If you are planning to buy a home you will need to submit a written offer, or Agreement of Purchase and Sale to the buyer. Your property sale agreement is a legally binding contract between both the buyer and the seller. Written offers are enforceable by law so they protect both parties. For most, a home is the biggest and most expensive purchase you will ever make so you will want to take all the necessary and legal steps to protect yourself and your money.
What is an Agreement of Purchase and Sale?
An Agreement of Purchase and Sale is a legal contract between a buyer and a seller. It is usually initiated by an interested buyer who wants to buy property. The buyer initiates the first step by submitting an offer to purchase in writing to the seller. Although potential buyers can write their own offers, it is advisable to have an experienced realtor or lawyer draft the sales agreement so make sure every essential detail is in the offer.
Once the buyer has put in their/ offer to purchase a property, the seller has a certain amount of time to either accept or reject the offer. During this time, the seller can negotiate their own terms and conditions of the sale. Once the purchase and sale agreement has been accepted and signed by the seller, the agreement becomes legally binding and cannot be broken unless both parties mutually agree.
An Agreement of Purchase and Sale is also called a real estate purchase agreement, real estate contract, purchase and sale agreement, and house purchase agreement.
Who Should Use a Real Estate Purchase Agreement?
Any potential buyer who are interested in purchasing a residential property should use a Real Estate Purchase Agreement in Ontario when submitting an offer to the seller. The written agreement is a legal document and will protect both the buyer and seller because it is enforceable in a court of law.
How Binding is a Real Estate Purchase Agreement?
After the buyer submits a purchase agreement, the seller has a certain amount of time as stated in the offer to accept or refuse the offer. The timeframe is typically a few hours or days. During this timeline, the seller also has an opportunity to counter the offer presented by the buyer. If the seller does not sign the offer by the deadline, the contract becomes void. Once the seller signs the purchase agreement, it becomes a legally binding document and cannot be broken unless both parties mutually agree.
How Long is an Offer in a Real Estate Purchase Agreement Valid?
The purchase of sale agreement includes a set date and time in which the seller can accept the offer. The time frame usually ranges from a few hours to a few days. During this time, the buyer cannot retract their offer, however, the seller can refuse the terms, submit a counter offer, or accept what the buyer’s initial offer. If the seller does not respond within the timeline, the offer to purchase becomes void. Once both parties have signed the agreement, it becomes a binding contract that cannot be broken unless both parties mutually agree.
What is Included in an Agreement of Purchase and Sale?
An Agreement of Purchase and Sale in Ontario starts with general information about the buyer, the seller, and the residential property that the buyer is interested in purchasing. Other information written in the offer includes:
- Purchase price including taxes
- Deposit amount
- Terms and conditions of sale outlined by the buyer
- Fixtures, appliances, and other accessories included in the sale
- Deadlines for seller to accept offer
- Deadline for buyer to make the deposit payment
- Mortgage approval stipulation
- Inspection approval stipulation
- Title check
- Requisition date
- Closing arrangements and completion date
- The rights and obligations of both buyer and seller
Things to Keep in Mind
An Agreement to Purchase and Sale is a legally binding contract that can be held up in a court of law. Failing to follow the guidelines outlined in the agreement can result in the contract being forfeited and cost you financially.
Because home purchases are a big expense, buying a home and securing a mortgage cannot be legally completed without a written purchase agreement. The agreement should meet both the buyer’s and seller’s terms. Consulting with a qualified real estate agent or lawyer before submitting or signing a Purchase and Sale Agreement is always recommended to ensure nothing is overlooked or missed.