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 process begins when the purchaser makes an offer, which is irrevocable for a certain time-period. If there are no counter-offers, and the offer is accepted by the seller within the time-period set by the buyer, the Agreement becomes a legally binding. Real estate matters such as purchase agreements can be complicated and involve large sums of money. To get help, ask a lawyer now. However, as of June 2024, the Homeowner Protection Act provides the buyer with a 10-day cooling-off period.
Under Part IV of Ontario’s Homeowner Protection Act, buyers of new freehold homes have 10-days within which they may cancel an agreement of purchase and sale without penalties. The cancellation must be in writing. “New freehold home” means a new home as described in section 1 of the Ontario New Home Warranties Plan Act: (a) a self-contained one-family dwelling, detached or attached to one or more others by one or more common walls, (b) a building composed of more than one and not more than two self-contained, one-family dwellings under one ownership. Purchasers of newly built condominiums in Ontario also have a 10-day cooling-off period to back out of purchase agreements. For more information, refer to the Homeowner Protection Act. Because all agreements for the purchase and sale of land must be in writing to be legally enforceable, the Agreement 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.
Most standard form Agreements begin with some basic information about the buyer, the seller, and the property in question. There will also be an area to record the purchase price being offered by the buyer, and the deposit being paid by the buyer to the seller’s real estate agent in trust for the seller. The exact date and time that the offer is open (and irrevocable) is also specified. It is usually a few hours or days. If the offer to buy the property is not accepted by the seller before that date, it will become void.
The Agreement also 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.
Included in the Agreement are clauses dealing with: The requisition date, which is the time within which the purchaser has to examine the title, and complete all other searches. It is generally set for 15 days to one month before the closing date of the transaction. Before this date, it is the purchaser’s responsibility to do a number of searches to ensure that there are no problems with the property. These are usually handled by the purchaser’s lawyer, and include things such as searching the registered ownership of the property with the land registry, checking that the property complies with zoning regulations, and searching for any outstanding municipal work orders. The closing arrangements and completion date is when all relevant documents are exchanged by the parties’ lawyers and the sale is finalized. This is the date that the seller must give vacant possession of the property to the purchaser.
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, spousal consent, and other standard clauses. 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 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. For more information on Agreements of Purchase and Sale, contact the Ontario Real Estate Association, or visit the Canadian Real Estate Association website at crea.ca.
Real estate agents are held to certain standards and ethics under the Trust in Real Estate Services Act (TRESA) (which replaced the Real Estate and Business Brokers Act (REBBA). TRESA brings changes to the way real estate professionals perform their duties. This includes new and updates to existing forms used in the buying and selling of real estate. For the most up-to-date information on TRESA, refer to the Ontario Real Estate Association.
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Real estate matters involve large sums of money and complicated legal issues. To get help, ask a lawyer now.
