Humber/Ontario Real Estate Course 3 Exam Practice

Regarding clause drafting for balance payments, what is incorrect in the clause: "The buyer agrees to pay a further sum of Two Hundred and Fifty Thousand Dollars to the Seller on completion of this transaction, with funds drawn on a lawyer's trust account in the form of a bank draft, certified cheque, or wire transfer using the Large Value Transfer System"?

1. Is correctly worded.

2. Is correctly worded, provided the phrase "on completion of this transaction" is amended to "on closing of this transaction."

3. Does not include the amount stated in numbers (i.e., $250,000) and the phrase "subject to adjustments" is missing.

4. Is correctly worded, except that the amount should be included using both words and numbers (i.e., Two Hundred and Fifty Thousand Dollars ($250,000)).

5. Should include the phrase "subject to final inspection" for clarity.

6. Requires the inclusion of a penalty clause for non-payment.

The correct answer is: Does not include the amount stated in numbers (i.e., $250,000) and the phrase "subject to adjustments" is missing.

The selected answer points out that the clause lacks the amount written in numerical form, which is typically included for clarity and to avoid any ambiguity regarding the payment amount. Additionally, mentioning that the phrase "subject to adjustments" is missing highlights the importance of stating how the final payment amount could be affected by other factors, such as prorated property taxes or utilities, ensuring that both parties have a clear understanding of any potential changes to the amount due at closing. In real estate transactions, clarity and precision in drafting clauses are crucial to prevent disputes. By including both the written amount and the numerical representation, along with an acknowledgment of adjustments, the clause becomes more robust and offers better protections for both the buyer and the seller.