|
|
Legal Line® provides Free legal information to Canadians through its website, telephone and fax-on-demand systems.
1,000 topics are covered within 35 areas of law...
Search...
Ontario|Real Estate LawGeneral 389 Agreement of Purchase and Sale An Agreement of Purchase and Sale is a written contract between a seller and a buyer for the purchase and sale of a particular property. In the Agreement, the buyer agrees to purchase the property for a certain price, provided that a number of terms and conditions are satisfied. The Agreement begins as an offer by the purchaser, and becomes a legally binding agreement if the offer is accepted by the seller. At this point, the Agreement cannot be cancelled unless both the buyer and the seller agree.
Because all agreements for the purchase and sale of land must be in writing to be legally enforceable, the Agreement of Purchase and Sale provides a general layout for addressing the main issues. Most local real estate boards and the Ontario Real Estate Association have established standard form Agreements of Purchase and Sale. Although these forms contain standard terms and conditions, the Agreement can be changed if both the buyer and the seller agree and initial any additions or deletions.
- Overview of the terms contained in the Ontario Real Estate Association Agreement
Most standard form Agreements of Purchase and Sale begin with some basic information about the buyer, the seller, and the property in question. For the purposes of the Agreement, the seller is referred to as the vendor. There will also be an area to record the deposit being paid by the buyer to the seller's real estate agent.
The next part of the form is a blank area for purchasers to identify in writing any special arrangements they are agreeing to. For example, the buyer may agree to assume the seller's existing mortgage, rather than arranging separate financing through a bank. A clause can also be included here making the agreement conditional on the sale of the purchaser's current house or on the purchaser arranging financing.
- Fixtures and Chattels
The next clause in the Agreement deals with fixtures and chattels. Fixtures are generally improvements that have been made to a property that are attached or cannot easily be removed without causing damage to the property. Hot water heaters, built in cabinets and light fixtures are a few examples of fixtures. Fixtures are assumed to be included in the sale of the home, unless they are specifically excluded in the agreement. Chattels, however, are moveable items of personal property contained on the property, and must specifically be listed in the Agreement if they are to be part of the sale of the home. For example, if the seller agrees to include a refrigerator and stove or gardening equipment in the sale, these items must be specifically identified in the Agreement. If there is any doubt as to whether an item is included or excluded, it should be clearly specified in the Agreement of Purchase and Sale.
- Dates, searches and requisition date
Next, there are a series of clauses dealing with relevant dates. The first of these is usually a clause establishing that the buyer's offer will be void unless it is accepted by the seller before a certain date.
A deadline is set for all searches to be done on the property. This is commonly referred to as the "requisition date", and it is generally set for at least one month prior to the closing date of the transaction. Before this date, it is the buyer's responsibility to do a number of searches to ensure that there are no problems with the property. These are usually handled by the buyer's lawyer, and include things such as searching the registered ownership of the property at the local land registry office, checking that the property complies with zoning regulations, and searching for any outstanding municipal work orders.
- Closing date
Finally, the buyer and the seller must identify a date for the closing of the transaction. This is the date on which the sale is finalized and the buyer takes possession of the property.
- Conditions
The next clause in the Agreement establishes a number of conditions. First, the buyer's entire offer to purchase the home is conditional on the seller being the legal and registered owner of the property.
Second, if the buyer's lawyer discovers any problems while doing the various document searches, the buyer must send a letter to the seller's lawyer before the requisition deadline explaining the problem. If the seller is unable to fix the problem, then the entire agreement may come to an end unless the buyer chooses to take the property with the particular defect.
Finally, the Agreement states that unless the buyer makes an objection in writing before the requisition date, the buyer cannot later complain about any defects in the seller's ownership of the property. For this reason, it is very important for the buyer's lawyer to perform all of the necessary searches to ensure that there are no hidden problems that may arise at a later date.
The remaining clauses in the Agreement deal with a number of technical issues in relation to the future use of the property, the production of documents, insurance, the Planning Act, tax arrangements, adjustments, and spousal consent. Your lawyer or real estate agent can provide a more detailed explanation of these terms.
Completing an Agreement of Purchase and Sale can be complicated and technical. Before the Agreement becomes final, it may get modified as the result of negotiations between the buyer and the seller, and counter offers presented to the buyer by the seller. To be certain that you understand all of the terms of the agreement, it is best to have your Agreement reviewed by a lawyer before your purchase or sale of land is finalized.
BUYING A HOME
|