What is an Agreement of Purchase and Sale?

 

Whether you’re purchasing or selling property, both parties must agree to and sign the Agreement of Purchase and Sale (APS). This is a legal document that contains details of the price agreed upon by the seller and buyer, and contract conditions.

 

What Types of Conditions are often Listed?

 

1) Financing Condition

A purchaser must ensure they will be able to advance the purchase price on the closing date to the vendor. This typically includes a down-payment and bank financing. A financing condition in an APS will protect the purchaser in case they are unable to obtain adequate funding. The deposit would usually be returned to the buyer without penalty.

 

2) Inspection

Purchasers also have the option to include a condition that the purchase is subject to a satisfactory inspection report. If the inspector finds a major repair, the buyer again has the option to leave the agreement.

 

3) Legal Review

Approval by the purchaser’s lawyer also gives protection to the purchaser, in case the review by the lawyer raises concerns about property or agreement.

 

4) Certain Work Must be Performed

If there is work that must be executed by the seller by a certain date (e.g. treating windows), the seller would be required to provide proof the work was completed for the agreement to proceed.

 

5) Sale of Existing Home

It is becoming increasingly common that offers for purchase are made without the sale of their current home. This condition allows for the purchaser to have a specified number of days to sell their existing home. If they are unable to do so, they may back out of the related purchase deal as it is likely they would have insufficient funds without the sale of their existing home.

 

6) Chattels, Fixtures and Rental Items

Chattels, fixtures and rental items are also a consideration when signing an agreement.

These legal terms are not commonly used often outside of a real estate transaction. However, one must be careful about what items they’d like to include and exclude in the property.

 

A more simplistic definition of a ‘chattel’ is an item that can be removed from the house without damaging the house. This would include lamps, refrigerators, tables etc.

On the flip side, a ‘fixture’ is an item that cannot be removed from the house without damaging it – e.g. chandelier.

 

7) Rental items

Rental items are also often mentioned in the APS and are usually objects that are not owned by the seller but are rented on a long-time basis such as a hot water tank and furnace. Again they might be included as part of the purchase.

 

 

If you have more questions about purchasing or selling your home, you can reach us at 905 787 2296 or email us at info@legaldirect.ca.