Posted 4 months ago

Walking through the Agreement of Purchase and Sale in Ontario

Walking through the Agreement of Purchase and Sale in Ontario

Click HERE to see a standard purchase and sale agreement in Ontario

What is a purchase and sale agreement? It’s exactly how it sounds, it’s an agreement for the buyer to purchase and the owner to sell a property. There are many details to the contract but it’s not as intimidating as it looks.

The main details to the contract are:

Agreed date: The date you agreed to the contract

Names: Specifying who the buyer and seller is going to be

Address: The address of the property

Legal description: Your lawyer or realtor will be able to provide you with this

Purchase price: The amount you agree to pay for the property

Deposit amount: For your agreement to be legally binding, there must be a deposit

The closing date: The date you as the buyer are going to take possession

Lawyers info: Write down your lawyer and the sellers lawyers info so they can communicate

Schedule A: This is where you put all your conditions

Importance of Schedule A

The last page in the agreement is the most important. This is where you are putting your conditions to protect yourself from losing your deposit or getting sued. A condition in an offer is basically telling the seller this is your offer as long as x conditions are met. Conditions can be financing, inspection, due diligence or partner approval. You must give a date on your conditions, depending on the size of the deal, it can be anywhere between a few days to a few months. For a regular residential property, I typically do a two week conditional period.

What happens if you don’t put conditions in your contract?

If you don't put conditions in your contract you are telling the seller that on the closing date you will have anything ready to close. This means you have your financing lined up, your insurance lined up, you have the downpayment and closing money, etc. If you put a deposit down of lets say $20k and you fail to close, you are forfeiting the deposit as well as you can get sued for damages. This is why the schedule A is super important, you want to protect yourself with conditions.

Key Takeaways

  • A purchase and sale agreement is not as scary as you think
  • There needs to be a deposit for it to be legally binding
  • Always put conditions in your offer