Orea Asset Purchase Agreement

The judge found that the sellers` representation in the highlighted portion of the illicit substances clause was interpreted as „a factual assertion to the knowledge and faith of the sellers, to which it was to be referred at the time of its realization and to which the purchaser could continue to avail himself at least until the conclusion, whereas the GSP was a contract of execution.” After the buyer discovered to the seller and informed that the property had been used as a marijuana crop, the sellers could no longer give the representation „honestly”. The appeal judge therefore found that the purchaser had the right to terminate the purchase and sale contract because he had been led to enter into the agreement on the basis of the sellers` misrepresentation. The buyer was entitled to the return of the deposit of 30,000 $US and legal costs. The vendors appealed. As a result, the Court of Appeal found that the sellers did not violate the illegal substances clause. The evidence suggests that the buyer`s discovery was also quite surprising to the sellers. The call was admitted. The sellers were granted a $30,000 surety, and the sellers` claim for damages was referred to the Supreme Court for a decision. Second, the Court of Appeal held that the importance of the sellers` representation in the illicit substances clause must be limited to their knowledge and beliefs at the time of signing the purchase and sale agreement. The illegal substances clause must be interpreted in accordance with the standard rules of treaty interpretation, including: (a) the clear language used in the clause; and b) the terms of a contract should be read taking into account the whole agreement and its other provisions. This case shows that buyers (and their real estate agents and lawyers) must ensure that they explore a potential property before signing a purchase and purchase agreement, since the doctrine of reserve emptor or „Let the buyer be careful” generally applies to all residential real estate transactions. The standard clauses in orEA`s purchase and sale contracts cannot protect the purchaser from a prior discovery that the property is stigmatized, for example by being an old marijuana crop, reports that the property is being sued or that it is a murder or suicide that took place on the land.

Stigma on the property not only affects the value and marketing of the property, but can also prevent the buyer from insuring a mortgage and/or insurance on the property. In this case, the purchaser could have avoided any problems and litigation if he had made superficial Internet searches and requests to the Toronto Police Services before offering to purchase the property. In this case, about a month after the purchase and sale agreement was concluded, the buyer`s real estate agent found that the property had already been used as a marijuana crop in 2004. The buyer tried to terminate the contract and demanded the return of the deposit of 30,000 $US. The sellers refused to terminate the contract and requested that the buyer breached the agreement by not closing and that the sellers were entitled to the surety and related damages. Subsequently, the purchaser commenced a competing application for exemption. The Court of Appeal found that the language clearly used in the clause did not specify that representation continued „at least until conclusion.” In addition, the purchase and sale agreement contained other provisions that contained insurance and guarantees expressly declared to be acting at the time of the conclusion. The absence of similar language in the Illicit Substances Clause reflected the parties` intention to limit representation to the knowledge and beliefs of sellers at the time of signing the purchase and sale agreement.

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