If you are buying or selling a property in Ontario, at some point you’ll have to sign a standard form Agreement of Purchase and Sale (the “Agreement”) prepared by the Ontario Real Estate Association (OREA), whether you are putting in an offer on your dream home or accepting an offer to sell your current home.
There are a few important things to know about the Agreement, which is really the foundation of the real estate transaction:
- The Agreement is a contract and is legally binding upon the parties: the purchaser and the seller. It contains mutual obligations that each party has to fulfill, as well as various other terms and conditions to be observed. If a party does not fulfil its obligations or breaches a term of the Agreement, the other party may seek legal action to enforce the relevant provisions of the contract. In a nutshell, be sure to fully understand what you are committing to before signing on the dotted line!
- The terms of the Agreement can be found either in the fine print embedded within every Agreement, or in the Schedules which allow the parties to adjust the Agreement to their own unique circumstances. The provisions in the Schedules feature additional obligations beyond what is already required of the parties in every transaction. For instance, in addition to having to provide an empty house, a seller may agree to re-paint, or to remove all the debris in the garage. Schedules also often include important information with respect to the condition of the property, the chattels or the fixtures. Parties may be held responsible for including inaccurate information, particularly if these inclusions induced a party into entering the Agreement. Remember when they told you to read the fine print?
- The Agreement can be conditional for a set period of time before it becomes “firm” or final. The “conditions” are also often found in the Schedules and are usually inserted by the purchaser. For example, a purchaser may want to make the Agreement conditional on financing or on their lawyer reviewing it before proceeding. If all the conditions in the Agreement are not fulfilled in accordance with the terms outlined, or waived by the appropriate party, the Agreement may become null and void.
- For each type of property – residential freehold or residential condominium, the Agreement may differ. Each form contains several provisions that are specific to the type of property. This is why it is crucial to ensure the correct form of Agreement is being used, particularly if relying on standard forms prepared by OREA.
When you are looking to buy or sell a property, things can get confusing very fast. We are here to help you understand the difference between what you need to know and what you don’t need to worry about too much!