Case Study ( Part 3 of 5 )

For the purposes of this case study, you are the broker of record for ABC Realty Inc. Assume
that today’s date is Wednesday, June 15th, 2011. One of your salespeople, Alice Green has just
returned to your real estate office after the presentation of an offer this morning on her listing at
18 Airdale Crescent. The selling salesperson is Harry Legg of XYZ Real Estate Ltd. who
represents the buyer. The offer was accepted by the seller and Green is now bringing a copy of
the agreement and the deposit cheque to your brokerage.

Answer the following five questions based on the information contained in the agreement found
here.

Based on the information provided answer the question on the right side.

Q: Which one of the following statements correctly describes a mistake/error within the
Agreement of Purchase and Sale?

Your Options Were:

A) The home inspection clause is a true condition precedent and should not have a waiver.

B ) “Per annum” is required to describe the interest rate of the second mortgage.

C ) The home inspection clause does not permit the buyer to object to an unsatisfactory
inspection.

D ) According to the Mortgages Act, the term of a second mortgage cannot exceed the term of
the first mortgage.

Feedback:

A ) Incorrect. The home inspection clause is not a true condition precedent as the buyer may
wish to waive the condition and proceed with the transaction even if the inspection reveals
deficiencies.

B ) Incorrect. The term “per annum” has been replaced in the second mortgage by “a yearly
interest rate” which is perfectly acceptable.
C ) Correct. The wording only states that the buyer will have a home inspection performed but
does not state that it must be satisfactory to the buyer. Once the home inspection is performed,
no matter what the outcome, the condition has been fulfilled.

D ) Incorrect. There is no such restriction in the Mortgages Act.

Question 24

Case Study ( Part 4 of 5 )

For the purposes of this case study, you are the broker of record for ABC Realty Inc. Assume
that today’s date is Wednesday, June 15th, 2011. One of your salespeople, Alice Green has just
returned to your real estate office after the presentation of an offer this morning on her listing at
18 Airdale Crescent. The selling salesperson is Harry Legg of XYZ Real Estate Ltd. who
represents the buyer. The offer was accepted by the seller and Green is now bringing a copy of
the agreement and the deposit cheque to your brokerage.

Answer the following five questions based on the information contained in the agreement found
here.

Based on the information provided answer the question on the right side.

Q: Which one of the following statements correctly describes a mistake/error within the
Agreement of Purchase and Sale?

Your Options Were:

A ) The present use in the Title Search clause must be filled in to indicate the zoning of the
property.

B ) The time limit for the home inspection clause must be the same date as the mortgage
conditions.

C ) A waiver should be included in the first mortgage condition clause.

CD ) The time allowed for the title search is too long.

Feedback:

A ) Incorrect. This is not a mandatory section to be completed. If it is completed, the use of the
property must be inserted, not the zoning.

B ) Incorrect. There is no requirement for the time limits to coincide. The buyer may want
confirmation that the financing is approved prior to spending money on a home inspection.

C ) Incorrect. This is a true condition precedent and a waiver clause cannot be included. The
buyer does not have to authority to waive the first mortgagee’s right to approve the buyer to
assume the mortgage.

D ) Correct. The title search runs until the closing date. If the buyer’s lawyer waits until the last
day to bring title problems to the attention of the seller, there is no time for the seller’s lawyer to
address them and the transaction may not close.

Question 25

Case Study ( Part 5 of 5 )

For the purposes of this case study, you are the broker of record for ABC Realty Inc. Assume
that today’s date is Wednesday, June 15th, 2011. One of your salespeople, Alice Green has just
returned to your real estate office after the presentation of an offer this morning on her listing at
18 Airdale Crescent. The selling salesperson is Harry Legg of XYZ Real Estate Ltd. who
represents the buyer. The offer was accepted by the seller and Green is now bringing a copy of
the agreement and the deposit cheque to your brokerage.

Answer the following five questions based on the information contained in the agreement found
here.

Based on the information provided answer the question on the right side.
Q: Which one of the following statements correctly describes a mistake/error within the
Agreement of Purchase and Sale?

Your Options Were:

A ) The Notices clause must contain the fax numbers of both the listing brokerage and the co-
operating brokerage.

B ) The date on the first line of the offer must be the same date that the buyer signed the offer.

C ) To protect the buyer, the HST should be "in addition to" the purchase price.

D ) The wrong party has signed the Confirmation of Acceptance.

Feedback:

A ) Incorrect. While it may be convenient to include them, there is no requirement for brokerage
fax numbers to be included in this clause.

B ) Incorrect. The date on the first page is simply the date that the offer was created. The buyer
may not sign the offer until some later point in time, e.g., the next day.

C ) Incorrect. By putting “in addition to” in the HST clause, the buyer would be responsible for
paying any applicable HST over and above the purchase price.

D ) Correct. The buyer’s offer was accepted by the seller and therefore, the seller would be the
one to sign the Confirmation of Acceptance.