Agreement of Purchase and Sale
The importance of the Agreement of Purchase and Sale cannot be over-emphasized. It is the contract that governs all aspects of the transaction for the purchase and sale of any real estate. Many people do not realize that one of the very old rules of law is that any real estate deal must be in writing or it is not enforceable. In other words, if someone says that they want to buy your house, until you get it in writing, there is no way to force them to do so.
It is sometimes frustrating for lawyers when they receive a signed Agreement of Purchase and Sale from their client. Oftentimes, the Agreement of Purchase and Sale is negotiated between the parties and a real estate agent. Most realtors are professionals who are very adept at dealing with standard issues. However, once the Agreement of Purchase and Sale is signed by all the parties, there is nothing a lawyer can do to correct it if there is a problem. Sometimes, in dealing with country properties, there are particular issues that not all realtors are familiar with. In the city, one does not usually have to worry about the potability of well water, the location of field boundaries, septic systems or grazing rights.
This importance of review is even greater when dealing with private sales. Increasingly, vendors are trying to sell through private sales “systems” that avoid the use of realtors. The vendor may not be trying to mislead you, but there are questions that you may not know to ask if there is not a professional involved who is familiar with issues that relate to country properties.
Everyone has the right to have their lawyer look at their contract before they sign it. Most lawyers would rather consult with you free of charge to review a draft Agreement of Purchase and Sale rather than spend hours trying to resolve problems later. It is always a good idea to review your draft Agreement of Purchase and Sale for real estate with your lawyer in advance of signing, but even more so if your are buying into a country property if you are not familiar with the issues that affect rurual properties.
“This offer is conditional for the sole benefit of the purchaser, who may, at any time, waive one or more of such conditions, upon the purchaser being satisfied as to the same:
Should the purchaser have failed to waive, in writing, all of the above conditions by 5:00pm on (insert date), then this offer shall be null and void and the purchaser’s deposit shall be returned promptly in full, without interest or deduction.
Of course, neither you nor your lawyer may want to draft up the entire Agreement if there is a draft contract to work with, either from a real estate broker or a self-sale system. As a purchaser, you have the right to put in conditions on the terms of the Agreement of Purchase and Sale to ensure that you get what it is you are expecting. The conditions also help to buy you time to get things like financing, inspections or the sale of your existing house finalized.
There is nothing unusual about making the Agreement of Purchase and Sale conditional upon:
- the purchaser obtaining financing satisfactory to him/her;
- the purchaser satisfying him/herself that a septic and building permit are available and that the property can be used for normal residential purposes;
- the purchaser obtaining at his/her own expenses a building and systems inspection satisfactory to him/her;
- the vendor providing a bacterial analysis and well report confirming that the well has provided an adequate amount (minimum of 3 gal./min.) of potable water for normal residential use.
The conditions do not have to be complicated. You do not want to scare off the vendor. In fact, the broader and less specific a condition is worded, the better.
The point of conditions is that if they are not met, then the deal does not go forward and you, as the purchaser, are off the hook. Any deposit would be refunded and there would be no obligation to close and pay the balance of the purchase price. Of course, to be fair to the vendor, you have to realize that the vendor may not want to take the property off of the market for an extended period of time, just in case the condition cannot be fulfilled. For example, if it is going to take you three or four months to sell your existing home and this is a condition of the deal, it is fair enough for the vendor to continue to offer their property for sale and to have a clause in the Agreement of Purchase and Sale that states that in the event they receive another Offer satisfactory to them during the conditional period, that they can give you 72 hours or some similar period to waive the condition or walk away from the deal.