Mortgage Broker

legalease 36 | summer 2017 cmba-achc.ca CmB magazine the schedule and the contract, the terms of schedule applied. e Court approved the offer and the sale was completed. Aer taking possession of the property, the buyer was shocked that it had been stripped bare of most, if not all, of its finishings (see the list of items in the box to the right). ere was also damage to the home that appeared to have been caused when the owner moved out of the property. is damage included large scratches on the hardwood floors and damage to the wall in the office. e estimated cost of repairs was $153,619.04; a considerable amount given that the purchase price was $1,050,000. So, who bears the loss? decision e question for the Court came down to whether the contract required that the property be delivered to the purchaser in the same condition as viewed on the viewing date. e Court referred to a previous case as being helpful. In that case, the schedule to the contract clearly stated that it replaced, modified and (where applicable) overrode the terms of the contract and that where there was a conflict between the schedule and the contract, the schedule applied. e Court said there was a conflict between the "As Is, Where Is" wording of the schedule and the "As Viewed" wording of the contract, so the schedule applied and the buyer bore the loss. However, in the present case, the Court said that the language was "patently ambiguous"; that is, the ambiguity was plain on an ordinary reading. e seller had originally declined to include the "As Viewed" clause in the contract, but, through negotiation, was persuaded that it be included in the final agreement. e Court said that it would be "somewhat disingenuous" for the seller to agree to allow the "As Viewed" clause to be included in the contract but then rely on the schedule to override it. As well, the addendum contained conflicting clauses, one providing the "As Is, Where Is" clause and the other the "As Viewed" clause. e wording of the schedule did not help resolve the conflict as, although it said it overrode the wording of the contract, it did not say it overrode the wording of the addendum. at meant the addendum was not overridden and the ambiguity caused by the conflicting clauses of the addendum remained. e Court looked to the surrounding circumstances to resolve the ambiguity. e purchasers had insisted on the protection of the "As Viewed" clause and the sellers had been persuaded to provide the protection. On this basis, the Court said the contract must be interpreted as including the "As Viewed" clause. e result – the seller bears the loss. Takeaways n Courts have been willing to assign the loss in accordance with the language of the contractual documents package. n As a mortgage broker or lender, always ensure that the contractual documents (as a package) are worded to exclude any "As Viewed" clause and to give overriding authority to the "As Is, Where Is" clause. While the Court may order the party who had received the sale proceeds (in this case, the lender in the foreclosure proceedings) to pay damages to the buyer, the buyer might pocket the money rather than making repairs. e buyer's new lender might be le to enforce any breach of the new mortgage triggered by the security property having been damaged and devalued. as a mortgage broker or lender, always ensure that the contractual documents (as a package) are worded to exclude any "as Viewed" clause and to give overriding authority to the "as Is, Where Is" clause. TyK V gRAhAM – STRIppEd FInIShIngS • Central Air conditioner with humidifier; • Speakers and intercom system (approximately 39 individual speakers were removed); • Iron gates and trim from the wine room; • Window shutters and electronic blinds from almost every window in the house; • Central vacuum; • Cabinet knobs and handles for most of the bathrooms and the basement kitchen; • Hardware and fixtures from the bathrooms, such as towel racks and toilet paper roll holders; • Ceiling fans; • Crystal chandeliers; • A mirror from one of the bathrooms and from the master bedroom closet; • Light fixtures (replaced with cheap utility-grade fixtures); • Decorative rivets from the garage door; and • All the dimmer switches. The right clause can protect you from hefty repair costs in the event your foreclosure property is plundered by the registered owner.

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