What is a contract and when is it legally binding?
A contract is a legally binding agreement between two or more parties and describes the rights and obligations of the parties to the contract.
Where a contract has been properly drafted and signed by the parties to the contract, and where the terms are clear and the contract is not for an illegal purpose, then it is likely that a Canadian court would consider the contract valid and enforceable.
Only the parties to a contract can sue or be sued under the terms of that contract.
Before you sign a contract
- Never sign a contract you don’t understand.
- Before signing a contract, consult your Realtor, your Realtors’ managing broker, and/or your lawyer for advice.
Generally, Canadian courts expect if you have signed a contract, you have agreed to it and you will therefore be bound by its terms. You may not be protected if you claim that you did not understand what you were signing. Always ensure that you understand a contract before you sign it.
Standard Form contracts
Cancelling a contract
If you have signed a standard form Multiple Listing Contract, Exclusive Listing Contract or Exclusive Buyer Agency Contract and you wish to cancel the contract early, you can only do so if the other party to the contract (your Realtor’s company) agrees. The Real Estate Board cannot require its members to cancel listing or buyer agency contracts early.
If you have signed a contract to buy or sell a property (contract of purchase and sale) and wish to cancel it you should seek legal advice without delay. Realtors are not parties to these contracts and therefore cannot cancel them unless the contracting parties agree, in writing, to do so.
What happens if a buyer or seller doesn’t fulfil the terms of a contract?
Even though your Realtor may have drafted the contract to sell or buy a property for you, s/he is not a party to that contract. A Realtor cannot force his/her client to fulfil the terms of a contract with the buyer or seller.
If the buyer or seller does not fulfil the commitments they have made in the contract, you may have legal recourse and should seek legal advice. If you do not have a lawyer, you may wish to contact the Lawyer Referral Service at 604-687-3221. If you have difficulty understanding English then you may wish to contact organizations like S.U.C.C.E.S.S. at 604-684-1628 for assistance.
Here are examples of typical issues for which the buyer or seller (not the Realtor) is responsible:
- Buyer does not close the sale.
- Buyer does not remove the contract’s subject clauses.
- Seller does not close the sale.
- Seller does not remove the contract’s subject clauses.
- Property is left untidy or dirty by the seller.
- Seller has removed items that were included in the contract.
- Transaction does not close on time.
- Appliances break down or a previously unknown property defect reveals itself after closing.
Your Realtor and his/her brokerage may be able to assist you to resolve this type of complaint. Typically your Realtor will contact the other party’s Realtor or brokerage and let them know about your concerns and ask them for assistance in resolving your concern. As noted, your Realtor cannot force the other party to do what they said they would do in the contract. (For this, you need the assistance of a lawyer or the Courts.)
If you have a monetary claim of less than $50,000 you do not need a lawyer to represent you in court, although legal representation is recommended. The Small Claims Court of BC is a place you can go to make your case before a judge.