Agreement of Purchase and Sale
The Agreement of Purchase and Sale is a written contract between a seller and a buyer for the sale and purchase of a 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 buyer 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 seller and buyer agree.
Century 21 uses the established standard Agreement of Purchase and Sale supplied by the Ontario Real Estate Association (see illustrations on this page).
The agreement begins with some basic information about the buyer, the seller, and the property in question. There is an an area to record the amount of the deposit being paid by the buyer to the seller's Sales Representative (or Broker). This is also a blank area on the form where the buyer can identify in writing any special arrangements. 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 buyer's current house, a home inspection, or upon the buyer arranging financing.
The agreement has sections dealing 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.
The agreement includes a series of clauses dealing with relevant dates. One of these is 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. 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.
The agreement identifies a mutually agreeable closing date for the transaction. This is the date that the buyer and the seller agree the sale is finalized and the buyer takes possession of the property.
The agreement also establishes a number of conditions. First, that the buyer's entire offer to purchase the home is conditional on the seller being the legal and registered owner of the property. Second, that 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 be voided unless the buyer chooses to take the property with the particular defect. The agreement will state 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.
Other 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 Sales Representative (or Broker) 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.
Information provided courtesy of Legal Information Ontario
www.legalline.ca
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OREA Agreement of
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