An agreement of purchase and sale is a document used in all real estate transactions and used as a legally binding contract to buy or sell real estate in Canada. This document is essentially an agreement between a buyer and a seller of a property, and it outlines the terms and conditions of the transaction.
In most cases, the agreement is created by a real estate agent or real estate broker, represented by a real estate brokerage. It can also be created by a real estate lawyer when a property is being sold privately.
The agreement is initially produced by the real estate agent or a lawyer representing the buyer as an offer and is presented to the seller to purchase the property. The conditions of the offer are initially set by the buyer.
Conditions in the Agreement Of Purchase and Sale
Some common conditions a buyer may include in their initial offer are:
- Home inspection – the purpose of a home inspection condition is to allow the buyer the opportunity to hire a licenced home inspection company to inspect the condition of the home.
- Chattels to be included – Chattels are items that can be removed that may not be fixed to the property
- Financing condition – this is the buyer’s request to be allowed certain time periods to get a mortgage approval
- Legal advice – the buyer may require to have their lawyer review the agreement of purchase and sale. The legal advice condition is most commonly included in the sale agreement of a pre-construction purchase.
What Must Be Included In The Agremeent of Purchase and Sale?
Terms and conditions that must be included in the purchase and sale agreement are:
- Purchase price – the price the buyer is willing to pay for the property
- Closing date – the date title/deed of the property is transferred from the seller to the buyer
- Deposit on offer – this is a good faith deposit which is paid by the buyer to secure the property, once the terms of the agreement have been agreed upon by both parties.
In order for the offer to be considered a fully executed agreement of purchase and sale, the buyer and seller must mutually agree to all of the terms of the agreement.« Back to Glossary