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Guidelines forResidential andCommercialClausesMarch 1, 20101 OREA Residential and Commercial Clauses

RESIDENTIAL AND COMMERCIAL CLAUSESINTRODUCTIONThe Ontario Real Estate Association can best fulfil its responsibility and role in organized real estate byensuring that all persons engaged in real estate brokerage business, either as brokers or salespersons,have an opportunity to be properly trained and well informed, and thereby better serve the public in aprofessional manner. To this end, this series of clauses is provided to complement the growing list ofeducational programs, reference materials, standard forms, and video instruction available to thegeneral membership.General Disclaimer and Caution to User:The Ontario Real Estate Association has developed these clauses for the use of its members in draftingAgreements of Purchase and Sale. The clauses which are contained herein are provided solely for thepurpose of guidance and do not in any way constitute required wording.TAKE NOTE THAT EVERY REAL ESTATE TRANSACTION IS UNIQUE AND THE ONTARIO REALESTATE ASSOCIATION DOES NOT WARRANT AND IS NOT RESPONSIBLE IN ANY WAY FORTHE ADEQUACY, SUFFICIENCY, APPLICABILITY, ACCURACY OR SUITABILITY OF ANY OFTHE CLAUSES OR PROVISIONS HEREINAFTER SET OUT. FURTHER, THE ONTARIO REALESTATE ASSOCIATION ASSUMES NO LIABILITY FOR THE UTILIZATION OF ANY OF THECLAUSES OR PROVISIONS HEREINAFTER SET OUT.The real estate professional is encouraged to seek expert advice in the drafting of agreements.IMPORTANT INSTRUCTIONS TO USERS:(a) Typed Supersedes Printed: Any clauses added to the body of the Offer will supersede anyinformation in the pre-printed form. Care must, therefore, be taken with any inclusions.(b) Conditions versus Warranties/Representations: The decision to utilize a condition, warranty, orother representation will depend largely on circumstances. The vast majority of clauses are presentedin “condition” format, however, various warranty examples have been included. The reader should notethat most warranties included in the handbook are made “to the best knowledge and belief”, survive theclosing, and do not extend beyond completion of the transaction. Many variations exist in themarketplace and caution is advised when using warranties and representations. A limited number ofsuch clauses has been included for information purposes only.(c) Alternative Wordings: In select instances, alternative wordings are provided for the same generaltopic area (i.e. road access to a recreational property might address rights-of-way, unregisteredeasements, public road access, privately maintained road, etc.). Users should carefully read allpossibilities and revise as required to meet individual circumstances.(d) Capitalized Words: The first letter of selected words has been capitalized for emphasis only (i.e.Buyer, Seller, Agreement of Purchase and Sale, Lease) and should not be viewed as a required format.(e) Use of Pronouns: This text should be read with all changes of gender and number as the readermay feel are required.2 OREA Residential and Commercial Clauses

TABLE OF CONTENTSACCESSACC - 1ACC - 2ACC - 3ACC - 4ACC - 5ACC - 6ACC - 7Condition – Obtaining Right-of-way. 12Condition – Road Access by Open Public Road. 12Condition – Road Access to Public Highways . 12Road Access – Alternatives . 12Road Access – Privately Maintained Road. 12Road Access – Unregistered Easement (Trespass Access) . 13Water Access . 13ASSIGNMENT OF AGREEMENTASSIGN - 1ASSIGN - 2ASSIGN - 3ASSIGN - 4Assignment of Prior Agreement . 13Assignment of Prior Agreement – Condo . 13Right to Assign Agreement. 13Right to Assign - Seller’s Consent . 13BUILDINGS/CONSTRUCTIONBUILD/CONST - 1Condition – Obtaining Building Permit . 14CHATTELS/EQUIPMENT/FIXTURESCHATT - 1CHATT - 2CHATT - 3CHATT - 4CHATT - 5CHATT - 6CHATT - 7CHATT - 8Chattels and Fixtures – All Chattels and Fixtures Included. 14Chattels and Fixtures – Good Working Order. 14Chattels – No Warranty. 14Equipment – Good Working Order . 14Equipment – Purchase of Additional . 14Equipment – Removal. 14Lighting Fixtures. 14Rental Items. 15COMPLETION DATECOMP COMP COMP COMP pletionCompletionCompletionDateDateDateDateby Buyer . 15by Seller . 15– Mutual Agreement . 15– Probate Trustee. 15CONDOMINIUMCONDO - 1CONDO - 2CONDO - 3CONDO - 4CONDO - 5CONDO - 6CONDO - 7CONDO - 8Condition – Review of Condominium Documents – By Specific Date . 15Condition – Review of Condominium Documents – Within Days . 16Alterations By Owner . 16Alterations/Changes to Unit During Interim Occupancy. 16Compliance by Buyers, Guests and Family Members . 16Default by New Buyers During Interim Occupancy . 16Occupancy by Buyer Prior to Completion of Construction . 16Occupancy by Buyer Prior to Completion – Payment of Occupancy Fee . 163 OREA Residential and Commercial Clauses

CONDO - 9 Permission to Access Unit. 17CONDO - 10 Tenant to Occupy Property . 17CONDO/POTL SCHEDULE “B” - Common Elements Condominium (POTL) . 17DEPOSITS/PAYMENTSDEP/PAY - 1DEP/PAY - 2DEP/PAY - 3DEP/PAY - 4DEP/PAY - 5DEP/PAY - 6DEP/PAY - 7DEP/PAY - 8DEP/PAY - 9A Further Sum of . 18Balance of Purchase Price. 18Deposit Increase - Additional Payment . 18Deposit Increase - Multiple Payments. 18Deposit Increase - On Removal of Condition(s) . 18Deposit Interest - Payment of All Interest Earned. 18Deposit Interest - Payment of Interest at a Rate Less Than Earned. 18Deposit Interest - Payment of Interest Earned Provided Minimum Amount Earned. 19Deposit Interest - Term Deposit Bearing Interest . 19DEVELOPMENT/SEVERANCE/SUBDIVISIONDEV - 1DEV - 2DEV - 3DEV - 4DEV - 5DEV - 6DEV - 7DEV - 8DEV - 9Condition – Services - Hydro/Telephone . 19Condition – Severance – Seller Undertakes Expense and Completion. 19Condition – Suitability for Roads/Services. 20Intention of Buyer to Develop . 20No Site Plan Development Agreement . 20Price Based Upon Acreage . 20Seller Consents to Subdivide . 20Seller Permitted to Remain on Property . 20Services – Warranty. 20DOCKS/BOATHOUSESDOCKS - 1DOCKS - 2Condition – Docks/Boathouses (Including Reference to Conservation and/or CanalAuthorities) . 21Docks/Boathouses – Warranty (Including Reference to Conservation and/or CanalAuthorities). 21ENVIRONMENTALENV - 1ENV - 2ENV - 3ENV - 4ENV - 5ENV - 6ENV - 7ENV - 8ENV - 9ENV - 10ENV - 11ENV - 12Condition – All Environmental Laws Complied With . 21Condition – Environmental Legislation – Lawyer’s Approval and Acknowledgement . 22Condition – Environmentally Protected Zone, Flood Plain, Hazard Land. 22Condition – Oil Tank – Aboveground or Underground . 22Agricultural Activities Acknowledgement . 22Environmental Issues - Release of Documents from Appropriate Ministries. 23Environmental Warranty – All Laws Complied With. 23Growth or Manufacture of Illegal Substances- Acknowledgment . 23No Growth or Manufacture of Illegal Substances- Warranty . 23Underground Tank – Compliance Warranty . 23Underground Tank – Seller Has Removed . 23Underground Tank – Seller to Remove . 244 OREA Residential and Commercial Clauses

FACSIMILE/NOTICESFAX - 1Delivery of Documents . 24GST/HSTGST/HST - 1 GST/HST Buyer is Registrant (Commercial Component) . 24HERITAGEHERIT - 1Ontario Heritage Act Designation . 24INSPECTION OF PROPERTYINSP - 1INSP - 2INSP - 3INSP - 4INSP - 5INSP - 6INSP - 7INSP - 8INSP - 9INSP - 10INSP - 11INSP - 12INSP - 13INSP - 14INSP - 15Condition – Inspection of Property by a Home Inspector - General Inspection . 25Condition – Inspection of Property by a Home Inspector - General Inspection – Condo . 25Condition – Inspection of Property - Limited Inspection. 25Condition – Inspection of Property – Seller Allowed to Remedy . 25Condition – Inspection - Seller Allowed to Remedy – Condo. 26Condition – Inspection of Property - Termites. 26Condition – Inspection of Property – Third Party . 26Condition – Inspection of Property by a Third Party – Condo . 26Condition – Retrofit Inspection of Property Fire — General Inspection . 26Condition – Retrofit Inspection of Property Electricity — General Inspection . 27Condition – WETT Inspection. 27Delivery of Report . 27Inspection of Systems . 27Right of Inspection Prior to Completion . 27Right of Re-inspection Prior to Completion. 27INSURANCEINSUR - 1INSUR - 2Condition – Arranging Insurance . 28Condition – Arranging Insurance – Cost Not to Exceed. 28LANDLEASELAND/LSE - 1 Condition – Landlease – Landlord’s Approval. 28LAND/LSE - 2 Landlease – Buyer to Assume. 28LAND/LSE - 3 Landlease – Option to Purchase . 29LAWYER'S APPROVALLAW - 1LAW - 2LAW - 3Condition – Lawyer's Approval – Buyer . 29Condition – Lawyer's Approval – Seller . 29Legal, Accounting or Environmental Advice . 295 OREA Residential and Commercial Clauses

LEASE APPROVALLEASE/APP - 1LEASE /APP - 2Condition – Buyer’s Right to Review Leases (Condition Subsequent) . 30Condition – Inspection of Leases and Real Property(Condition Subsequent) . 30LEASE/COMMERCIALLEASE/COMM - 1LEASE/COMM - 2LEASE/COMM - 3LEASE/COMM - 4LEASE/COMM - 5LEASE/COMM - 6LEASE/COMM - 7LEASE/COMM - 8LEASE/COMM - 9LEASE/COMM - 10LEASE/COMM - 11LEASE/COMM - 12LEASE/COMM - 13LEASE/COMM - 14LEASE/COMM - 15LEASE/COMM - 16LEASE/COMM - 17LEASE/COMM - 18LEASE/COMM - 19LEASE/COMM - 20LEASE/COMM - 21LEASE/COMM - 22LEASE/COMM - 23LEASE/COMM - 24LEASE/COMM - 25LEASE/COMM - 26LEASE/COMM - 27LEASE/COMM - 28LEASE/COMM - 29LEASE/COMM - 30LEASE/COMM - 31LEASE/COMM - 32LEASE/COMM - 33LEASE/COMM - 34LEASE/COMM - 35LEASE/COMM - 36LEASE/COMM - 37LEASE/COMM - 38LEASE/COMM - 39LEASE/COMM - 40LEASE/COMM - 41LEASE/COMM - 42LEASE/COMM - 43LEASE/COMM - 44Condition – Approval from Board of Directors – Landlord . 31Condition – Approval from Board of Directors – Tenant. 31Condition – Financial Covenant of Tenant (Condition Subsequent). 31Condition – Lawyer's Approval – Landlord . 31Condition – Lawyer's Approval – Tenant . 31Condition – Occupancy Permit (Condition Subsequent) . 32Condition – Zoning Satisfaction (Condition Subsequent) . 32Agreement to Sign Lease . 32Alterations and Improvements. 32Arbitration. 32Area Defined . 32Area Measurement. 32Assign or Sub-lease . 33Assignment – Approval by Landlord . 33Assignment Without Approval . 33Chemicals - Compliance with Regulations. 33Compliance with By-laws and Codes . 33Confidentiality . 33Contractors to be Used . 33Demolition Clause . 33Early Occupancy – Gross Rent Free . 34Early Occupancy – Net Rent Free . 34Electrical and Mechanical Equipment in Good Working Order. 34Entire Agreement . 34Escalation Clause for Property Taxes . 34First Right of Refusal on Vacant Space . 34First Right of Refusal to Purchase . 35Gross Lease. 35Gross Lease with Escalations . 35GST/HST – Lease . 35Guarantor. 35Insurance – Tenant to Obtain . 35Lease Cancellation Privilege . 35Lease Form. 36Net Lease. 36Option to Purchase . 36Option to Renew – Appraisal. 36Option to Renew – Arbitration . 37Parking. 37Partitions . 37Partitions with Approval. 37Proportionate Share . 37Rent Free Period. 37Rental Amount . 376 OREA Residential and Commercial Clauses