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Understanding the Contract of Purchase and Sale

When selling your home, one great offer or several different offers are exciting but it’s prudent to understand what you can expect to see in any offer that comes your way.

Every offer will include the following information:

- The date of the offer
- Full legal names and addresses of both the Buyers and the Sellers
- Full legal description of the property
- Offer / purchase price of the property
- Amount of the deposit and timeframe that the deposit is payable
- Date of the completion of the sale
- Date of possession of the property
- List of conditions or subjects that must be fulfilled prior to the offer becoming a firm deal
- General terms and statements regarding the sale, Buyer’s or Seller’s obligations, or legal disclaimers
- List of inclusions in the purchase (appliances, fixtures, etc)
- Date and time the offer expires
- Signatures of all parties

Completion Date

The date when money changes hands and the title is transferred to the Buyer’s name. Completion happens prior to the Buyer taking possession of the property to allow time for lawyers and Realtors to confirm that funds and title have successfully transferred. Of note, on Completion date the Buyer legally owns the property and should have house insurance in place.

Possession Date

This is the date that the Buyer will take possession of the home and receive keys to the property. In most cases, moving day. There is generally a day or two between Completion and Possession to allow time for the Seller to move on to their new home. In busier markets, where Buyer demand is high, this is often a point of negotiation.

Common Subjects

While conditions, or subjects, can vary depending on the Buyer and the current market conditions there are several subjects that are commonly seen on Purchase Agreements.

Financing - This clause is to guarantee approval for the necessary mortgage amount and /or the financial institution’s obligation to assess the home’s value. The Buyer needs to verify that they are qualified to purchase this particular property at the agreed upon price.

Property Disclosure Statement - Generally filled out at the time of listing, the Property Disclosure Statement (or PDS) is the Seller’s written disclosure of all material facts pertaining to the home. As a Seller, you have a legal obligation to disclose any KNOWN material or latent defect about the property that could be harmful to the Buyer or affect their intended use of the property. The PDS is not a warranty and should not replace a home inspection.

Inspection - Many Buyer’s choose to hire a property inspector to evaluate the condition of a property and to identify any possible issues that may arise in the future that may not be evident upon an initial viewing. The findings of an inspection can provide Buyers with peace of mind that there are no costly repairs in the immediate future or can identify issues that need to be addressed prior to the Completion date of the sale.

Title Search - As part of the listing process, your Realtor will obtain a copy of the Title to your home. The title search identifies any restrictions registered on the property such as covenants, rights of way, or liens as well as any financial charges listed against the home. A Buyer will want to review this title, and possibly get a legal opinion on it.

House Insurance - All insurance policies differ and older homes, homes in high claim areas, and homes in need of repair all have the potential for higher annual insurance costs. A Buyer should have an insurance company provide a quote for insurance so that they know what to budget for.

Stata Documents - The records, meeting minutes, and financial statements of a strata titled property must be made available to a potential Buyer. These documents are obtained by a listing Realtor from the strata management company upon listing a property.