When buying or selling a home, one of the most important documents you will have is the home Agreement of Purchase and Sale, also commonly referred to as the “Offer”. This legally binding contract will outline in detail everything from the purchase price, closing arrangements and conditions to titles and chattels. It is always best to have a lawyer go through the details of every document or contract you have to sign when buying or selling a home, but it doesn’t hurt to be acquire some knowledge of the process prior to seeing your lawyer. We will share with you some of the more important and relevant sections of the agreement, and from here you will be more equipped when the time comes for you to sign one.
The Agreement of Purchase and Sale is a standard contract governed by OREA, the Ontario Real Estate Association. The purchase or sale of a home is usually the largest transaction that you will make in your lifetime. As such, the Agreement should be fully understood by both the buyer and seller and requires that both parties fully understand what it contains and what it means to them.
The agreement is only four pages when you remove the signature page and schedules that contain additional provisions. It contains many self-explanatory “fill in the blank” provisions, but care must be taken to ensure that they are accurately completed, including the names of the parties, the purchase price, the property description, the deposit and the closing date. The date of the agreement is typically for reference purposes only.
Here are three of the more important sections for the Buyer:
Section 1 – Irrevocability
This section places a deadline on the offer, meaning if it is not accepted by a certain date and time it is no longer valid.
Section 4 – Chattels Included
This section allows the buyer to list any additional items in the home they would like to include in the offer such as appliances, light fixtures, etc.
Section 13 – Inspection
The inspection allows the buyer to renege the offer if a home inspection reveals any discrepancies or repairs needed outside of what has already been divulged.
Here are three of the more important sections for the Seller:
General Use Section
The general use section details the purchase price, deposit and other financials.
Section 3 – Notices
This section clearly identifies the agent representing the seller and that he is legally granted permission to work on behalf of the seller.
This section was not commonly used 10 years ago but has almost become standard on agreements. This schedule outlines will disclose the handling procedures of the deposit and whether or not there will be interest paid on this at closing.
Once the Offer is made by one party and accepted by the other, it becomes a binding agreement of purchase and sale (subject to any conditions set out therein). In order to get the Agreement right, the buyers and sellers will have to heavily rely on the expertise of their realtors and lawyers, but should make every effort to read and understand the Agreement provisions before rushing off to sign.
Disclaimer: The content of this article is intended to provide general information for the reader and is not intended as advice or an opinion to be relied upon in relation to any particular circumstance. For specific applications of the law to a particular set of circumstances, the reader should seek professional advice.