By Bob Aaron
An Ontario Small Claims Court decision in January illustrates the complexity of using email to conclude real estate contracts and how easy it is to mess up a perfectly good real estate transaction.
“This case,” wrote Deputy Judge J. Sebastian Winny, “would make a good case study for Realtors on how not to conduct a real estate transaction. And it is another poster-child for the wonders of miscommunication by email.”
In the fall of 2011, Ian and Anita Pilon put in an offer on a Kitchener, Ont. property owned by Adrian and Florica Rosu. The price on the agreement was $400,000. The Rosus signed it back at $420,000 and initialled all the pages except page four, the critical signing page.
The signback was then scanned and emailed back to the agent for the Pilons – missing the signature page. Thinking it was valid, the buyers countered at $410,000 and sent the document back to the sellers, again missing the signature page.
The sellers met with their real estate agent, Ninoslav Orasanin. There was some confusion as to whether they intended to accept the $410,000 price or sign it back at $420,000. In any event, the change in price was never initialled and the document was returned to the buyers – still missing the signature page.
Looking back on the events, the deputy judge later noted, “It did not appear that (Clifton van Dincten, the buyers’ agent) examined the document with any significant care – if indeed he opened that email attachment and looked at it at all.”
In this comedy of errors, all parties thought an agreement had been reached. The buyers thought they were paying $410,000 and the sellers apparently thought the price was $420,000.
The sellers acknowledged receiving a “final” copy of the agreement of purchase and sale from their sales rep, but did not open the email attachment believing they were aware of its contents. They felt no need to review it.
The buyers had the home inspected and waived the condition on home inspection. They were ready, willing and able to close on the scheduled closing date, but the sellers could not provide vacant possession since their tenant had not moved out. The deal ultimately died because of the confusion over the price.
The buyers sued for damages exceeding $17,000 and return of their deposit.
After analyzing the evidence, the deputy judge decided that a complete contract was never concluded since it was missing Florica Rosu’s signature and communication of the acceptance to the buyers was never completed.
It also appeared that the parties were not in agreement on the price.
The buyers were denied damages since there was no contract in existence but they were awarded return of their deposit.
A number of lessons emerge for real estate agents from this case:
– Always have the parties initial every page of an agreement and every change to the price and the wording.
– It is imperative to retain a copy of every document version that has been signed. Make sure your clients also have a copy. If a copy is not readily available, take a picture of each page with a cell phone and email it to the clients.
– Open, print and review all email attachments.
– Carefully monitor every step in the negotiations to make sure nothing is missed.
– Never assume the contents of a document without opening it, printing it and proofreading it.
– Count the pages in each document and match them to the fax transmission sheet or the scanned version. If the pages don’t match, you’re in trouble.
– And above all, make sure you have a minimum level of experience with scanners and email and that you are intensely focussed on getting the transaction done properly.
– If you’re not comfortable with a scanner, don’t use one.
The case of Pilon v. Rosu is available online at https://canlii.ca/t/g2jqz.
Bob Aaron is a Toronto real estate lawyer and chair of the Tarion consumer advisory council. His bi-weekly columns appear in The Toronto Star. He frequently lectures to real estate agents. Email [email protected]. Website www.aaron.ca.
