Changes To The Process of Satisfying Buyer Conditions in The Agreement of Purchase and Sale

Effective January 3rd, 2022 the Nova Scotia Real Estate commission has made mandatory form changes that change the process of satisfying buyer’s conditions in the Agreement of Purchase and Sale. These are significant changes from previous Agreements of Purchase and Sale in Nova Scotia that have been the standard for many years.   These changes will affect both buyers and sellers.

Changes are being made as a result of feedback from the industry after ongoing issues regarding confusion over the silent confirmation (“no news is good news”) process of satisfying buyer’s conditions where written notice was only sent in cases of dissatisfaction.

Form 400: Agreement of Purchase and Sale’s clause on buyer’s conditions will be revised to state*:

“The Buyer shall provide the Seller or the Seller’s Agent, on or before _________ a.m./ p.m. Atlantic Time on the date specified above, with Form 408 confirming that all conditions identified in this clause are satisfied and now waived. If the Buyer fails to provide the required form this Agreement shall be deemed terminated. If the Buyer determines, prior to the condition date, that they are not satisfied the Buyer may terminate this Agreement. The deposit shall be returned to the Buyer subject to the applicable NSREC By-laws.”

*All other forms that reference buyer’s conditions are being revised with similar wording to reflect the change.

These changes only apply to buyer’s conditions in clause 4.1 of the Agreement of Purchase and Sale. They do not apply to clauses on lawyer review, title investigation, and the estoppel certificate.

The Old Way (No News is Good News)

For example, when preparing an Agreement of Purchase and Sale in Nova Scotia, clause 4 highlights the buyer’s conditions. It states that the Agreement is “subject to the buyer, at the buyers expense, securing, conducting or reviewing the following” on or before X date. These conditions are “out clauses” meaning if the buyer provides notice of dissatisfaction, either the buyer or the seller shall be at liberty to terminate the Agreement. There is a checklist of conditional items, including:

• property disclosure statement
• restrictive covenants that may affect the property
• equipment schedule, if not attached
• financing
• property inspection(s)
• insurance
• other

The parties agree on a condition deadline for the items selected on the checklist. The buyer now has a list of conditions they are responsible for and a deadline they must meet.

The buyer’s conditions are considered satisfactory unless the seller or seller’s agent is notified to the contrary, in writing before the deadline has passed. If the deadline passes, and the buyer has not provided notice of dissatisfaction in writing, it is assumed everything is in order and the transaction can proceed. “No news is good news”.

However, if there is an issue, for example, with the property inspection, the buyer or buyer’s agent must notify the seller or seller’s agent in writing of their dissatisfaction prior to the deadline. At this point, either party is at liberty to terminate.

If the buyer wishes to proceed with the Agreement, they can propose an amendment. The seller can choose to accept the buyer’s amendment, reject the buyer’s amendment and all terms and conditions in the Agreement remain in full force and effect, propose a different amendment, or terminate the Agreement.

Sellers do not receive written confirmation if a buyer has satisfied their conditions. If a buyer is dissatisfied and wants to propose an amendment, they risk the seller triggering a termination over ‘notice of dissatisfaction.’ This discouraged them from attempting to amend an agreement over minor issues, impacting their ability to negotiate.

The New Way (No News Means You Lose)

In the new process, the buyer’s conditions will remain the same: the buyer still have a checklist of items they are responsible for and a condition deadline(s) that is agreed to by both parties.

Once the buyer has completed their list of conditions and are satisfied, they must provide the seller or seller’s agent with written confirmation that they are satisfied and waiving their conditions. The NSREC The Nova Scotia Real Estate Commission has developed a new form for this purpose: Form 408: Buyer Waiver of Conditions. The revised Agreement of Purchase and Sale requires Form 408 to be provided to the seller or seller’s agent on or before the condition deadline. If Form 408 is not provided to the seller or seller’s agent before the condition deadline, the agreement is deemed terminated. Form 408 confirms that the buyer is satisfied with and waiving those conditions from the Agreement of Purchase and Sale. Once Form 408 has been completed and provided to the seller or seller’s agent, the buyer and seller can proceed with the transaction.

The new process allows the buyer to negotiate new terms to their agreement without the fear of the seller terminating when they propose an amendment. Under the new process, only the buyer may terminate before the specific condition deadline. By providing notice of satisfaction, sellers now have written confirmation that buyers have completed their due diligence and have satisfied all of the conditions per their agreement.

Affected Forms

• Form 400: Agreement of Purchase and Sale, clause 4.1

• Form 402: Resale Condominium Schedule, clause 2.2

• Form 403: Agreement of Purchase and Sale for New Construction, clause 4.1

• Form 404: Vacant Land Schedule, clause 2.3

• Form 406: Mini/Mobile Home Schedule, clause 3.2

• Form 407: Multi-Unit Residential Income Property Schedule, clause 2.1

• *New* Form 408: Buyer Waiver of Conditions

• Form 431: Water and Septic Schedule, clause 2.1

Effective January 3rd, 2022, the following forms will change to reflect the new process:

The Commission created Form 408: Buyer Waiver of Conditions, to provide written notice that the buyer is satisfied and waving their conditions from the Agreement of Purchase and Sale. The revised Agreement of Purchase and Sale requires Form 408 to be provided to the seller or seller’s agent on or before the condition deadline.

For many industry members this new Form 408 is a welcomed change. This formally gives notice to all parties that conditions in the agreement as stipulated in Form 408 have been met. For most sellers, they can then breath a sign of relief knowing that the buyer now fully intends to purchase the home. For Buyers they too can relax knowing that the seller can no longer terminate the agreement in favour of a back up offer.

Agreements in place prior to January 3, 2022 are not affected by these changes.