Tax Treatment of Testamentary Trusts
Contracts of Purchase and Sale for real estate must be in writing. As lawyers, we unfortunately often see the contract after subjects are removed or very close to the closing day. Many “terms” are discussed between the parties or just assumed to apply, but never reduced to a written contractual term. These include such “terms” as the requirement for the seller to leave the property reasonably clean and free of trash, or the confirmation from the seller that the buyer may indeed put a pool in that backyard. What’s even more concerning is that sometimes the contract does not even set out important things like whether or not the price includes HST, is subject to HST or is HST exempt. Omissions such as these are the most common sources of disagreement and the remedy is simple – there isn’t a simple one and if the parties cannot agree, they must walk away from the deal or complete the deal and then sue the other party. The legal rule is well established: if the term isn’t written into the contract, you cannot rely on it. So, the solution is just as simple: if it is important to you, ensure that it is in the contract.
The same legal rule applies to changes. If something in the original contract is going to change, it must be in writing. Often the purchaser has a home inspection and asks the seller to fix certain minor issues. If you don’t add this to the contract and simply remove that subject clause, you may not be able to enforce this against the seller if the seller does not make the fixes. While most people are honest, it is amazing how many times a verbal discussion is not remembered by both parties the same way. My rule of thumb – “a verbal agreement isn’t worth the paper it is written on”.
Photo courtesy of dbbent