FAQ – “I find that sometimes listing agents aren’t providing strata documents in time for my buyers to do their due diligence, but they still expect subjects to be removed on the date specified in the Contract of Purchase and Sale. How can I protect my buyers from this situation?”
In this video Steve Jamieson, Managing Broker of RE/MAX Crest Realty Westside, suggests a clause that you could add to your Contract of Purchase and Sale to automatically extend the subject removal date, thereby giving your buyers enough time to read the strata documents and make prudent inquiries.
Here’s a brief summary:
Reading strata documents requires time
We all know that strata documents can take quite some time to read and understand. Minutes, strata plans, Form B’s, special assessments, engineer’s reports, bylaws, rules, financials and more – it can be overwhelming. Homebuyers of strata properties need adequate time to digest an enormous amount of information, and they will probably have a lot of questions for their agent (you), their home inspector and / or legal counsel.
At the time of taking a listing, the listing agent is meant to obtain current relevant strata corporation documents. (See Rules of Cooperation 6.04)
We’d like to think that all documents would be available for perusal once an offer is accepted. Unfortunately that is not always the case. Perhaps this is a hot listing and your offer was accepted before the property management company even compiled the documents.
A frustrated contract
When a seller or listing agent prevents the achievement of the buyer’s objectives, we call this “frustrating the contract”. Obviously this is not OK.
It could happen innocently like in the scenario above or there might be something more complicated going on.
Let’s say the seller has received a backup offer with a greater selling price, and they really prefer that contract to the one they already accepted from your buyer. Of course, you’re not privy to this information, but you do sense that some monkey business is going on. The documents haven’t been delivered, and the time that your buyer will have to read them is getting tighter and tighter. You keep contacting the listing agent, who is at the mercy of their seller and you just aren’t getting anywhere fast. It’s down to the wire and now your buyer is in the precarious position of having to make an uninformed decision on a major purchase. Argh!!!
Now, it would actually be illegal to hold back documents in circumstances such as these, but sorting all that out would be a nightmare, so let’s try and prevent what could turn into a very messy situation.
Add a time clause to your strata contracts
Append the clause below to your standard documents clause. You can add it to your custom clauses in WebForms so that it’s always available when needed.
“Buyer and Seller agree that in the event that any of the above documents are not received by the Buyer in the time frame outlined above, subject removal for this condition shall automatically be extended to [number] business days after receipt of the final document.”
By both parties agreeing to this ahead of time, it is part of the contract. No addendum is required to extend the subject removal date for the documentation clause.
Adding this extra term will give your buyer the time they need, and it will avoid termination of the contract for reasons that could be open for interpretation. Not only that, you will most likely get all of the documents on time because nobody likes to extend subjects!
Note: All other conditions do need to be removed on time, per the Contract of Purchase and Sale.
Please note: The Frequently Asked Question video series is used for training purposes within our group of RE/MAX offices. If you are licensed at a different brokerage, you must refer to your own Managing Broker for advice.