Law Times

Law Times • January 17, 2011 FOCUS PAGE 11 Addressing the pitfalls of standard documents Upcoming OBA session to focus on avoiding problems in real estate form BY DARYL-LYNN CARLSON For Law Times W hile the standard document for resi- dential home sales introduced by the Ontario Real Estate Association seems relatively straightforward, some lawyers have experienced problems using it. In fact, the standard form document has some issues law- yers should know about that could result in a flawed trans- action in the event the parties don't address all of the nu- ances. Pervasive problems with the document have prompted the Ontario Bar Association to host an educational session for the real property section on Feb. 3 to update lawyers on the possible perils when using the standard form document. "With the standard docu- ment agreement, there are problems," says Jeffrey Schwartz of the law firm Schwartz & Schwartz Professional Corp. He's co-chairing the OBA edu- cational session along with Lori Swartz from LawPRO. "Lawyers need to be re- freshed on what they know and also about some details that they don't realize can affect a transaction," he says. Schwartz notes roughly 95 per cent of real estate transac- tions use the standard docu- ment even though lawyers have experienced major problems with it. For starters, Schwartz says the document enables property buyers to provide bad cheques or money orders without any ramifications. "Some clients are scoundrels, and there are no consequenc- es," he notes, adding he has contacted several banks about bogus payments for property sales that he has handled but hasn't received any constructive responses. As well, condominium pur- chase transactions when buying a new property from a devel- oper are particularly trouble- some. "When you buy from a developer, they don't use stan- dard agreements, so the lawyer involved will have to sit down and read the agreement thor- oughly," Schwartz says. "That can be a problem for lawyers who are used to the standard document." The document can be par- ticularly problematic for clients seeking to purchase a cottage property, he adds. "The document doesn't ad- dress things like plumbing and septic systems, so lawyers have had a lot of discussion about cases that arise from cottage properties." As a result, the bulk of the fo- cus during the OBA session on real estate transactions using the standard document will be on what lawyers need to know about negotiations, amendments, and addendums related to it. Untitled-9 1 www.lawtimesnews.com 10/26/09 3:36:58 PM "It's not how you draft the agreement but what you should be thinking about when you negotiate the agree- ment," Schwartz says. "There are so many details that have to be addressed that many lawyers don't know about." Tom Baulke of Baulke Au- gaitis Stahr LLP in Colling- wood, Ont., agrees that the standard form can be prob- lematic, particularly when dealing with details it doesn't address, such as easement rights and other modifica- tions a purchaser may want to include in a real estate trans- action. At the OBA session in Feb- ruary, he'll be speaking about the standard document's use in a resale transaction and ad- ditional clauses that lawyers need to include to ensure the contract holds up, especially if the matter ends up in court. "There may be specific lawyers are left to scramble to make the changes and modifi- cations." In many instances, lawyers have to modify clauses or add their own to the standard form to tailor the sale for their client. "A typical condition is structured so that a purchas- er can terminate the deal if they're not satisfied with the conditions," Baulke explains. "So lawyers must know how to formulate a condition in an offer in the context of how judges will look at these." He notes lawyers also need 'With the standard document agree- ment, there are problems,' says Jeffrey Schwartz. modifications that we should be making regarding the stan- dard form" to accommodate additional details, he says. "If we have an issue, then often to carefully review the prop- erty description in the context of the details provided on the standard form and feel free to make any additional modi- fications to be sure they ad- dress all of the nuances and clients' expectations. "My approach is going to be that it is a contract, and we can't forget that," Baulke says. "The majority of the time, we don't have the opportunity to negotiate the offer and terms, but there are contractual things that we need to be looking at in order to make sure there is an enforceable agreement." Five lawyers will be speak- ing at the half-day session next month. Louis Radomsky will provide an overview of the forms and possible changes lawyers need to make. Deborah Bellinger of Nelli- gan O'Brien Payne LLP in Ot- tawa will address nuances in a standard condo agreement. Bradley McLellan of Weir- Foulds LLP will discuss the standard recreational property agreement. Steven Pearlstein of Minden Gross LLP will address the im- plications of the HST, while Bob Aaron of Aaron & Aaron will wrap up with a talk about the seller property information statement. LT [ Keeping real estate transactions where they belong – in your office. ] At Stewart Title, it's how we work that sets us apart. We deal in title insurance and related products, under- taking no part of the transaction that has traditionally fallen to lawyers/notaries. Since our inception into the Canadian market, you will find that we have consistently combined com- prehensive coverage with unparalleled support for lawyers/notaries. 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