Novel Coronavirus (COVID-19)
May 28, 2020

Sidney H. Troister and Aaron English quoted in Move Smartly


Sidney H. Troister and Aaron English quoted in Move Smartly, a blog written by Toronto real estate lawyer, Bob Aaron. 

Why New COVID-19 Legal Clauses in Real Estate Deals Are a Problem

A respected real estate lawyer warns against using untested COVID-19 clauses in property transactions.

Sidney Troister is a partner at Toronto’s Torkin Manes LLP, and is widely regarded as one of Ontario’s leading real estate lawyers.

Last month, Troister and his law partner Aaron English distributed an e-bulletin cautioning against the use of these clauses. 

The first clause they say “raises a number of issues and questions” provides for an extension of closing if the buyer’s lender, or the local land registry office, should cease operations. If the delay exceeds a particular date, the clause allows either party to terminate the transaction.

Jeffrey Lem, Ontario’s director of titles, has stated that the land registration system will not be closing. As well, there is no basis to expect that the banks will “cease operations.”

Troister and English warn that giving either party the right to terminate could allow a dishonest or insincere party to use the clause as an excuse for ending a transaction that otherwise should not be cancelled.

Another clause concerning the lawyers states that if there is a delay in registration of the title documents, the closing will be extended past the scheduled date to the “next possible date,” and there will be an “escrow” or trust closing where funds and keys may be exchanged. 

The Torkin Manes bulletin notes that this clause does not specify how the closing will take place or what would be involved in such a complex arrangement. Under this clause, a buyer would be in the purchased property paying expenses but the seller would not get his money to pay off the mortgage.

Troister notes the escrow closing clause “is hardly satisfactory to address the nuanced issues” involved in that type of transaction.

A third clause states that if the buyer or the seller is the “subject of a mandatory COVID-19 virus quarantine, the closing will automatically be extended, at the request of either party, for a period of 14 days.”

This problematic clause does not distinguish between a quarantine and voluntary self-isolation. It also does not address what should happen if either party remains unwell after the 14-day period. 

As well, the clause seems anachronistic in our electronic age that provides a digital solution to print, sign and scan documents, as well as meet by videoconference. This clause, the lawyers say, sends mixed messages that open it to both confusion and disputes among the parties.

While there are certainly ways to ensure real estate transactions can proceed under the restrictions of the pandemic, the proposed clauses could cause the opposite — or easily lead to litigation among the parties and their real estate agents.

Troister and English urge buyers and sellers to view these COVID-19 clauses “with caution,” and to seek legal advice before including them in any purchase or sale agreement.

This article was published in Move Smartly.


Related News

Firm News

Congratulations to our lawyers recognized in The 2021 Canadian Legal Lexpert Directory

Torkin Manes is pleased to announce that several firm members have been named as leaders in their fields in The 2021 Canadian Legal Lexpert Directory....
May 4, 2021
In the News

Torkin Manes once again recognized as the #1 ranked Ontario regional law firm by Canadian Lawyer

Torkin Manes is once again proud to announce that we have been recognized by our peers and colleagues as the top-ranked Ontario law firm in Canad...
Apr 28, 2021
Firm News

Torkin Manes named a 2021 Canadian Law Awards Excellence Award winner for Ontario Law Firm of the Year

Torkin Manes is honoured to be named a 2021 Canadian Law Awards Excellence Award winner for Ontario Law Firm of the Year.
Apr 14, 2021