Legal Blog

Undertaking

Most real estate lawyers understand that undertakings mean something. That is why they often fight harder over the undertakings than anything else in a transaction. Some real estate lawyers, however, sign undertakings as if they were meaningless and then ignore them, hoping that everything will work out in the end. This can cause some problems for them, as was evidenced in Patel v. Ghuman [2004] O.J. No. 1412 (SCJ).

Septic

The vendors agreed that they would pay for the upgrading of the septic system. The vendors’ solicitor undertook to holdback $15,000 to ensure payment for those upgrades, as well as a furnace upgrade.

The septic system upgrades cost either $36,000 or $63,000, depending on whose position the judge accepted. The judge allowed judgment for $36,000 because that was the undisputed minimum cost and allowed the matter to go to trial on the remaining $27,000.

The lawyer had run out of funds and was not able to hold back $9,000 of the $15,000. He had to pay other liabilities, we assume things like the mortgage repayment.

The judge held that the lawyer was liable to pay $9,000 to the purchaser, but had a right of indemnification from the vendors.

Mortgage Back

We are unsure why the lawyer was joined in the first place or why there was a judgment against the lawyer.

The judge had already indicated that the uncontested amount of $36,000 could be set off against the mortgage back that the purchaser had given the vendor. The resulting principal balance was $63,000. Accordingly, there is no possibility that the mortgage would not cover the remaining $27,000 over which the parties were fighting. The purchaser would never need to turn to the lawyer.

Perhaps that is why the lawyer gave the undertaking without doing the appropriate arithmetic.