What am I signing - Offer

What am I Signing?  Agreement of Purchase and Sale
 

It is imperative to know exactly what you are signing.  All real estate contracts are written by lawyers and can be difficult to understand.  Here is a breakdown of some of the more important paragraphs in the Agreement of Purchase and Sale:

Deposit: this shows that the buyer is serious.  Some suggest a 5% deposit but it can vary.  In the Bayfield area, $1,000-$2,000 is quite normal.  This deposit is part of the purchase price and is adjusted as a credit to the buyer on closing.

Irrevocable Date: this states a deadline that a person making an Offer gives the other party to accept their Offer.  If it is not accepted by that stated time, the Offer is over and no longer binding on any of the parties in the transaction.

Completion Date: this is the date of closing and unless otherwise stated in the Offer, the property is to be vacant.  This date is not to be on a weekend or statutory holiday.

Chattels Included: this might include appliances, window coverings, central vac attachments, etc.  When it comes to appliances be specific, ie., "LG stainless fridge", etc.

Fixtures Excluded: fixtures are anything attached to the property, ie., light fixtures, mirrors, built-in appliances, etc.

Rental Items: these are not included in the purchase price because they are being rented.  These could include hot water tank, alarm systems, furnaces, water softeners, air conditioners, etc.  Make sure you know what is rented and if you can assume the rental if you choose to.

HST: this is not applicable for resale homes.  Make sure this paragraph states INCLUDED IN.  If you are purchasing a new build, tax will be applicable. 

Future Use: if you are purchasing a home, this will say “single family residence”.  If you want to operate a business, you will need to check about the possibility of rezoning.

Title: the buyer is entitled to good title but must accept any easements for the supply of telephone services, electricity, gas, sewers, water, television cables, etc.  The buyer also accepts any restrictive covenants that run with the land.  If there are any municipal agreements (bylaws), the buyer must assume them as well.

Inspection: if you don’t put an inspection clause in the offer, this paragraph says too bad; you had the opportunity.

Insurance: the seller must take care of the property until closing and is responsible to maintain fire insurance policies.  If there is a fire prior to closing the buyer has two choices: they can either not buy the property or they can take the insurance money and take the property as it is.

Residency: ensure that the seller is a resident of Canada and if not, make sure that they have paid all applicable taxes owed under the Income Tax Act – this is something your lawyer will take care of.

Family Law Act: this confirms that both spouses (if matrimonial home) have consented to the sale of the property.

UFFI:  this warrants that the seller did not use nor is aware of UFFI insulation ever having been used on the property.