Cancellation of a previously accepted promise to purchase
Clause R2.3 of Annex R - Residential immovable allows the seller to accept a new promise to purchase conditional upon the cancellation of a previously accepted promise to purchase. In some cases, however, this clause may not suit the needs of the seller. An example of this is if the seller accepts a second promise to purchase for the sole purpose of having an alternative if the first promise becomes null and void. In this case, of course, the seller will not be willing to take the steps needed to cancel the previously accepted promise. In such a case, the OACIQ suggests that brokers respond to the second promise with a counter-proposal by checking the box of clause P2.4:
P2.4 This counter-proposal is conditional upon the cancellation of a promise to purchase previously accepted by the SELLER. Should this first promise to purchase be cancelled, the SELLER shall notify the BUYER in writing by_____________ at ____________. All time periods contained in the PROMISE shall begin from the time of receipt of the SELLER’s written notification. Should the SELLER fail to notify the BUYER within the time period and in the manner specified above, this counter-proposal shall become null and void.
With this clause, the seller is not agreeing to take the steps to obtain cancellation of the first promise to purchase, contrary to the provisions of clause R2.3 of Annex R – Residential immovable. Rather, he is agreeing, in case the first promise to purchase becomes null and void, to notify the second buyer within the specified time period.
In most cases the time period indicated in this clause should exceed the period remaining for the fulfilment of the conditions contained in the first promise to purchase. Most often, the end of this period is when one finds out whether the first promise to purchase has become null and void. The time periods allowed for the fulfilment of conditions contained in the second buyer’s promise to purchase begin to run only from the time of receipt of the written notification from the seller that the first promise has been cancelled. This implies that the second buyer is bound to the seller for the time period indicated under this clause, but that he will not disburse any money to buy the property until he has received the seller’s reply.
If the seller does not notify the second buyer within the time period provided, the counter-proposal becomes null and void. It is important to make sure that the first promise to purchase is indeed cancelled before notifying the second buyer. If any uncertainty whatsoever remains regarding such cancellation, the seller should consult his legal advisor before sending notification. The times periods contained in the second promise begin to run as soon as the buyer receives notification from the seller.
Clause R2.4 of Annex R – Residential immovable also allows the seller to accept, while waiting, a second promise to purchase without starting the fulfillment of its conditions for the purchase of the property coveted. It reads as follows:
This promise to purchase is conditional upon the cancellation of any other promise to purchase, by ___________________ at _______: _______. In this event, the SELLER shall notify the BUYER in writing within this time period.
All time periods contained in the promise to purchase shall begin from the time of receipt of the SELLER written notification. If the SELLER fails to notify the BUYER within the time period and in the manner specified above, the promise to purchase shall become null and void.
For any questions, feel free to contact the OACIQ Info Center by telephone by email at firstname.lastname@example.org or by telephone at 450-462-9800 or 1-800-440-7170.
For more information, please read the following articles: