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The Agreement of Purchase and Sale (the “Agreement”) contemplates a period of time for the purchaser to determine whether the seller has a good and marketable title to the real property and that it is owned free and clear of any claims, liens or liabilities. Unfortunately, the search of title and other inquiries often reveal title defects which may or may not be correctable before the closing date. For example:

  1. An Agreement describes the seller as Daniel M. Green. Yet when Daniel purchased the property, the Transfer/Deed set out his name as Daniel Mark Greene;
  2. There is an old mortgage registered and on title that appears to have been paid in full, but no discharge has ever been registered; and
  3. A review of the survey reveals that the house encroaches on the neighbour’s property.

In this regard, the requisitions or written demands the purchaser makes, usually through her solicitor, outline the matters that the seller must satisfy in order to fulfill his legal obligations under the Agreement.

Interestingly, the Agreement has evolved to require that the purchaser accept title subject to certain defects such as easements for public utility lines which do not materially affect the present use of the property. These changes to the Agreement, the conversion of properties to the Land Titles System and the prevalence of title insurance have led to the requisition letter being dangerously deemphasized or not sent at all in real estate transactions. Purchasers and sellers may wish to ask their respective lawyers what title defects, if any, were discovered during their investigations and confirm that such issues were satisfactorily resolved in a timely manner. The purchaser will want to ensure that their lawyer discusses the transaction with them to ascertain their proposed use of the property and whether any potential title defects hinder its present or future use.

Download the PDF: Concepts Newsletter – Winter 2009

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