You’ve found the house of your dreams, and now you’re ready to make an offer. But maybe you’re not sure what exactly an offer entails.
The offer is known as the agreement of purchase and sale. It’s a precisely-worded document that sets out the terms and conditions between you (the buyer) and the seller. Once the offer is made and accepted, and the conditions are met, the offer becomes a legally binding contract. This means that you and the seller are obligated by law to uphold your ends of the contract. Because of this, it’s very important that you understand what is in the offer before you sign it. Everything that is important to you about the house, like the appliances, should be put into the offer. This prevents complications down the road.
Preparing Your Offer
Your Realtor will be able to prepare the offer for you and account for everything that is important to you about the house. Realtors also have access to a Standard Agreement of Purchase and Sale form. This form is used by most of the real estate boards in Ontario. Although the form is standard, you may want to include some special conditions.
What kinds of things are on this form?
1. Buyer or purchaser.
This of course is referring to you. If you are buying the house with a spouse, both of your names should be listed how you want them to appear on the ownership when the house becomes yours.
2. Seller of vendor.
If the house is jointly owned, every seller’s name will appear exactly as shown on the existing ownership document (deed).
3. Real property.
This is the legal description of the house you intend to buy. It should include the postal address, lot and plan number, as well as frontage and depth dimensions. The Realtor and lawyer will provide the correct description.
4. Purchase price.
This is the price you are offering for the house.
A deposit is usually put down to show the seller that you seriously intend to buy the house. It will also give the seller some assurance that you will go through with the purchase when the closing date arrives.
6. Clauses particular to this agreement.
This is where you would put any conditions. They are normally put in at your Realtor’s request and are for your protection. Should one or more of the conditions not be satisfied, the offer is no longer valid and you usually have the right to get your deposit back. The most common conditions that your Realtor will put in would be making the offer subject to you obtaining financing, or being conditional to a home inspection to evaluate the state of the property before you buy it. Whatever conditions you might want to use, your Realtor and lawyer can advise you of the use and proper wording.
7. Chattels included and fixtures excluded.
Chattels are moveable pieces of personal property like washers, dryers, and microwave ovens. They are sometimes listed as items included in the sale to attract buyers. Fixtures are permanent improvements to a property that normally stay with it as part of the sale. Any fixtures that the seller would like to keep should be listed on the agreement as an excluded fixture. If there are any items that you are concerned about, list them in the offer. Make sure you note the make and model numbers, or describe the item and its location. By doing this, you will avoid any surprises later and will help deliver a smooth closing process.
8. Irrevocability of the offer.
This refers to the period of time that you leave your offer open to consideration. If you are not notified before this exact time and date that your offer is accepted, the offer is no longer valid.
9. Completion date.
This is most often referred to as the closing date. This is the day that all of the documents are finalized and money is paid out. The property will officially become yours on this day. It is usually set for 30 to 60 days from the date of the agreement. Your REALTOR will help you determine an agreeable closing date.
10. Time to examine title.
The title is the legal evidence of ownership. You have to make sure that your lawyer has enough time to search the title to make sure that the seller has clear ownership. Should the seller not have clear title to the property, this could complicate transferring the title to you.
Ask Your Lawyer To Review the Offer
It is a good idea to have your lawyer review the offer to make sure you are protected. They will also be able to answer any questions you might have about your responsibilities and the sellers. You can also have your Realtor put in the condition of “satisfactory review of offer by your lawyer”. This will make sure you’ve truly dotted all your I’s and crossed all your t’s, ensuring that your offer is advantageous and fair to you as the buyer.