Inventory of Reforms

Contracts for the Sale and Purchase of Land: Purchasers’ Remedies

Year:
2009

Description:
This report addresses the current state of the law (as of the time of publication) concerning situations where a purchaser of land has fulfilled his or her obligations under the purchase contract, but the vendor has not transferred the land. In Semelhago v. Paramadevan, [1996] 2 SCR 415, the Supreme Court of Canada determined that in most such cases, the purchaser will be entitled to damages, but not specific performance (i.e., receipt of the land in question), unless the parcel of land can be proven to be “unique.” The report contends that provision of damages to the purchaser in this type of case is not always in the interests of justice, and suggests that statutory changes be made with the effect of moving the presumptive remedy in these cases back to specific performance.

Status:
Completed

Jurisdiction:
Canada

Body Responsible:
Alberta Law Reform Institute

Publications:
Contracts for the Sale and Purchase of Land: Purchasers’ Remedies – Alberta Law Reform Institute

Purpose:
The principal opinion advanced in this report is that the availability of specific performance should not be determined by a rule adopted for purely historical reasons without examination of the basis for the rule. The question should not be whether damages is an adequate remedy for a vendor’s breach of a contract for the sale and purchase of land, but, rather, which remedy is better: damages or specific performance? The report concludes that specific performance is fairer as between the vendor and the purchaser; that it is more efficient in the sense that it avoids litigation for the assessment of damages; and that it is more effective than damages because it puts the purchaser in the precise position they would have been in if the contract had been performed, and because damages is not an effective remedy at all if the vendor is judgment-proof due to insolvency. This conclusion leads to the further conclusion that specific performance should generally be available to a purchaser under a contract for the sale and purchase of land.

A second opinion advanced in the report is that a contract for sale and purchase of land should generally confer on the purchaser an interest in the land, with the consequent right to file a caveat against the certificate of title to the land where a certificate of title exists. It should do so because such a contract grants the purchaser a right to obtain ownership of the land on payment of the purchase price and the purchaser has paid part of the price and contracted to pay the balance. If the purchaser cannot file a caveat to protect their interest under the contract, the vendor may convey the land to another party, or the vendor’s creditors may attach the property, thus defeating the purchaser’s claim.

Results:
The report makes three recommendations:

1. That, for the purpose of determining whether a purchaser under a contract for the sale of land is entitled to specific performance of the contract, theland that is the subject of the contract be conclusively deemed to be unique at all material times, and legislation should be enacted to that effect.
2. That a contract for the sale and purchase of land should confer on the purchaser an interest in the land and, where the land is covered by a certificate of title, a right to file a caveat protecting that interest. The legislation we have recommended will have that effect, as it will restore the pre-Semelhago law under which the purchaser had an interest in land and a right to file a caveat.
3. That our recommendations apply to the following, all of which we include in the term “contract for the sale and purchase of land”: (a) a contract providing for payment of the purchase price over time; (b) a contract entered into for closing at a future time; (c) an option for the purchase of land where the option has been exercised; (d) an offer in writing for the purchase of land which has been accepted in writing by the owner of the land; and (e) an agreement to grant a lease

Revision History:
This summary was last reviewed in Aug 16, 2012