As a first-time home buyer, reading through 5-10 pages of the Agreement of Purchase and Sale may seem quite daunting. In the case of a condominium purchase, the Agreement of Purchase and Sale can be even more lengthy.
This blog-post focuses on the Agreement of Purchase and Sale for a free-hold home and helps you gain a basic understanding of what it entails.
Five Crucial Clauses In An Agreement Of Sale And Purchase That A Buyer Must Be Aware Of:
1. Irrevocability
The Agreement of Purchase and Sale generally contains an “Irrevocability Clause” which stipulates that the offer shall be irrevocable by a party at certain time, after which time, if not accepted, the offer shall become null and void and the deposit shall be paid back to the buyer in full without interest. This clause affords the purchaser or the seller an opportunity to revoke the offer with the deposit returned to the purchaser.
2. Completion Date
This date is the “closing date” as generally known. This is the date by which both the seller and the purchaser should fulfill their obligations under the Agreement of Purchase and Sale and the vacant possession of the property has to be delivered to the buyer by the seller.
3. Searches
Under the Title Search clause, the buyer is allowed until a certain time to examine the title to the property. The search clause helps in satisfying the buyer that there are no remaining work orders or deficiency notices affecting the property and he/she is acquiring a clear and vendible title.
It is crucial that as a purchaser, you retain a real estate lawyer prior to the title search deadline to allow sufficient time for your lawyer to raise any objections to the title to seller’s lawyer.
In the Land Titles System, a searcher is entitled to rely on the fact that the party who appears as the owner in the register does have good title to the property. The reason why a title search is indispensable is to prevent fraudulent conveyance. It is important that the owner of the property is the vendor indicated on the Agreement of Purchase and Sale.
Other searches include executions search against the current owner of the property to ensure that no creditor has a claim in the property against the current owner. Usually, a search of executions is updated on the day of closing to ensure that nothing has been filed between the time of the initial search and the date of closing. Abstracts of each instrument affecting title are also reviewed by the solicitor.
4. Inspection Condition Clause
This clause is usually contained in the Schedule to an Agreement of Purchase and Sale. It is in the best interest of the buyer to have the option of obtaining an inspection report on the home and making an informed decision whether to go ahead with the transaction.
5. Finance Condition Clause
With the drastic change of the market dynamics, this clause or the absence of this clause is increasingly becoming a minefield. A lot of buyers waive the finance condition with the confidence that they will be qualified for a mortgage. Once the approval of a mortgage proves to be an issue, the buyer is facing the risk of breaching the agreement and being sued by an unaccommodating seller.
The above-mentioned only represents a small fraction of the clauses that a buyer needs to be alerted to. It is always a safe approach to consult a real estate solicitor before you enter into a binding agreement with the seller. For a more thorough and specific analysis of your Agreement of Purchase and Sale, feel free to talk to one of our real estate lawyers.
Our Skilled Lawyers Can Guide You
If you face any issues pertaining to agreement of purchase and sale, we recommend you speak with our real estate lawyers for advice tailored to your situation. Ayaz Mehdi Professional Corporation can assist you with your matter at cost-effective prices.
Disclaimer: Kindly note that sending or receiving information through this site does not establish a solicitor-client relationship. Legal matters are fact-specific, and the law is variably changing. The views expressed and the content provided on this blog are general guidelines and cannot substitute for proper legal advice. Schedule your legal consultation by clicking here: Let’s meet!
