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Real Estate

Realtors; learn how to save a deal when spouses are feuding and being uncooperative over the sale of a property!

This article applies to legally married couples and not those in common-law arrangements.  The long and the short of it is that IF both spouses are on title of the property [that means they are both registered owners in one capacity or another (commonly as Joint Tenants or even Tenants In Common)], then you will need them BOTH to sign the listing agreement, representation agreement, the offers in between, any other required Realtor documents/amendments, and the finally accepted Agreement of Purchase and Sale and its amendments.  So long as that is the case, the two FINAL documents you should ask their lawyer to produce while signing the listing agreement is, first an Un-revocable Direction to the lawyer (presuming he/she will be the one closing the deal) as to how the Proceeds of Sale are to be divided and that he/she is to be the closing lawyer.  This ensures that the two spouses cooperate and do not hold each-other hostage on the eve of closing threatening not to close unless one spouse gets what they want out of the deal.  It also ensures that the lawyer who holds this direction will be able to use it because he/she will be closing the deal.  Second, and at the same time ask the lawyer to also draft and provide a declaration that both spouses will be providing vacant possession on the day of closing before 4:00 pm.  This will help the scenario where one spouse is being difficult but knows they must leave and wont until the last minute.  That way, at least after 4:00 pm the lawyers involved can still tender and register the deal as closed before 5:00 pm.  At the very least if one spouse suspects that regardless of the documents signed while listing the property that the other spouse will now be uncooperative, that spouse can instruct the lawyer to proceed with a quick application to the court under the Vendor’s and Purchaser’s Act or in family court to obtain an order based on the agreements and documents signed to enforce the closing and seek direction.

However, IF both spouses are NOT on title of the property, and the property is considered a matrimonial home, it is equally important to have the non-title spouse sign all the same documents mentioned above for the following reasons:

1)      A matrimonial home is broadly defined in law to include any property that is used as a residence.  Hence, this would apply to a cottage, chalet, farm, condo in the city and a suburban house; there is no limit on how many, only that it was used as a residence.

2)      Non-title spouses under law have equal rights to possession of the property.

3)      Non-title spouses under law are entitled to notice of any proceeding that involves the property.

4)      Non-title spouses under law have the right to occupy the property for 60 days after the death of the spouse who is on title.

It is not sufficient to rely on the terms of the Agreement of Purchase and Sale provided by OREA.  Currently the standard OREA agreements have a Family Law Act provision that only says that unless you see a signature hereto by the non-title spouse consenting to the transaction, then it is presumed that consent was not needed and the spouse is not on title.  As a realtor you should verify that if there is a non-title spouse and you are not therefore seeking the consent of the non-title spouse then the subject property must NOT be a matrimonial home pursuant to the definition provided above.  Now, you can try and rely on actual evidence, such as if the property is commercial, retail or industrial, or if it was always rented out to a tenant, or if it was recently purchased and constructed, however, in some cases this would be difficult to ascertain without wasting valuable time.  Hence, again, it would be wise to nevertheless obtain the same acknowledgements and consents mentioned above in order to cover yourself from any misunderstanding or being misinformed.  Failing to complete your due diligence could result in the non-title spouse informing the closing lawyer that he or she refuses to provide vacant possession of the property on closing, and the only way to force him or her would be by court order; a procedure that would now have to stem from an initiating process such as a divorce application or civil claim, both of which could take years.  You have no way of holding the non-title spouse responsible or liable for the damages that would result should the deal not close and the purchasers sue the seller (title spouse).   Without the aforementioned signed acknowledgements and consents the title spouse would be left solely responsible for dealing with the mess, and you as the realtor could find yourself barring part of the losses, not to mention your lost time.

The OREA agreement also includes one more provision known as the Spousal Consent.  This provision requires that the consenting non-title spouse sign the agreement in order for the seller (title spouse) to sell the property.  Here the non-title spouse is waiving any rights he or she may have under Family Law, which are essentially the rights mentioned earlier (provided the property is a matrimonial home).  Now, although this is somewhat equivalent to a less detailed document consenting to the transaction, it does not cover all aspects of the transaction.  It does not make it clear to the non-title spouse that he or she would have to vacate the property on or before closing, or if she is to receive any of the proceeds of sale, or what is being sold with the property, or even what is the final price (as it is on the first page and not the signing page), or what other documents she may have to sign to effect the sale.  The title spouse cannot force any further cooperation if the non-title spouse refuses for any reason whatsoever.  Hence, it is imperative to obtain the acknowledgements and consents ahead of time so that the title spouse can apply to the courts for an order enforcing the closing of the transaction and cooperation from the non-title spouse.  At the very least the non-title spouse can be shown that he or she will be liable for the damages, and furthermore, if the non-title spouse signs the Agreement of Purchase and Sale consenting at that time, the purchasers can also obtain a court order for same and sue the non-title spouse (who consented) directly for any damages.  Finally, the biggest problem with relying solely on this provision is that once signed it is highly unlikely that any future amendments will be signed and consented to by the non-title spouse, giving the non-title spouse a way out of his or her original consent and avoiding any liability at all.  For instance, an agreement is reached for a specific price and closing date, for which the non-title spouse consents to by signing under the subject provision in the agreement.  A few weeks later the seller (title spouse) agrees to an amendment reducing the price and bringing the closing date forward.  The seller (title spouse) does not obtain consent from the non-title spouse for this amendment.  All of a sudden the non-title spouse would receive less than anticipated (if it was expected) and must vacate the property earlier than agreed to.  Any court would sympathise with the non-title spouse and will very likely refuse any order to enforce the closing of the sale.  Again, it is imperative that ALL AMENDMENTS are signed and consented to by the non-title spouse.  As well, an appropriate acknowledgement and consent showing what exactly has been amended must be signed by the non-title spouse to go together with the aforementioned documents.

All in all as a prudent realtor DO NOT rely on the title spouse to have obtained the proper acknowledgements and consents from his or her non-title spouse as well as having provider him or her with proper notice.  The onus should be on you, the realtor, to verify same, and to perhaps go one step further and obtain the signed documents mentioned above, as well as to ensure that all amendments thereafter are consented to, with an additional document showing what exactly has changed in the transaction so that the non-title spouse can acknowledge and consent to as well.

 

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