OREA develops standard forms that form the basis for a binding agreement between a buyer and seller. Sometimes, these forms are not enough, so clauses are created.
For 2012, the Standard Forms Committee revised two standard clauses and created five new clauses involving renewable energy (or green energy).
The Law Society of Upper Canada requested that OREA revise the standard balance of completion clauses (DEP/PAY-1: A Further Sum of and DEP/PAY-2: Balance of Purchase Price) of problems with counterfeit cheques and bank drafts. The Law Society explained that limiting the method of payment for completion of the transaction would help resolve this problem.
The committee revised the clauses accordingly, and read as follows: [the underlined portions reflect the revisions]
DEP/PAY-1: A Further Sum of
The Buyer agrees to pay a further sum of _____ ($_____), subject to adjustments, 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.
DEP/PAY-2: Balance of Purchase Price
The Buyer agrees to pay the balance of the purchase price, subject to adjustments, 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.
The new Green Energy clauses are:
- GREEN-1: Condition – MicroFIT Contract
- GREEN-2: Acknowledgement – MicroFIT Contract
- GREEN-3: Decommissioning Renewable Energy Facility
- GREEN-4: Renewable Energy Projects
- GREEN-5: Wind Turbines – Warranty
The first two clauses deals with the microFIT stream of the provincial government’s Feed-In Tariff program for renewable energy generation, launched in September 2009. The program is operated by the Ontario Power Authority (OPA).
MicroFIT is designed to encourage homeowners and businesses to generate renewable energy with projects of 10 kilowatts or less. Homeowners and businesses must apply to the OPA to participate in the program. For more information, go to http://microfit.powerauthority.on.ca.
Clause GREEN-1 provides the buyer with the opportunity to review the terms of an existing microFIT contract on the property, if applicable. Clause GREEN-2 confirms the buyer has reviewed the microFIT contract, if applicable.
The balance of the clauses confirms/warrants the following:
• GREEN-3 – confirms that the buyer understands he/she may be responsible for decommissioning the renewable energy installation at expense of the property owner
• GREEN 4 – confirms that the buyer is aware of proposed or existing renewable energy projects in the area
• GREEN 5 – warrants that the seller is not aware of any renewable energy projects for the immediate area
Clause GREEN-5 can be altered to reference solar energy collectors.
Green energy is a complicated topic. REALTORS® must be prepared to create specific clauses to deal with unique circumstances as they arise. In addition, REALTORS® should be aware that renewable energy installations can affect the insurability of a property, and clauses may be required to verify the insurability of the property.
For More Information
The clauses are posted in the Members Only section of OREA’s website (www.orea.com).