ANNOTATED GUIDE TO THE PURCHASE CONTRACT

The following is an annotated guide to the standard real estate purchase contract (as of August 2008: see bottom left of contract) by section:

At the beginning of the contract, there is a spot for the buyer and seller. It is important to put down the seller who is actually on title. If a seller is married and their spouse is not on title, they must ensure that the spouse will be willing to release their dower rights in the property. the failure of a spouse who is not on title to waive their dower rights, can lead to the seller getting sued for breach of contract.

If a corporate entity is involved, it is mandatory to have the correct legal name of the company.

1. The Property: this section describes what is included and what is not included in the purchase. It is very important to ensure you have the correct legal and municipal address.

1.2 There are frequent issues with condominiums ion this section. Please ensure that every titled parking stall and/or storage locker is included in this section. Also, be aware that there is a difference between the legal unit number and the municipal one; they are often confused.

1.3 Ensure that all the items not attached to the house (such as a furnace) are clearly described here. Where there are two items, only one of which is included, ensure that sufficient details are given. Ideally, the make model and serial number are listed in this section, though this is seldom done.

1.4 If it is your intention to keep anything attached to the home (ie a light fixture or attached (not just hung) mirror), ensure that it is listed here.

1.5 This is the section that the seller agrees that they will pay out all the debt secured against title. Every week (September 2008 to present) we have seen people sell their homes and the sale price does not cover the amount of debt secured against the home. Lines of credit MUST be paid out if they are secured on the property.

2. The Transaction: this section sets out the price of the property. The total purchase price must be set (or ascertainable) you cannot have a “to be determined” statement here. The buyer will want a large deposit to ensure that the sale goes through. Once any conditions are waived, if the buyer fails to purchase the property, the deposit if forfeited to the seller.

Please be aware that if the transaction involves real property that was just built (no one has lived in the property before), then GST should be taken into account. Small builders and people who flip new properties usually use this standard agreement and there needs to be some issues taken into account with respect to the GST.

3. Deposits: This is the section that states who will hold the deposit and what happens to the deposits if there is a dispute.

4. Closing:

4.1 This section needs to have a date or be ascertainable on the face of this document. If there is no means to determine an exact date for the date of closing, the whole contact may be void.

15. Final Signing this section is not mandatory with respect to creating a legally binding contract. It has more to do with the timing of things to ascertain the time of final acceptance.