After you’ve exhausted all of the possibilities of locations in your preferred area, the asking price is within your budget and the property suits all of your needs, it’s time to proceed with the sale. This is initialized with an offer to the seller. It starts with formatting the The Agreement of Purchase and Sale, which sets out the terms and conditions between the buyer and seller. It begins with you presenting the offer, following with them hopefully accepting it (after the conditions, if any, have been met), the offer then becomes legally binding. Both the buyer and the seller must hold up their end of the agreement and finalize the purchase. Both parties must understand what’s in the offer before they sign to avoid any legal complications. If you so choose, you can add special conditions in the offer. Every sale is unique, so it’s critical you do your due diligence and ensure that every aspect is covered.
The standard form has the full legal names of the buyer, seller and the agent involved in the transaction. The legal description of the property along with the municipal address, the lawyer will ensure that everything is specific and accurate. The purchase price must be there, including the deposit. When you submit an offer, you are generally expected to submit a deposit to demonstrate serious intent to buy the property. This is usually in the form of a certified cheque payable to the listing broker in trust. When the agreement is finalized, the amount is credited towards the purchase price.
There are generally clauses specific to the agreement of the purchase. As every offer is unique, they will have different conditions which protect the buyer or seller. If you are arranging a mortgage to buy the property, it’s customary to insert a condition making the offer conditional upon financing for a specified period of time. In the event that you are unable to arrange adequate financing within the allotted time period, the offer becomes null and void, the deposit is then returned to you, and neither party is under any further obligation to proceed.
As the buyer, you have the ability to add additional clauses to the agreement. This can be anything from adding new drapery to painting the walls. Be aware that if a seller receives two offers, one with conditions and one without, they will most likely be more inclined to accept the unconditional (firm) offer. Consult your lawyer concerning the use and wording of conditional clauses.
The irrevocable date and time is the period at which the other party must respond to your offer. The offer will become null and void if no agreement is made. This is typically done under 72 hours. The closing date (or completion date) is when the parties complete the transaction. At this point all of the paperwork is filed, all funds paid out and the buyer receives the title to the property. The closing date is typically 30 – 60 days from the date of the agreement, but it can be longer for new sales.
There is a wide array of items included within the purchase price of the property. Fixtures are permanent improvements that remain with the property as part of the sale. Chattels are moveable pieces that are not physically attached. The distinction is not always clear. If the chandelier in the dining room is a family heirloom the seller will most likely want to keep that. Since it could be defined as a fixture, it should be listed as an exception in the offer. From a legal standpoint, it’s a fixture and not mentioned in the offer, it is considered part of the sale. In order to avoid confusion, any items you are unsure about should be listed in the offer. These items are not limited to: area rugs, light fixtures, curtains, dishwasher, custom furniture, water heater, storage shed and satellite dish.
I would strongly advise having your lawyer review the offer before you submit to the seller. After this agreement, you are legally liable for the conditions as stated in the agreement. If timing is critical, you can insert a clause making the agreement conditional upon your lawyer reviewing the offer, which is usually within a couple of days. Be aware that it’s only the lawyers job to review the paperwork and ensure that you are protected. It’s not their job to comment on the value of the property.
After the offer is signed, a meeting is then arranged with the seller and the listing agent to negotiate the terms. The seller can accept, reject or make a counter-offer, but only during the irrevocable period (before the deadline). If the offer is rejected, it may be because your initial offer was too low or the terms were not acceptable to the seller. At this point, you may want to raise your price and try again. In the event the seller makes a counter-offer, this is a good sign as it indicates that they are interested in the potential to close the deal with you. You have the ability to go back and forth to negotiate the price and terms until you are both satisfied. Be aware of what the seller is looking for to streamline this process, you don’t have to match this but you may have to compromise. Unless you absolutely require a condition that the seller is unhappy with, don’t let it sour and potentially ruin the transaction. You may have to decide on what’s more valuable to you: the conditions or the price of the property. Always remember what you’re trying to accomplish, ideally both parties getting a fair deal.