What is an Agreement of Purchase and Sale?
In Ontario, a real estate transaction must be in writing to be legally binding. An agreement of purchase and sale (APS) is the written contract detailing the specifics of a transaction between the buyer and seller of a property. It’s often referred to as the basis of any real estate transaction where buyers agree to pay a specific purchase price for a home provided the terms and conditions outlined in the agreement are satisfied.
When a buyer initially places an offer on a property, their offer is irrevocable for a certain amount of time. If the seller accepts the offer from the buyer within the time-period set by that buyer, the two parties have entered into an agreement. This agreement can only be revoked by way of mutual cancellation (release) from both the buyer and seller.
Since people buy and sell properties everyday, the Ontario Real Estate Association has created a standard form agreement for both homes and condominiums which is used as the template for most Agreements of Purchase and Sale. Of course, this agreement can be amended to reflect any specific requests provided both the buyer and seller agree to these changes.
What’s Included in the Agreement of Purchase and Sale?
Some of the major items that are included in Agreements of Purchase and Sale are:
- Legal names of both the Buyer(s) and Seller(s)
- Legal description of the property (for condos further information such as condominium corporation details, condo fees, any parking spots or lockers are also included)
- Purchase Price
- Amount and terms of the deposit
- Requisition Date (the latest date that the buyer can search title of the property to check for things like liens, encumbrances or work orders)
- Completion Date (the day that title to the property will transfer from the seller to the buyer)
- Closing arrangements.
- Details of any fixtures/chattels
Most Agreements of Purchase and Sale are conditional upon one or more terms as well. These vary, but some general examples include making the agreement conditional upon:
- A successful home inspection
- Verification that the seller is the legal and registered owner of the property
- The seller’s obligation to provide a survey of the property
- If the property is a condominium, a Status Certificate being provided and reviewed to the satisfaction of the buyer
Many people consider their home to be one of, if not the greatest investment they’ll make in their lifetime. As such, it’s understandable that many homebuyers and sellers are anxious during the process. Your Agreement of Purchase and Sale exists to organize your transaction so that you can complete it with confidence and ease. It ensures both you and all other parties involved are on the same page and dictates clear deadlines, dates, and generally what’s expected from everyone. You’ll never feel out of the loop.
Since your Agreement of Purchase and Sale is arguably the most important document in the home-buying or selling process, it’s often advised you seek legal advice from a real estate lawyer when creating or completing it. Your real estate lawyer will also help you search the title of the property during the requisition period as well as carry out a number of other legal tasks. Making sure you buy or sell a property legally and with a clean title is crucial for a number of reasons, and your lawyer is there to prepare you as much as possible for this next big step in your life.