Area of Law: Real Estate Law
Answer # 390
Offers and counter-offersRegion: Ontario Answer # 390
If the buyer offers to purchase the property at the listed price with no conditions, the seller will almost always accept the offer, forming a legally binding agreement. Offers are almost always irrevocable for a specified time-period.
It is more common, however, for a home buyer to make an offer to purchase the property at a price below that listed by the seller, or to make a conditional offer. This means that the buyer offers to purchase the home, but only if certain conditions are first satisfied. Most commonly, buyers will offer to buy provided that they are able to sell their current home, or provided that they are able to arrange suitable mortgage financing. A buyer may also include a condition to buy the home subject to a satisfactory home inspection, or subject to a zoning change or other municipal approval. To be legally binding, the condition must be specifically written into the offer to purchase.
Conditional offers can be very effective in reducing any risks for the purchaser. However, they are less attractive to sellers and may not be accepted.
In reply to a conditional offer, the seller might make a counter-offer instead of simply refusing the conditional offer. A counter-offer will usually agree with some of the conditions wanted by the prospective buyer, but will exclude the rest. If the seller’s counter-offer is accepted by the buyer, the agreement becomes legally binding.
Offers may go back and forth several times before a deal is finally reached. The legal issues can become complicated. It is advisable to seek the assistance of your real estate agent and your lawyer in preparing either a conditional offer or a counter-offer.
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