The obligation to use the CBA Standard Undertakings
by Edward L Wilson
Lawyers and paralegals often call me as one of the original drafters of the CBA Standard Undertakings, when a lawyer or notary acting for the other side in a residential conveyance, refuses to accept the CBA Standard Undertakings. I am frequently asked: “Where in the Legal Profession Act or the Law Society Rules does it require that lawyers use the CBA Standard Undertakings?”
The obligation to use the CBA Standard Undertakings arises not in the Legal Profession Act or any Law Society Rules, but in the standard form Contract of Purchase and Sale, copyrighted by the CBA and the B.C. Real Estate Association. The December 2003 version of the Contract of Purchase and Sale incorporates in clauses 13 and 14, the requirement that where a Buyer wants to use the proceeds from a new mortgage charging the property being purchased to finance the purchase, or a Seller wants to use the sale proceeds to clear title, the parties must close on the basis of the CBA Standard Undertakings.
Obviously, as the conveyancing lawyers are not parties to the Contract, they are not contractually bound to use the CBA Standard Undertakings. However, if the conveyancing lawyers wish to use their own form of undertakings that are materially different from the CBA Standard Undertakings, they are at risk of putting their client in breach of the Contract with their own consequential liability. Any significant deviation from the CBA Standard Undertakings may ultimately result in a Court finding that a party did not comply with their obligations under the Contract. A conveyancing lawyer who did not get their client’s informed authorization to vary from the CBA Standard Undertakings in a material way, may be held liable for their client’s default.
What some lawyers seem to be objecting to is the new transparency provisions added to the CBA Standard Undertakings in 2003. In 2002, as a result of the “Wirick matter”, and the report of the Law Society’s Conveyancing Task Force, the Real Property-Vancouver Section of the Canadian Bar Association felt it was necessary to review the 1999 CBA Standard Undertakings to see if the closing procedures could be improved upon so as to reduce the potential of another lawyer choosing not to honour their undertakings. After an extensive consultation process led by the Real Property-Vancouver Section and the Law Society’s Conveyancing Task Force, the “transparency option” was selected and incorporated into the CBA Standard Undertakings in March of 2003. The transparency provisions of the 2003 CBA Standard Undertakings relate to the clearing of title where there are existing financial charges to be discharged and imposes new obligations on the Seller’s lawyer when clearing title using the sale proceeds. (A more detailed review of the new provisions was set out in BarTalk, April 2003, page 18 – available in “CBA Publications” at www.cba.org/bc.)
The CBA Standard Undertakings incorporating the transparency provisions now reflect the conveyancing practice in B.C. and to deviate from this standard practice potentially opens up conveyancing lawyers to additional risks and liabilities.
The Law Society of B.C. and the Law Society Conveyancing Task Force strongly support the use of the CBA Standard Undertakings.
The real estate bar has always displayed a great spirit of cooperation and a desire to get deals done in the best interests of their clients. I am sure the real estate bar will continue to show that cooperative attitude and adopt the CBA Standard Undertakings as a standard part of their conveyancing practice.
Edward Wilson practises real estate and municipal law at Lawson Lundell. He is past Chair of the Real Property-Vancouver Section and continues to be actively involved in CBA and CLE matters. Mr. Wilson has been the CBA’s representative on the B.C. Real Estate Association’s Standard Forms Committee since 1996.
This article was published in the April 2004 issue of BarTalk. © 2004 The Canadian Bar Association. All rights reserved.