What’s in Those Power of Sale Clauses Anyway?
Power Of Sale Agreements are very different from an average Agreement of Purchase and Sale.
The following highlights typical clauses Lenders include when a property is sold under Power of Sale.
1. Seller’s authority to sell the property due to default under the mortgage.
2. Buyer relies on his own inspection and investigation regarding quantity, quality and value.
3. Buyer accepts property “as is” as of closing…without representation or warranty by Seller as to:
fitness or state of repair and condition; zoning or lawful use; location of structures, fences or retaining walls.
4. Buyer assumes all work orders and deficiency notices against the property.
5. Buyer accepts any subdivision agreements, public utility easements, declaration and by-laws if a condo.
6. Seller only to provide evidence of title in its possession or control.
7. Seller not required to discharging mortgages, liens or encumbrances registered after its mortgage.
8. Buyer is responsible to verify any information supplied by Seller or its representatives.
9. If GST is applicable, buyer is responsible
10. Right of Redemption. Sale is Subject to:
1. The right of mortgagor (owner) to redeem or place the mortgage in good standing prior to closing,
2. The right, if any, of any other person to redeem or place mortgage in good standing,
3. Seller retaining the right to terminate sale due to an injunction or order to restrain sale.
Agreement becomes null and void, buyer’s deposit is returned and Seller is released from liability.
11. Fixtures and Chattels:
1. They are not included in purchase price.
2. Seller does not warrant ownership or state of repair and are taken by buyer at his own risk.
3. Seller delivers possession of fixtures and chattels found on the property at closing.
4. Buyer assumes any liens on chattels (i.e. Gas Lien or Personal Property Security Act lien).
12. If property is Tenant Occupied
1. If Buyer wants vacant possession s/he must provide a statutory declaration that property shall be occupied by Buyer, Buyer’s spouse, same-sex partner, child, parent, etc.
2. If Vacant Possession cannot be Provided…
…Seller is entitled to extend the closing for up to 60 days.
…Extensions can be given up to and including closing.
…If no vacant possession after extensions, the Buyer may assume tenants or terminate the agreement.
3. Assuming Tenancies…
…Seller to provide only tenancy information it possesses,
…Seller to adjust only on rental payments and last month’s rent received by Seller,
…Buyer acknowledges there are no prepaid rents, unless set out in the Agreement.
13. Keys: Seller to supply only keys in its possession.
14. UFFI: Seller has no knowledge that property has Urea formaldehyde Foam Insulation.
15. Other provisions may apply: Buyer to investigate septic, conditional offers may have escape clause….
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Power of Sale.