When it comes to standards, it might be fair to say that there as no such thing as universal standards. Pick a topic, any topic, and you’ll probably be able to find people with significant disagreements on what is the standard for it.
Are you on time if you’re there two minutes late? Is arriving five minutes early not on time, but in fact early? Do you need to stand poised outside their door looking at your watch or phone and when the seconds go from 59 to 0, immediately knock?
In real estate, standards – or a lack of agreed upon standards – can cause real problems. You may have seen articles about a recent court case where some homebuyers in Oakville were nine minutes late with a payment, and it cost them $113,000.
The contracts for real estate deals specify in considerable detail what both sides are agreeing to do and when they have to do it. Whether it is the time and date at which a conditional purchase expires, or how long a buyer has to provide the deposit, these contracts have been revised over time to make sure it is clear about the obligations of the parties signing it.
Despite these very detailed contracts, there are some parts of real estate transactions where a different set of standards can still cause tremendous problems. This is because, despite the best efforts of agents, lawyers and courts, not all terms are consistently understood or applied.
Let’s go through some of the most common issues that arise when standards aren’t universally agreed upon. Some cause little problems, but some can mean the transaction doesn’t happen at all.
What do you mean, we did clean it!
By far the most common issue we see with a different set of standards has to do with the state of a home when the new owners take possession. The vast majority of Agreements of Purchase and Sale include wording in the Schedule A that says the Seller agrees to provide the property in “clean and broom swept” condition.
If you think that sounds pretty clear, we’d urge you to think about whether you’ve ever had a friend, family member or roommate who’s definition of “clean” was considerably different than yours. We would say that in about half our closings, the seller and the buyer have a different standard when it comes to what clean means. If we had a quarter for every time a seller told us that the property was immaculate and the buyer said it was filthy, we could spend the day at an arcade. Wait, are arcades still a thing? The point is, we’d have a lot of quarters, as one person’s “clean” is another person’s “dirty”.
As this issue occurs after the property has closed, it typically only causes irritation and a poor first impression of the buyer’s new home. Unless it is egregious, both sides shake their head in disagreement and move on. We’ve paid for a few cleanings on behalf of our seller clients over the years, as sometimes in the stress and time crunch of a move, a property is left in less than pristine state. Regardless, there’s no question that what constitutes “clean” is not the same for all people.
Everyone knows you leave those.
Apart from the state of the property (and its relative cleanliness), there are often disagreements about what is typically left in a home versus what doesn’t remain. While an Agreement of Purchase and Sale does spell out lots of specific items to remain or to be removed, it is not uncommon for certain things to be not specially spelled out in the contract.
We often see mirrors, shelves and window coverings become points of contention after closing. While there are clear definitions of what is a chattel versus what is a fixture, sellers who aren’t clean on the distinction and who haven’t been clearly instructed by their agent often take things they have in fact included in the sale price. In most cases, it is because the Seller wants the items and can use them in their next home and didn’t realize they should have been excluded from the list of inclusions in the Agreement of Purchase and Sale.
Regardless of whether it comes from, when a Seller takes something they included in the sale price (or conversely leaves something they should have removed), it can cause issues. Different people have different standards when it comes to what is “normal” to leave or take with you when you sell a home – and that includes the agents involved. We’ve had conversations with agents on the other side who is adamant that something should have been left by the seller as “everyone knows you leave those”, despite it not being spelled out in the sale agreement. Window coverings are typically included in a sale and if we have a client who is selling their home who wants to take some drapes with them, we exclude them from the sale, as otherwise, they should remain. In more recent years, TV mounts have become points of contention, with a Buyer either upset they were removed and holes left in the wall, or in some cases, upset that they were left and they need to remove the bracket themselves.
Our paperwork evolves with each deal we do for our clients to make sure that we cover off – in no uncertain terms – what is staying and what is going. It avoids these problems that occur when either side relies on something being “typically” included in the sale.
I’ll get right back to you.
Another very common issue we encounter in real estate negotiations is a difference in what people mean when they say, “I’ll get right back to you”. I bet if we took a poll of the people reading this article, we’d have answers that range from two minutes to end-of-day.
As part of negotiating a sale or purchase, we often have a series of phone calls, texts and emails with the agents on the other side of the deal. When an agent says “Let me talk to my client and I’ll get right back to you”, we know that could mean a call back in five minutes or three hours. If you are considering a career in real estate and you’re not a particularly patient person, be prepared to have some frustrating times. As there is a deal on the line, both sides need to be patient with delays from the other side and boy, oh boy, there are sometimes significant delays.
On many occasions, we’ve been in the position of reassuring our anxious clients that we’re doing our best but we’re still waiting on a response. In a few incredibly perplexing deals, we’ve had agents say “Give me two minutes” and then ignore all communication for the next six hours. While it can be understandable to assume an unexpected delay means the deal isn’t happening, the reality is that there are significant differences in people and cultures as to what constitutes a quick reply. We’ve had a number of deals where we started to assume it wasn’t going to happen to be surprised by an email with an accepted offer from the other side, despite hours of silence and no further negotiation on a contested point. The moral of the story is that there is not really a standard when it comes to “right away” and that can cause stress if one side’s definition is quite different than the other!
We’ll be a little bit late, but it’ll be fine.
Speaking of time, deadlines can also be problematic if one of the parties views them as a target rather than an absolute requirement. In a typical Agreement of Purchase and Sale, there are a number of crucial and absolute deadlines that dictate whether a contract remains valid.
For example, unless otherwise specified, the standard wording in an offer about the deposit is that “the Buyer is required to deliver the deposit to the Deposit Holder within 24 hours of the acceptance of this Agreement”. That means if a deal is accepted at 2:42 PM on Tuesday, the deposit has to be provided by 2:42 PM on Wednesday. Technically, it also means that if the deal is accepted at 11:24 PM Saturday night, the deposit is due no later than that time Sunday night. On many, many, many occasions, we’ve had buyer’s agents who either ignore or fail to realize the existence of this clearly written term in the contract. As a result, as part of our process when representing a seller, we reach out to the other side with specific instructions and to get an acknowledgement of the timeline for the deposit. We regularly have agents on the other side of the deal who mistakenly think it is 24 business hours, or end of next business day or some other “typical” timeframe they have in their mind.
Another key date and time in the Agreement of Purchase and Sale is the completion date, which is the day on which the new owner receives the keys and ownership is transferred to them. The standard wording (there is that term again) is “This Agreement shall be completed no later than 6:00 PM on the <CLOSING DAY>. Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.” Many sellers and agents interpret this to mean they have until 6:00 PM on closing day to move out of the home they have sold, but the above includes the words “no later than” and the vast majority of deals close in the early to mid afternoon of the closing day. A few times a year we receive a call from the other side of a deal where the deal has completed, ownership has been transferred and the former owner is still packing and moving out. If both parties are willing to allow what is technically trespassing, it works out fine, but sometimes it can cause real problems. If a Buyer shows up at 11 AM with their moving truck full of furniture and the deal doesn’t close until 4 PM, they have to be ready to pay their movers for five hours of waiting. Similarly, if the deal closes at 12:15 PM and the Buyer shows up with their movers at 1:00 PM to find the Sellers are halfway through their move out, expect to see flared tempers!
In these and other cases, misreading, misunderstanding, or ignoring specific deadlines in the accepted Agreement of Purchase and Sale can cause tremendous issues. In such cases, one side often claims the “standard” is X or Y, ignoring the specifics as spelled out in the contract.
We could go on and on about how people often have different interpretations of the standard or typical way to handle something, but we think you get the point!
If you are looking to buy or sell and you want it to go smoothly, you need agents who understand where problems arise and how to prevent them from happening. If that sounds appealing, then get in touch with us to talk about the next steps!