The importance of representations and warranties

Representations are statements a buyer or seller makes about specific facts. Warranties are contractual promises made to one another regarding the existence or accuracy of specific facts, often relating to the contract.

What do they look like?

Representations and warranties are usually made by the seller. Here are some common examples:

1. Legal right to sell the property
The seller promises they have the legal right to sell the property.

Action: Check the title to ensure the names are correct and accurately spelled. Be aware of issues like estates, corporate sellers, or other legal encumbrances.

2. Residency status for tax purposes
The seller confirms they are not a non-resident for the purposes of the Income Tax Act (Canada).

Action: Make note if you're meeting the seller in person or they are signing the contract from out of country. This can affect the timing of fund transfers, the ability to transfer title, and have tax implications on the buyer.

3. No other legal claims to attached or unattached goods
The seller assures that no one else has a legal right to the included goods.

Action: Ask the seller about any debts, payments, or contracts related to items like alarms, furnaces, appliances, and water softeners.

4. Compliance with land use and municipal laws
The seller states that the property complies with municipal land use bylaws and any restrictive covenants.

Action: Obtain a copy of the Real Property Report to ensure all structures are accounted for and comply with regulations.

5. Proper location of buildings and improvements
The seller promises that buildings and improvements are correctly located and comply with relevant laws.

Action: Review the Real Property Report to check for any encroachments and ensure compliance with covenants and bylaws.

6. Disclosure of material latent defects
The seller discloses any known hidden defects in writing.

Action: When touring the property, look for signs of defects and ask questions about any abnormalities.

7. Disclosure of government notices and permits
The seller discloses any government notices and whether they have permits for any work done.

Action: Ask the seller about any notices and ensure they have permits for any developments on the property.

If you have any questions or concerns, please do not hesitate to contact Kahane Law Office, so they can assist you with your questions. Call Kahane Law at 403-225-8810 or email at realestate@kahanelaw.com.

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