This is a complimentary post to Patrick Shing’s 2015 post entitled ‘Stigmatized Properties and a Vendor’s Duty to Disclose.’

You’ve just sold your property, signed the requisite documents required for closing and handed over the keys to your lawyer.  Just when you think the transaction will be completed without issue, you receive a phone call before closing and are advised by your lawyer that the purchaser is seeking to back out of the transaction. This is a problem that no seller wants to deal with. However, having a well-written Agreement of Purchase and Sale (APS) and receiving sound legal advice can make all the difference.

Anticipatory Breach of an Agreement of Purchase and Sale

So how does a seller and their lawyer deal with a potential breach of an APS by a purchaser in a residential real estate transaction?  If the seller cannot come to an agreement with the purchaser to allow for an extension in order for the purchaser to fulfill the terms of the APS, the seller’s lawyer will need to tender on the purchaser’s lawyer.  Tender, briefly explained, means a party has demonstrated to the opposing side that it is ready, willing, and able, to complete the transaction. When either party to an APS fails to tender properly on the other in the event of a potential breach, the consequences can be serious for both the parties to the transaction.

The purchaser and seller must ensure they comply with their respective obligations in the APS, failing which, the infringing party will expose themselves to a default of the APS and even worse, potential litigation.

To avoid a breach of contract and a potential tender, parties to the transaction need to pay close and strict attention to the terms and wording of the APS.  This is what will ultimately be relied upon and guide the future course of proceedings in the event either party decides to commence litigation against the other. Case-law has consistently held that the highest deference must be made to the wording of the APS when there is an attempt to interpret the rights and responsibilities of the parties.

Protecting Your Interests

Having a properly and well-drafted APS is crucial to protecting your interests.  Any representations made and subsequently relied upon by a potential purchaser can lead to a problem where the seller promises something, but on closing, has failed to satisfy their promises. Parties to an APS need to make sure the terms are satisfactory to them, and ideally, have it reviewed by a lawyer in order to explain what the legally binding contract they are about to enter into actually means.  Most parties to an APS will not be familiar with the technicalities and nuances embedded within a standard-form APS. The relatively minor expense of seeking out legal advice from an experienced real estate lawyer can make all the difference between a deal closing smoothly or becoming a potential nightmare.

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