There are many technical issues and requirements that buyers and sellers must be aware of when signing real estate agreements.
Under the Ontario Statute of Frauds, real estate agreements are only valid if they are in writing and signed by all parties, therefore a handshake agreement to sell your property will not be enforceable.
The standard resale agreement provides a spot for the buyer and seller to sign as well as a witness. What happens if the witness does not sign the agreement? Can the seller or buyer cancel the agreement?
There is no requirement in the statute for a witness to sign beside the signature of the buyer or the seller. The main reason for the witness is to prevent either of the parties from later denying that it was their signature. But if the witness saw the party sign, they could also give evidence later as to what they saw, even if there was no witness signature.
As a result of the increase in mortgage fraud, many lending institutions now require that all real estate agreements be witnessed in writing or else they will not advance the mortgage loan. As a result, buyers and sellers are cautioned to always have a witness available. This can become problematic when agreements are signed by fax late at night and witnesses may not be available.
Some of the questions that buyers and sellers may have include:
• If two spouses are signing the agreement, can they witness each other’s signature? While technically they can, this may also offend a lender’s policy and so care should be taken to have an independent third party available, over eighteen years of age, to witness the signature.
• Can someone witness a signature if you fax the document to them after you sign it? The answer is no. The witness must be physically present to see you sign the document in order to sign as a witness.
• How is an offer or acceptance communicated? Under most standard agreements, the offer must be delivered or faxed to the other party to prove communication. Therefore, if an offer is delivered to the seller and it is open for acceptance until 11 p.m., then not only must the seller accept the offer before 11 p.m., but the accepted offer must be either delivered or faxed to the buyer before 11 p.m.
• Can you communicate offers and acceptances via email? Most agreement of purchase and sale forms in use today do not provide for communication via email. One of the main reasons is that there is a fear that you may send the email today, only to be notified tomorrow that there was a server error and the email was not delivered. Or perhaps you referred to the agreement as an attachment to your email but then forgot to include the attachment. In order to avoid problems, a clause should be inserted into your agreement to permit communication by electronic systems such as email. In addition, when you send the email, always ask for a reply communication from the other party to confirm that they have received the email. Then print the reply and keep it for your records.
The real estate agreement of purchase and sale is a serious contract, and may be the largest financial investment that you might ever make. Make sure to have it properly witnessed and that every clause is properly explained to you before you sign it. This is what a professional real estate salesperson or lawyer will do whenever they prepare and witness your signature to an agreement of purchase and sale.
Mark Weisleder
July 16, 2010
Mark Weisleder is a lawyer, author, course developer and public speaker for the real estate industry.
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