Help – What is the agreement of purchase and sale?
In Ontario, the realtor will usually provide you with a standard Ontario Real Estate Association (OREA) form 100 to fill out and send to the seller’s. This offer to purchase, once signed by all parties, becomes your Agreement of Purchase and Sale.
Your Agreement of Purchase and Sale needs to be precisely worded. If there are any special terms and conditions between you and the buyer/seller, be sure to document it in writing. Verbal agreements are hard to prove and are often difficult to enforce in a court of law.
Upon the acceptance of an offer by the seller, and once all conditions are either satisfied or waived, the offer to purchase becomes a legally binding contract. This essentially means that both parties are required by law to uphold their end of the bargain and complete the transaction. It is very important to understand what you are signing before you finalize the offer.
Your Agreement of Purchase and Sale should leave no room for interpretation. If you are uncertain, it is always better to err on the side of caution and expressly write out the exact meaning of any special conditions or terms you wish to include in the standard form agreement. For example, any items that you want included with the home purchase should be written into the agreement. Having a written agreement about these things now will avoid complications later. Also, remember that it is not customary to have any holdback of the purchase price on closing day. Therefore, if you want to holdback a certain amount of money in order to confirm/verify the condition of the home after move-in, you will have to expressly negotiate and insert a holdback provision in the Agreement of Purchase and Sale. If any of the appliances or other personal property is particularly valuable, ensure that you take the model numbers and take photos of them in case they get damaged or switched out after move out.
Your Agreement of Purchase and Sale will set out the name of the parties. Your offer will also set out the exact legal description of the property, the municipal address, as well as the lot and plan number. Your realtor and lawyer should ensure the property description is specific and accurate. The purchase price together with the amount of deposit you will be providing will also be documented in the offer.
Lastly, your offer should explain any conditions and terms that will apply to the transaction as a schedule to offer. In addition to the conditions set out in the Standard Form Agreement we provided (above), see here for a list of other Agreement of Purchase and Sale Conditions.
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