Problems during the transaction

Your client has accepted a promise to purchase, and the buyer has fulfilled his conditions. All that remains is the signing of the deed of sale.

In the interim, a natural disaster occurs that causes damage to the building. What should be done?

Is the seller responsible for the damage?

Can the buyer cancel the transaction?

What should the seller’s broker do when damage is caused to the immovable after the promise to purchase has been accepted and the conditions fulfilled?

In this situation, the broker must exercise his advisory role by assisting the seller in inquiring with the various authorities concerned, including the insurance company and the municipality, about any factor that could affect the value of the property. He must also recommend that his client document all the damage caused to the property as well as the measures to be taken to resolve it, with supporting evidence such as invoices, photos and videos. The broker should also note any damage sustained in the surrounding area (roads, electricity, water) that would be of interest to a potential buyer.

The form Declarations by the seller of the immovable will need to be revised using the Amendments form, where it is mandatory, to reflect the current state of affairs, and provided to the buyer so that he may decide if he still wishes to go ahead with the purchase.

If so, amendments to the Promise to purchase can be made to provide the details of the agreement between the parties, such as a change in the purchase price or a list of work to be performed within a certain time frame. The use of the Amendments form is mandatory to record changes if the object of the transaction is a residential immovable containing less than five dwellings; it is recommended in all other cases.

If the buyer wishes to cancel the transaction, the mechanism under clause 10.5 “Defects or irregularities” of the Promise to purchase (10.7 in the PPD form) can be used.

Even if the seller has provided his declarations on the immovable and the broker has disclosed what had to be disclosed, the obligation to inform the buyer of any factor that may affect the immovable remains until the deed of sale is signed.

If adverse factors are discovered after the brokerage contract has been signed and the seller’s declarations have been made, or if an event such as a flood or earthquake damages the immovable after the Promise to purchase has been accepted and the conditions have been fulfilled, the broker must ensure that the Declarations by the seller of the immovable are amended and the buyer informed.