Real Estate Purchase Agreement

Real Estate Purchase Agreement

The Real Estate Purchase Agreement explained

The following are brief explanations of the agreement of purchase and sale used in Ontario, Canada. While the real estate purchase agreement is quite similar from province to province or state to state consult with a lawyer or real estate representative for a more detailed explanation of the terms in the agreement of purchase and sale for your area. That said, I am sure you will benefit greatly from the following explanation of the real estate purchase agreement contract.

The elements of the real estate purchase agreement contract

1. Legal name of Seller

2. Legal name of Buyer

3. Description of property sufficient to describe it. As well as including the legql description of the property also include, for example, a 2 storey detached house with a pool and 2 car attached garage backing onto a ravine. There have been instances when buying in a new subdivision when an error has occurred and the buyer actually ends up buying the house next door.If there is a metes and bounds description of the property, attach it as a schedule to the offer. Metes and bounds is a description that uses directions and distances to outline the property.If there is a survey show it to the buyer and hand it over on the day of closing. A copy of the survey can be given to the buyer or shown to potential buyers. However, a copy is not a legal survey. Most lawyers include title insurance as part of their fee. Ask your real estate lawyer if this insurance covers the absence of a survey. It usually does.

4. Price

5. Deposit or seal to indicate that a home purchase agreement contract has been entered into. The deposit is evidence of claim. It is an indication of the amount of damages to the seller if the property does not close. A seal indicates that the person intends to be bound by the home purchase agreement contract.
Making the offer and the deposit cheque in the name of one person could limit liability to the buyer named on the offer if later there is a law suite against the buyer.
The deposit amount is usually paid upon acceptance of the offer by the seller. The deposit can be increased at a later date. This is especially helpful if money is tied up in investments so that a small deposit may be made initially.

6. Completion date also known as the closing date (moving day) must be during the week and not on a holiday.

7. Schedules are pages of information attached to the real estate purchase agreement. Usually there are only two or three of these pages but there could be more.

For example:

1. A full description of the property.
2. A copy of the survey.
3. Mortgage details.
4. Details on how interest is to be calculated on the deposit in the case of a long closing time.
5. A statement regarding any repairs to be made before closing or defects in the property.
6. The terms of a lease.
7. Any covenants.
8. Seller Property Information Statement (S.P.I.S) document.
9. A list of items, chattels, included in the real estate purchase agreement. Include the model and serial numbers of any appliances, especially if they are expensive ones. Ask about any warranties for the appliances that may continue after closing day.
10. A list of fixtures to be excluded.
11. A list of the conditions for purchase of the property such as a condition to inspect the property with a home inspector, to obtain financing (mortgage), to obtain insurance for the property, and other agreements and warranties.
Such as: an agreement to allow the buyer to visit the property a fixed number of times (usually one or two) before the closing date, warranties as to the condition of any appliances included in the agreement and also that the property has not been used for the growth or manufacture of any illegal substances.

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Irrevocability: The date and time until which the offer is valid, after which the offer is null and void. Usually offers are written to be valid until midnight of the day on which they are presented to the seller. But the time can be longer.

Completion date: the date and time at which the property is transferred to the buyer (moving day!) This must not be on weekends or holidays. Lawyers do not work on weekends.

Notices: these can be legible offers, faxes, waivers and amendments. The offer and signbacks can be hand delivered. This gives permission for the buyer’s brokerage and the seller’s brokerage to deliver or fax notices such as the back and forth of the offer during negotiations, waivers and other documents.

HST does not apply to the sale and purchase of a resale home in Canada. The HST does apply to the Seller’s real estate commission.

Title Search date is usually from 2 to 4 weeks before the closing date. The time before this date is for the lawyers to determine liens and mortgages against the property and to clear up any problems that might arise. The present use of the property may be lawfully continued.

Title: In a subdivision home there will almost always be registered restrictions such as municipal agreements and easements. For example: the telephone line runs across the property above or below the ground.

Rental Items excluded from the home purchase agreement such as a hot water tank. Many home owners rent their hot water tank.

Closing Arrangements
The lawyers for the buyer and the seller will complete the transaction and the transfer of monies. Any and all mortgages or liens against the property will be discharged by the seller’s lawyer. Electonic means may be used to effect these transactions.

Documents and Discharge
Such documents that the seller has such as a survey, copy of a survey or a sketch of the property shall be made available by the seller to the buyer.

Inspection
The buyer agrees that they have had the opportunity to inspect the property.

Insurance
Seller must have insurance up to completion. Insurance can not be transferred on completion. The Buyer must arrange their own insurance. Talk to a insurance broker early.

Planning Act
The seller must enusre that the property complies with subdivision rules before closing.

Document preparation
The preparation of the deed for the buyer shall be paid for by the seller.

Residency
Non residents may have to pay a tax to the Canadian government. Ask your real estate agent if a party to this agreement is a non resident.

Adjustments
Money owing by or to the buyer will be made to account for payments made or unpaid by the seller.

Property Assessment
The Ontario government carries out current value assessment for the purposes of determining municipal property tax. These values can change.

Time Limits
Documents shall be exchanged without delay since time is of the essence.

Tender
Clients are ready, willing and able to conclude a sale of the property.

Family Law Actapplies to spouses.


UFFII
This refers to homes that were insulated with urea formaldehyde during 1960’s and 70’s.

Legal, Accounting and Environmental advice
The sales agents and their companies do not give legal, tax or environmental advice.

Consumer reports
A credit report or other personal information may be referred to in this transaction.

Agreement in Writing
Schedules and other written agreements added to this agreement supercede the relevant material printed in this purchase and sale agreement.

Time and Date refer to the time and date when the contract was enetered into.

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Page for Witnessed Signatures
Buyers
Sellers


Spousal Consent is used when the spouse’s name is not on the property deed.

Confirmation of Acceptance
The last party to sign or initial the agreement signs here to indicate that the agreement has been concluded.

Acknowledgement
Buyers and Sellers sign here when they have received their completed copy of the agreement of Purchase and Sale.

Note:
A waiver (another form) removing a condition from the real estate purchase agreement will be signed by the buyer, when one or more conditions have been satisfied. Your real estate agent will then deliver this document to the other party’s real estate agent. This waiver becomes part of the purchase and sale agreement.

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