Profession Broker February 2013 Page 8

In the field series

Profession Broker February 2013

This series, which began in January 2012,
presents actual cases referred to the OACIQ
Info Center. They contain concrete examples
of things you should and should not do. This
one concerns the financing clause.

Financing questions

Mrs. Jai-Trouvé visits a pretty waterfront property with her bro-
ker, Mr. Bellemaison. She falls in love with this property and
decides to present a

Promise to purchase.

Mr. Bellemaison completes the mandatory form

Promise to pur-

chase Chiefly residential immovable containing less than

5 dwellings excluding co-ownership and presents it to the seller's
broker. After negotiations, the

Promise to purchase is accepted.

The periods allocated for the fulfilment of conditions are 10 days
for obtaining a financing (clause 6.2) and 7 days for the building
inspection (clause 8.1) following acceptance of the

Promise.

On the 11th day of the period specified to obtain financing, the
seller, Mr. Se-Demande, still has not received a copy of the under-
taking by Mrs. Jai-Trouvé's hypothecary lender. This raises seve-
ral questions:

· Is there something the seller can do?

· Is the

Promise of purchase automatically cancelled if the

financing is obtained after the period specified in clause 6.2?

· What happens if the amount of the buyer's hypothecary

undertaking is higher than what is specified in clause 6.1?

The financing clause

The seller's broker contacted the OACIQ Info Center. Here
are the answers he received to his questions.

The period in clause 6.2 begins on the day after the

Promise to

purchase is accepted, but this is not a strict deadline since the
Promise is not automatically rendered null if the clause is not res-
pected. However, it can be risky for a buyer to continue to look for
financing following the expiration of the time period in clause 6.2,
because the seller can then exercise the mechanism stipulated in
clause 6.3 of the

Promise to purchase. This mechanism begins as

soon as the time period in 6.2 expires and gives the seller 5 days
to exercise one of these two options:

Notify the buyer in writing that the seller requires him to file a
new application for a hypothecary loan at his own expense

with the financial institution designated by the seller and within
the time period specified by the seller (note that clause AV4.2 of
the form

Notice and follow-up on fulfilment of conditions can be

used for this purpose). If the buyer does not obtain a hypothecary
undertaking in accordance with the terms set out in 6.1 within the
time period specified, the

Promise to purchase becomes null and

void. However, an undertaking provided to the seller within that
period has the effect of fully satisfying the condition.

Render the

Promise to purchase null and void.

If the seller fails to exercise one of the options in clause 6.3 within
the 5-day period, the

Promise to purchase becomes null and void

on the 6th day.

If a Promise to purchase is presented by another buyer
within the period specified in clause 6.3, can the seller
accept it?

Yes, by ranking it second and making it conditional upon the
cancellation of the first

Promise to purchase (using clauses R2.3

or R2.4 of the form

Annex R Residential immovable). If the

seller's intention is to make this first

Promise to purchase null

and void as soon as the time period in clause 6.2 expires, he
should notify the first buyer of this cancellation in writing in
order, among other things, to avoid selling the immovable twice!
(Note that clause AV4.1 of the form

Notice and follow-up on

fulfilment of conditions can be used for this purpose even after
the expiry of the time period indicated in clause 6.3).

If, after the financing deadline expires and before the
seller exercises the mechanism in 6.3, the buyer provides a
hypothecary undertaking with a loan amount higher than
what is specified in 6.1, can the seller refuse it?

No. Clause 6.2 states that the undertaking by a hypothecary
lender must be for a loan in the amount set out in clause 6.1 or
higher. Thus receipt of such an undertaking would have the
effect of fully satisfying the conditions in 6.1. In addition,
remember that the time period indicated in clause 6.2 is not a
risk period and that non-compliance with it does not make the
Promise automatically null.

On this subject, we encourage you to read the following arti-
cles on our website:

Promise to purchase and financing of an

immovable The importance of the section relating to new hypo-
thecary loan

(article no. 122575) and

The importance of confir-

ming the cancellation of a promise to purchase

(article no. 122576).

For more information, please contact the OACIQ Info Center:

by email at

info@oaciq.com

by telephone at 450-462-9800 or 1-800 440-7170
between 9:00 AM and 4:00 PM on Monday, Tuesday,
Thursday and Friday and between 10:00 AM and 4:00
PM on Wednesday.

Do you know the origin o

f your

licence?... continued

Once responsibility for l

icences (then

called "certificates") w

as transferred

from the government t

o the ACAIQ,

the new association b

egan assigning

licence numbers compo

sed of a letter

and four digits, starting w

ith number

A1001. The ACAIQ t

hen assigned sub-

sequent numbers contin

uing with series

A, B, and so on.

Cont'd on page 21

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