Amending Agreements of Purchase and Sale
You could revise agreements of purchase and sale by inking in and initialling changes. Provided changes are few and simple, that's perfectly legal. Here's why using the OREA amendment to agreement of purchase and sale form 120 could be better.
By the way, multiple amendments can be presented on a single form 120, but ongoing negotiations warrant completing new OREA amendments to agreements of purchase and sale. File OREA form 123 to waive home inspections with extreme caution and form 124 to remove post-inspection conditions the buyer can live with. Reserve forms 125 and 126 to terminate an offer as a last resort, only if all negotiations have failed.
Advising Buyers Who Change Their Mind
New or infrequent home buyers can enter into sales contracts without fully appreciating what they are committing to. When favourable mortgage terms aren't available or buyer's remorse sets in, withdrawing offers to purchase can seem attractive. Unfortunately for them, it's not that simple.
Bargaining in good faith requires buyers and sellers to make serious efforts to close real estate contracts. That's why Axess Law's Ontario real estate lawyers recommend inexperienced and experienced buyers alike get independent legal advice.
We review OREA forms before real estate clients sign to ensure they understand all the terms and conditions and their legal obligations. We explain irrevocable periods and post-acceptance steps to make real estate transactions successful.
Amending Accepted Real Estate Offers
When a signed offer threatens to go sideways, quick action by skilled real estate brokers is critical. Referring your client to an Axess Law Greater Toronto Area law office near you could protect you from future legal liabilities.
Short of force majeure events like major flood or wind damage the seller is reluctant to repair, buyers have alternatives to signing a form 122 mutual release. Before cancelling, see if the seller will agree to amend the offer.
5 Ways to Reignite a Real Estate Sale
- Ask for more time to finalize mortgage arrangements.
- Negotiate a vendor take-back mortgage.
- Propose an interest-only leasehold agreement until the buyer's home sells.
- Request a price reduction if the sales amount exceeds appraised value, stalling mortgage approval.
- Write an agreement of purchase and sale business in leased premises amendment to reflect changing market conditions.
Sellers' Duty of Good Faith
Sellers are under no obligation to accept an amendment to agreement of purchase and sale. But sellers must show flexibility to convince Ontario civil courts they didn't ignore buyers' efforts to remedy contract breaches.
RECO requires realtors to return deposits upon mutual release by buyer and seller or by court order. But real estate transactions are not terminated or changed if a form 120 is rejected. Likewise, on the buyer's side, withdrawing an offer to purchase if conditions aren't met frustrates, but doesn't necessarily void a legally enforceable contract.
Realtors must protect against the potential a seller is reneging because they have a more lucrative offer or plan to delist their home to take advantage of market conditions. Neither are bona fide reasons to refuse reasonable options buyers may offer.
Suing a buyer for opportunity loss or incurred expenses is still possible if the deal falls out despite or because of amendments. More likely, the buyer will forfeit their deposit as liquidated damages, with further legal consequences if the seller accepts a lesser offer or is forced to cancel a purchase contingent on sale of their own home.
Using Form 120 to Adjust Sales Prices
Buyers can think getting a home inspection report gives them a second chance to adjust their offer.
That can be red flag territory for inexperienced buyers, who often lack the financial chops or money to forfeit the deposit if their hard ball tactics fail. Axess Law's Toronto area realty attorneys can discuss the realities of adjusting sales prices based on home inspection deficiencies with buyers unfamiliar with this iffy legal terrain.
Bidding wars give low bidders an opportunity to reconsider their offer. An amended APS can be used to up an offer or remove conditions that make it sweeter.
Legitimate Reasons to Renegotiate Offers
Sellers who have withheld information about latent defects by not completing the SPIS are well advised to bargain. Buyers can walk away without penalty from deals that misrepresented major faults like flood plains, burdensome easements or outstanding liens against property titles.
Renegotiating is more probable for remediable conditions that affect mortgage financing like:
- building code violations for homeowner add ons
- missing or degrading shingles that could cause water damage
- faulty electrical wiring
- safety issues like shaky hand railings or balconies
- radon contamination
- termite or carpenter ant damage.
Rejecting an amended offer outright has perils if the buyer can prove home deficiencies made a sales contract impossible to execute. Sellers are not free to accept other or higher offers unless a real estate contract is revoked in writing. Appeasing buyers by offering perks like new appliances in lieu of minor fixes can work to the seller's advantage by preventing time-consuming contract breaches.
Amendment Renewals After Expiry
Realtors should be cautious to assume amendments haven't been accepted if the irrevocable period expires. Sellers may have missed the deadline for valid reasons or be planning a counter offer. Presenting the same or a slightly better offer is sound practice if a seller is ambivalent.
Remedying Realtor or Seller Errors
Contractual errors you make as the buyer's or seller's agent, or exclusions the seller omitted, can be healed with a form 120. Unless you deliberately mislead a party by fraudulently misrepresenting or omitting material facts, an error is not sufficient reason to breach the contract. Buyers or sellers who threaten legal action can be referred to Axess Law or RECO for professional advice.
Book Video Call Appointments Online
Ready to negotiate but not sure your client is? Remote video call appointments with experienced Axess Law real estate lawyers are available 7 days a week, day or evening, anywhere in Ontario. Book online with our easy web form or call our 1-647-479-0118 lawyer line, toll free at 877-522-9377. We're in Greater Toronto Area and can arrange in person meetings at your client's convenience.