Notice of Fulfillment vs. Waiver: What to Use & When...

Posted on: Friday, December 6th, 2013

NOTICE OF FULFILLMENT vs. WAIVER:
What to Use & When to Use it

INTRODUCTION
There is a common practice when it comes to real estate conveyancing matters that it is irrelevant whether one chooses to use a Waiver as opposed to a Notice of Fulfillment when completing a transaction. This is a common misconception and can cause severe headaches if one ever finds themselves having to deal with that transaction in Court after the fact.

Generally, there is at least one or more conditions found within a standard Ontario Real Estate Association (OREA) Agreement of Purchase & Sale (APS). These conditions will either be optional or mandatory and will need to be either fulfilled or waived before the transaction can become firm and binding upon the parties.

DEFINITIONS & EXAMPLES
Although there doesn’t seem to be any clear cut definition for a ‘Notice of Fulfillment’, one can use deductive reasoning to determine its meaning. A Notice of Fulfillment is a legal document (OREA Form 124) which states that the party tendering the document has completed the task which it claimed it would and as a result, the deal can proceed. When a party provides a Notice of Fulfillment, they are legally proclaiming that the condition has been fulfilled.

A Waiver on the other hand does not have the same effect or result as the Notice of Fulfillment. A Waiver is defined by Duhaime’s legal dictionary as follows: “An intentional relinquishment or abandonment of a known right or privilege”. In its most basic form, the waiver states “I have given up my right to nullify the deal as a result of this particular condition not being fulfilled”.

WHY IT IS IMPORTANT TO KNOW THE DIFFERENCE BETWEEN A WAIVER & A NOTICE OF FULFILLMENT
Although the two different approaches (Notice of Fulfillment & Waiver) may accomplish the same end result, if there is a misunderstanding or legal conflict later on, it might come back to haunt you as the REALTOR® on the transaction.

A Notice of Fulfillment confirms in writing that the client actually did perform the action necessary to satisfy the condition and makes it crystal clear that the condition has been met fully & completely.

Removing a condition with a waiver does the opposite of the Notice of Fulfillment: it says that the vendor/purchaser decided they did not need to have that condition including and are willing to move forward without taking that action.

An example of a condition that is mandatory is financing. Your condition for financing should only refer to a notice of fulfilment as the way to satisfy the condition not a waiver. You should also ensure what you receive is a Notice of Fulfilment and not a Waiver. An example of a condition that is not mandatory is a home inspection. This condition might be inserted when the offer is drafted and the purchaser for whatever reason decides they do not want to incur the cost and deem it not necessary and decide to waive this condition. It is important for proper tracking of the transaction to ensure the proper document is used for each condition.

RECENT CASE LAW ON POINT
The case of McKee v. Montemarano [2009] O.J. No. 1771 (QL) goes to show how important it is to make sure that one not only reads and understands all of the terms & conditions in an APS, but that they adhere to those terms & conditions as well.

The facts of this case are not relevant to our discussion topic, but what is relevant is that people understand and abide by the terms and conditions found within an APS, more specifically when to use certain documents & refrain from using others.

In this case, when the 1st deal purportedly fell through, there was a 2nd deal lined up by the vendor for this particular scenario. The only problem was that the vendor thought the deal had fallen through due to the lack of a waiver delivered within the timeframe stipulated by the APS, whereas the purchaser believed they had adhered to the timeline & that the waiver was actually delivered.

When the parties found themselves in Court some years after all this had transpired, it turned out that the party tendering the Waiver did not abide by the APS & as a result was deemed not to have satisfied their requirements under the APS.

This is an example that illustrates the importance of knowing when to use the proper form(s) in a real estate transaction because if one finds themselves in Court in a dispute over the transaction months or years down the line, the use of the wrong form may be detrimental to your client & their interests.

CONCLUSION
As a general rule, if a condition affects you materially, never allow a waiver. If it doesn’t affect you materially, allowing a waiver is appropriate.

In order to save yourself countless hours and headaches down the road if anything were to go awry with transaction, then it is well within your interest as a REALTOR® to make sure you understand which form would be best suited for each individual scenario. If you are unsure about which form to use in a given scenario, it is advised that you seek the advice of a legal professional in order to be totally clear on the topic.

The content of this article is intended to provide a general guide to the subject matter. The information does not constitute legal advice and a solicitor and client relationship is not created.

Shari D. Elliott
Elliott & Elliott
135 Bayfield Street, Suite 101A
Barrie, Ontario, L4M 3B3
Tel.: 705-797-2672
Fax: 705-797-8445
Email: shari@elliottlawyers.com

One Response to “Notice of Fulfillment vs. Waiver: What to Use & When to Use it”

  1. Jeff Beamish says:

    Thanks for this article!

    jeff

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