The notion of a contract is as old as time.
The notion of a contract is as old as time.
Two parties make a promise to one another, they settle on the terms and compensation, then they shake hands to bind the agreement.
I will give you this if you give me that; I will do this if you do that.
Should one party to the agreement fail to come through, the contract is breached and the other party is entitled to legal remedy.
A contract is a contract.
Of course, this is a wild oversimplification — contract law is actually quite complex and nuanced — but fundamentally we all understand the concept.
For example, when deciding to purchase a home, a buyer signs an offer and usually accompanies that offer with a healthy deposit cheque. If and when that offer is accepted by the seller, they then have a firm and binding contract that clearly outlines the obligations of both parties and a date upon which the deal is to be transacted.
What happens if the buyer wakes up the next morning with cold feet? What if they can’t obtain financing from the bank? What if the following week they find their dream home and want to bail on the first deal?
Well, they would be in breach of the contract they signed. Their deposit would be forfeited. And the other party would be entitled to pursue damages against the other.
You’d be shocked at how often this happens.
You may have read this week about a 250-year-old heritage tree at the centre of a whole legal brouhaha in Toronto. Long story short, on a fairly random lot up in North York sits a house. And but inches from that house sits a red oak tree that pre-dates Confederation.
So glorious and significant is this tree that in 2019, after the community rallied to protect and preserve it, the City of Toronto entered into an agreement with the homeowner to purchase the property with the intention to demolish the house and turn the lot into a parkette. They settled on a price, which was agreed to be fair market value at the time. The deal was contingent on the city putting up a portion of the money with community donors responsible for the rest. Hence the lengthy gap between signing and completion to allow for fundraising, which was fulfilled.
Nearly two years later the seller has changed his mind, citing the substantial increase to market value for the property. If the city wants the deal to go ahead, he’d like more money.
Hopefully someone has told him he signed a contract; the simple fact of no longer liking the terms of that contract does not make it invalid.
It will be settled in court in October.
It’s the classic case I have seen a number of times. When one party realizes the terms they agreed to could be more favourable and wants a do-over.
The thing is, that’s not how contracts work, even if it’s something that parties to real estate transactions have been getting away with for years.
As the Toronto market has been on its upward climb for most of recent memory, if a buyer wanted to bail on a deal, you could usually count on another buyer being ready and willing to step in, grateful for the opportunity.
With prices rising month-over-month, by and large the seller wouldn’t suffer much of a loss so rather than dragging it out into a protracted battle, typically both parties would simply sign a mutual release, the deposit would be returned and everyone would move on.
The problem with all of that is that it appears to have given the impression that real estate contracts are flexible. Contracts by definition are not flexible.
Especially now that we are starting to see prices coming down from the highs of March. A buyer refusing to close on a house purchased at the top of the market will result in a substantial loss for sellers who will be unlikely to hit the same number now that the market activity has slowed.
That’s a financial loss suffered by one party as a result of the other’s breach of contract. That party would be entitled to pursue damages against the other, and based on recent cases, it’s a near certainty the courts would side with the aggrieved party. Courts are in the business of upholding contracts.
The moral of the story? A contact is a contract. You are bound to the terms you agreed and signed on. And if you wish you hadn’t? Think long and hard because bailing is surely going to cost you.
When it comes to luxury real estate, location is key. From properties with French alpine to Pacific Ocean views, these luxury listings take advantage of their picturesque settings.
Location: Courchevel Le Praz, France
This wood-filled chalet overlooks the ski slopes from an expansive living room with a fireplace and an adjacent south-facing terrace.
The six en-suite bedrooms all have terraces. A closed-in area features a pool and spa, along with sauna and massage room.
Location: Aspen, Colorado
Price: $8.3 million
This ranchette home, remodeled in 2017, sits on a hillside overlooking Brush Creek Valley, the Snowmass ski area and Hunter Creek. The main home, which features antique 19th-century French Provincial/Mediterranean doors, has three bedrooms and 2.5-bathrooms. Features include a pantry with a custom wine cellar. A large outdoor entertaining area comes with a wraparound stone deck.
A two-story accessory dwelling unit, built in 2005, houses an art studio and kitchen on the first floor and one bedroom, one bathroom, and a kitchen on the second. A three-car garage comes with a full bath.
Location: Son Termes, Bunyola, Mallorca, Spain
This villa sits surrounded by nature on the island of Mallorca. The 12-bedroom, nine-bathroom stone residence has classic Spanish architecture, shaded outdoor sitting areas and a modern swimming pool.
Location: Santa Monica, California
Price: $7.75 million
Designed and built in 1910 by architect Robert D. Farquhar, this three-bedroom home sits just off the Santa Monica Bluffs, with views to the Pacific Ocean. The home has been reimagined with luxurious finishes, including white oak flooring and custom automated shades. The kitchen features custom two-tone Italian cabinetry and stone countertops and Wolf, Sub-Zero, and Miele appliances. The bathrooms include luxe fixtures by Brizo, Rohl, Newport Brass and Toto.
This home features a patio and the ground level and a deck on the second floor comprising more than 1,000 square feet of private outdoor space.
FGP Swiss & Alps, Hilton & Hyland, Inmobiliaria Rimontgo and Slifer Smith & Frampton Real Estate are exclusive members of Forbes Global Properties, a consumer marketplace and membership network of elite brokerages selling the world’s most luxurious homes.
A Lower Mainland real estate agent has been ordered to pay nearly $100,000 in fines after being found guilty of professional misconduct in relation to a rent-to-own scheme allegedly aimed at financially vulnerable homeowners.
More than three years after B.C.’s real estate council first suspended Kevindeep Singh Bratch’s licence under “urgent circumstances,” Bratch has also been told he’ll have to wait another year before he can apply to get his licence back.
A disciplinary committee found that Bratch committed conduct unbecoming of a real estate agent after a hearing that saw testimony from a man who claimed Bratch acted like a “saviour,” while negotiating a deal to purchase a $2.1 million house for less than a quarter of its worth.
“Bratch’s conduct … constitutes conduct unbecoming because it targets members of the public who are in stressful positions, have limited options and feel pressured into agreeing to any terms to keep their family homes,” the council said in submissions that resulted in the penalties.
“In these circumstances, Mr. Bratch was looking to make an investment and was driven by profit. The homeowners were driven by the desire to keep their homes.”
The case was one of the last handled by the real estate council before the introduction of a new regulatory authority in B.C. The B.C. Financial Services Authority (BCFSA) now oversees real estate agents, mortgage brokers, credit unions, trust and insurance companies and pension plans.
The penalties — which include a $45,000 fine and $50,000 to pay for the cost of the investigation — were announced on the new regulator’s website this week.
The BCFSA will handle the file going forward.
Bratch could not be reached for comment, but a spokesperson for the regulator said he has appealed the decision to the Financial Services Tribunal.
The rulings make clear that Bratch’s activities were not illegal.
The real estate council claimed they were “disadvantageous” to owners who “did not receive independent legal advice or separate agency representation, and either believed that Mr. Bratch was acting on their behalf, or were at least confused as to his role in the transaction.”
The witness who claimed Bratch came across as a “saviour” told the council that he approached Bratch after receiving unsolicited mail claiming the real estate agent was a foreclosure specialist.
At the time, the witness — whose name is redacted in the decision — was experiencing financial difficulties; his mother had passed away two years earlier and his bank had started foreclosure proceedings on his $2.1 million childhood home.
According to the decision, the two reached a deal that saw Bratch and his wife purchase the home for $500,000 and then agree to rent it back to the former owner for $4,000 a month with an option to buy back the property for $600,000 four months later.
“The language was like this is the best case scenario, this is what you have to do in order to make sure that the bank doesn’t take your home,” the witness told the disciplinary committee.
“I’m walking into this, like Kevin [Bratch], is in my corner, he is not somebody who, who is on the other side of the table in an agreement.”
The deal ultimately ended up in court after Bratch and his wife sued the homeowner, who responded by claiming the deal was “unconscionable.”
All three parties agreed to dismiss the legal action in December 2017.
The real estate council’s disciplinary committee considered evidence related to three rent-to-own deals involving Bratch.
In one case, Bratch evicted an elderly Maple Ridge couple on Thanksgiving 2017 after taking them to the Residential Tenancy Branch, over unpaid rent on a home they agreed to sell for $233,000 less than its assessed value to a company Bratch and his wife controlled .
The council faulted Bratch for failing to disclose the nature of his relationship with the company, and for failing to recommend that the couple get independent legal advice.
That situation led to the interest of local media. It also resulted in a lawsuit that was settled in an agreement that saw the couple buy their home back from Bratch for roughly the same price he originally paid them.
In the third case, the council says Bratch paid $154,000 less than the value of a property assessed at $869,000. He rented it back to the original owners for $4,300 a month.
“When we first signed this deal I expressed concern as to whether or not… [we] would be able to execute the re-purchase option after just one year, to which you assured me, and I quote, ‘I’m not a monster, I’m here to make a return on my investment, if you can’t buy it back after one year I would extent it [sic] another year,'” the original homeowner said in an email to Bratch, shared with the council.
The original owners could not buy the home back in a year and ended up renting on a month-by-month basis before moving out in December 2018.
According to the decision, Bratch now resides in the property. It was assessed at $915,000 in 2019.
Bratch represented himself at the hearing, disputing the allegations against him. He claimed he had advised the elderly couple to get a lawyer and was clear with his clients about the transactions.
According to the decision, he described himself as wearing “different hats.”
“So I provide homeowners with the different options and again I do wear the different hats,” Bratch is quoted as saying.
“So I would be wearing a mortgage broker’s hat, a real estate agent’s hat and during that time you’re allowed to be … licensed as a mortgage broker and a real estate agent at the same time.”
In addition to the penalties and suspension, Bratch has been ordered to take an “Ethics in Business Practice” course offered by the Real Estate Institute.
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