What You Should Know When Writing Your Own Clauses 🖊️

Although we definitely do not suggest selling your own home or writing your own clauses, the reality is… Everyone loves to try things at least once! So today we wanted to take a brief look at the world of real estate clauses and try to decode exactly what you should be doing when writing your own clause. It is important to understand what type of clause we are talking about, and in this article, we will be exploring the clauses that are typically used for either conditions or obligations.

When you are buying or selling a home, typically the conditions we hear about are inspection, financing and document review which are three pre-written clauses in the promise to purchase that you use at your discretion… But once your offer has been accepted, and your delays start, what happens if you have a post inspection negotiation? or if you need to oblige the vendors to do something for you prior to the notary? Let’s take a look at the two different types of clauses we can use.

A conditional clause, also known as a contingency clause, is a provision in a contract that specifies certain conditions or events that must be met or occur before the contract becomes fulfilled (meaning that the offer is conditional upon the conclusion of this condition). In the context of a real estate transaction, conditional clauses are used to protect the interests of both the buyer and the seller by ensuring that specific requirements are fulfilled before the sale can be finalized. Typically we use these conditions for aspects such as financing, the sale of a home, inspection, expertise tests and so on.

An obligation clause in a real estate contract outlines the duties and responsibilities that each party involved in the agreement is required to fulfill. In the context of a real estate transaction, an obligation clause details the specific actions that both the other party must perform to complete the transaction successfully. This can mean that the buyer obliges the seller to open the pool before signing at the notary or that the seller obliges the buyer to leave a non refundable deposit of five thousand dollars in trust until the notary date. 

Regardless of what type of clause you are using, always remember these important elements to make it an enforceable clause; who, what, when, why, how and the consequences related thereto. Although it seems pretty logical, in every clause you write you must make sure that it is clear to all parties without any doubt the above mentioned aspects. Let’s look at a typical obligation clause for example:

As per agreement between all parties, the vendor is obligated, at his expense, to paint the garage white, prior to the signing of the title deed following the rules of the art. Should the vendor fail to fulfil this obligation, they fully understand that the notary instructed to pass the sale of this property will hold back an amount of eight hundred dollars ($800) in trust for three (3) months until the purchaser is able to find a professional to do the work for him. Once the work is completed, a receipt will be provided to the notary and the funds necessary shall be released to the buyer to be able to cover the work that was done at his expense. The balance shall be remitted back to the seller.

Who: The vendor
What: Must paint the garage

When: Before signing at the notary:

How: In respect to the rules of the art (as a professional painter would)

Consequence: If not done, the notary holds back $800 until it gets done and paid for.

Although we do not suggest it, writing a clause yourself must be done properly and have an enforceable action! If you are not sure how to write your own clauses, call your local real estate broker, lawyer or notary and let us be your guiding light! You definitely do not want to leave the biggest purchase of your life in the hands of “Well the vendor looks like a great guy”

Until next time,
Your friendly neighbourhood realtors!