"A HEAD for Business, a HEART for People"

 

NEW FOR FOR 2007

 

The Agreement of Purchase and Sale is the document that is used to state the Buyer's desire to purchase a property and to negotiate the terms of the sale. In rare situations (Buyers market) it could be used by the Seller to offer their property to a Buyer, but this is not very common. It is commonly referred to as "The Offer".

 

This document allows the Buyer to outline in detail all of the conditions they wish to be placed in their Offer to buy the Seller's property.

 

After the Offer is prepared and signed by the Buyer, it is presented to the Seller for their consideration/acceptance. The Seller, in turn, may want to make changes to the Offer for the Buyer to consider.

 

Read on, and if you have any questions, feel free to contact me.

 

 

 

 Here we simply insert the date the Agreement is made and the legal names of all parties to the Agreement.

 

 

  

This section identified what property is being considered. Both the Municipal address and the Legal Description are inserted, as well as a brief locational and size description of the property in question.

 

 

This is the part Buyers and Sellers are often most concerned with!! The Price being offered is spelled out both alphabetically and in numbers.

 

A deposit gives the offer authenticity and shows the Buyer's sincerity. The Buyer either includes a deposit with the Offer, agrees to provide one within 24hours of  the Offer being accepted, or within some other stated time period. 

 

The Deposit is considered part of the purchase price and is ultimately deducted from the proceeds on closing. The amount of deposit can vary, but generally, the larger the better. However, as most people do not have large amounts of cash readily available, as the saying goes, size doesn't always matter.

 

The deposit is made payable, in most circumstances, to the Listing Broker and is held "in Trust" until completion. Usually no interest is paid on the deposit due to prevailing low interest rates and the size of the deposit.

 

 

"Schedule A" is Page 5 of the Agreement of Purchase and Sale, and starts out by stating how the Buyer will pay the balance of the purchase price.

 

This section also lists all the conditions and provisions that run with the Offer.

 

If additional pages are needed, they would labeled as Schedule B, C, D, etc. as required.

 

 

 

This is the deadline that a person making an Offer gives the other party to accept their Offer. If the Offer is not accepted by the stated time, the the Offer is not binding on either party involved. If a Deposit has been submitted with the Offer, it must be returned to the Buyer in full.

 

 

This is the actual day that the Buyer would like to take possession of the property, by which time the Seller must have vacated. This day must be agreed to by all parties and cannot fall on a weekend or statutory holiday.

 

 

 

In order a accomplish the term of an Agreement, various Notices need to be given. This section states how such notices will be given. Specifically if the Cooperating Broker represents the Buyer only, the Buyer acknowledges that the Buyer Agent will be receiving Notices relevant to him/her.

 

  

 

 At the end of each page that does not  require a signature, the Buyer and Seller must place their initials to indicate that they have read and understand the information contained on that page.  

Here the Buyer lists all additional items separate from the property that they wish to be included in their purchase. Examples that may be listed here include appliances such as "GE Stainless Steel Stove" or "Maytag White Washer and Dryer". The Seller must agree with items the Buyer wants included before accepting the Offer. The guide to follow is "when in doubt spell it out". Clear descriptions of what is expected to remain in or on the property are recommended. If additional room is necessary to list all items, them it would be carried over in a Schedule A, B, C etc.

 

 Lists any fixtures that are attached to the property that the Buyer and Seller agree will not be included in the deal, i.e. a chandelier in the dining room, a mirror attached to a wall in the front hallway. The same rule applies here as for Chattels included - Specific details of items that the Seller wishes to remove on closing will be set out.

 

Sometime items that are included with the property are Rented as opposed to owned, and here the Seller discloses any such items, and the Buyer agrees to assume the rental of said items.

 

The most common example is that of a hot water heater currently being rented from the local utility. 

 

 Some other items that could be rented include alarm systems, furnaces, air conditioners.

 

 

GST is generally not charged on residential resale property, however certain exemptions do apply. This section stated how GST is to be treated in this particular transaction.

 

The Buyer is being told that the only use the Buyer can insist upon is the use as set out in this Agreement. If the Agreement states that the property is for use as a single family residence, there is no guarantee that in five years they can operate a business from the property.

 

 

This section stated the time period that the Buyer's Lawyer has to do all of the necessary checks on the property. These include checking the Title to make sure the Buyer will be able to obtain good Title to the property when they take possession, and ensuring that they can use the property for the purpose they are buying it for, i.e. Single Family Residential. Other checks include the opportunity to confirm that there are no outstanding work orders and that fire insurance can be obtained.

 

 

If the transaction is to be completed electronically, the preceding paragraph sets out how the closing is to proceed.

 

 

This section establishes that the Buyer is entitled to a good title to the property free from encumbrances except restrictive covenants that have been complied with, municipal agreements such as subdivision agreements, minor utility, cable or telephone easements and any other easements that do not materially affect the use of the property.

 

 

 

 

 

 

Here, the Seller stated that he will give the Buyer and documents they have, while the Buyer cannot ask for documents that the Seller does not have. When there is a mortgage on the property in favour of a Bank, Trust company, insurance company, Credit Union or Case Populaire, in most cases a discharge is not available for registration on closing. This paragraph sets out the procedure for dealing with these matters. A mortgage other than those mentioned above must be paid out and discharged on closing.

 

  

 

Here, the Buyer makes it known that he has had the opportunity to do a personal inspection of the property they are purchasing. The Buyer also acknowledges that, unless it is stated in the body of the Offer (Schedule A), the Buyer declined the opportunity to have a professional home inspection completed on the property.

 

  

 

 The Seller must take care of the property until closing and is responsible for maintaining fire insurance policies, if any, on the property until closing. If there is a fire before closing, the Buyer has two choices; they can either not buy the property, or they can have any insurance money paid to them and take the property "as is".

 

  

 

This paragraph states that this Agreement is subject to compliance with the Planning Act. This statute governs things like severance.

 

 

 

This spells out that the Buyer will take responsibility to pay for the preparation of their own mortgages and the Land Transfer Tax Affidavit. Meanwhile, the Seller is responsible for preparing a Deed to transfer at the Seller's expense.

 

  

 

This paragraph deals with the Seller's residency in Canada. It ensures that they are a resident of Canada, thus any capital gain on the sale of a principal residence is non-taxable. If the Seller is a non-resident of Canada, it ensures that they have paid any taxes owed payable under the non-residency provisions of the Income Tax Act.

 

 

 

 Certain charges applicable to the property such as property taxes or utilities will be adjusted on the completion date. The Buyer will assume responsibility for any costs beginning on the completion date.

 

In order to demonstrate that a party is ready, willing and able to complete a transaction, a party must produce certain items. For the Buyer it is generally money, for the Seller it will include things like a Transfer/Deed and keys. This paragraph sets out how each party performs their side.

 

 

 

All deadlines must be met according to the dates and times stated in this Agreement.

 

  

 

In this section, the Seller is stating that no spouse has a claim to this property other that a spouse who has consented to the contract in the signature area set aside for that purpose.

 

 

 The Seller warrants that while living in the property they have not used insulation containing urea formaldehyde/ Further, that the Seller is not aware of that kind of insulation ever having been used on the property.

 

 

 

 This section notifies the Buyer that a personal or credit check may be obtained on the Buyer.

  

 

 

 

If there is any conflict or discrepancy between the preceding pre-set portion of the Form and any provision added, then the added provision will supersede the pre-set portion. This paragraph also confirms that no other agreements have been made other than what is contained in this Agreement.

 

  

 

In the event one, or both, of the parties to the Agreement dies, their heirs or executors are bound by the terms of this Agreement.

 

 

 

This is where the Sellers sign that they have accepted the Offer.

 

If the Seller counter offers, the Seller still signs here, but it is not a binding agreement until accepted by the Buyer, and signed for as such in the Confirmation of Acceptance below.

 

 

If the property For Sale is a principal residence/matrimonial home, and the Seller has a spouse whose name is not on Title, that spouse has to agree to the Sale by signing here.

 

 

 Once everyone had agreed on all terms and provisions, and a deal has been struck between the Buyer and Seller, the last party hold the Agreement signs here to make it a firm and binding Agreement of Purchase and Sale.

 

 

This section simply contains the Names and Contact information of the REALTORS® involved in the transaction.

 

 

 

Once everyone has agreed to all terms and conditions, copies are given to the Buyer and Seller and they acknowledge receipts of their copies by signing here. The Buyer and Seller's contact information is also given here, along with the contact details of the Lawyers who will be representing them.

 

 

 

This section is completed by the REALTORS®, It confirms that any monies collected will be held "In-trust".

 

 

 

Schedule A is usually the last page of the Agreement. This section contains all the conditions of the Offer such as conditions on Financing, Home Inspection, Insurance etc. Any provisions made here supersede any of the pre-printed part of the form.