to agree to the change, and if they don’t agree, then you don’t have an agreement.”

CTV News Vancouver reports that for more than a year, a couple had been looking for a home in a neighbourhood where friends and family lived.

When they found something they liked, they immediately jumped on it, offering the asking price of close to $1.4 million while including a tight deadline for the seller to respond, according to CTV.

The next day their realtor told them the seller has agreed to all the major terms of the deal, CTV reports. The sellers removed two clauses in the agreement, and the purchasers told the realtor they would accept the counteroffer, according to the news organization.

However, a short time later, the couple’s realtor informed them other buyers were making bids, and they would have to increase their offer, CTV reports.

Bernstein tells that neglecting to initial even minor changes in a contract can make it unenforceable.

“I could see the public perception would be that the buyer is removing two impediments to the agreement, so now it’s even better, so why wouldn’t the seller agree?” he says. “But they didn’t agree, and they don’t have to agree. Once there’s a change, there’s no agreement, there’s no deal.

“That’s probably something that the general public doesn’t understand, but if you really think about it, the agreement is changed. You have to have an offer, you have to have an acceptance, and it just can’t be done by one party.”

Bernstein, who was not involved in the matter and comments generally, notes that in the age of the internet, it is fairly easy to sign back on amendments with electronic contracts that can be sent by email.

In this case, the buyers have no legal recourse, he says.

“There’s no remedy. If they were really serious they could have signed back with a higher offer, and that would have solved the problem,” Bernstein says. “They probably didn’t realize that they were effectively receiving a new contract, so now they are unfortunately out of luck.”

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