bout de papier, Vol. 5, No. 1 (1987) — Spring 1987 // Printemps 1987, p. 50
You have arrived in Ottawa and are camped out in an apartment-hotel. Days and nights are spent trailing from house to house in search of reasonable accommodation at a price you can live with. At last you find it. THE house. There’s room for the kids, a yard for the dog you always wanted, two bathrooms (at last) and yes, even a fireplace.
You’ll take it!
But wait…there is more to an Agreement of Purchase and Sale than the price.
Before signing on the dotted line, take time to consider the following:
1. Are you 100% sure you can arrange the financing? If not, make certain the Agreement is conditional on your being able to make the necessary financial arrangements. Ten working days should be sufficient.
2. How structurally sound is the house? The most adorable looking houses may need major repairs such as a new roof or furnace. Make the offer conditional on your obtaining a clean bill of health from a qualified building inspector if there is any doubt.
3. Is there a recent survey available? All mortgage companies will require a survey. If none is available, your minimum cost will be $700.00. Make it a condition of the Agreement that the Vendor supply a recent survey within five days of acceptance of the offer. Be careful of the wording here, so that the Vendor is not to supply only “any available survey.” If one is not “available”, there is no obligation to supply one. Should there be none available, use this as a bargaining tool in the price.
4. So you like the Jennair stove? Yes, but is it included in the purchase price. Make sure all items that are important are specifically included, with correct descriptions.
5. The Vendor wants a $5,000.00 deposit and you have $236.72 in your savings account. Generally speaking, a minimum deposit of $1,000.00 will be required; however, in rare cases, $500.00 is accepted if the closing of the transaction will take place soon (4-3 weeks). The further away the closing date, the larger the deposit, but you should also provide in any agreement where the closing is two months or more away, that you be given interest on the deposit on closing. The amount of the deposit may also depend on the purchase price. A Vendor or Vendor’s Agent will want a substantial deposit for several reasons, including: a) to evidence your earnest intentions to fulfill the terms of the contract; b) to have as much of the commission as possible paid up front. On the other hand, you don’t want to tie up your life savings on the deposit in case the transaction falls through.
6. Mrs. Jones is happy to sell you the house for $90,000.00 and is ready to sign. Mrs. Jones is separated from her husband. Although this should not be a problem where agents are involved, be wary on private sales that both spouses accept the Offer, even if only one spouse is the registered owner. In Ontario, both spouses must consent to the sale, possibly even in cases where the subject property is not a matrimonial home.
7. You just love the new cedar deck that has been added to the side of the house, and the new sunroom added on the back gives you a really warm feeling all over. That’s all very nice, but where you see any additions or alterations have been made, the Vendor should warrant that: a) he has obtained all necessary municipal permits to complete these renovations; b) the additions or alterations are in compliance with all municipal by-laws; and c) he has complied with the holdback requirements of the Construction Lien Act if the renovations are incomplete or completed within the last ninety days.
8. You are unsure whether to make the Offer in your name alone or in the name of you and your spouse as joint tenants. Aside from tax considerations, husbands and wives usually take title as “joint tenants”. Joint tenancy carries a “right of survivorship” in the surviving joint tenant so that if one of you dies, the other virtually automatically gets title to the property without it passing through your estate. Don’t worry about making the Offer in your name alone if your spouse is unable to sign. By signing a Direction to the Vendor through your lawyer prior to closing, you can direct how you wish title to be taken. Discuss the matter with your spouse, accountant and lawyer (not necessarily in that order).
Finally, I would recommend even with what appears to be a simple Agreement of Purchase and Sale, that you consult your lawyer prior to signing, as once the Offer is made and accepted you are completely bound by its terms. Most real estate lawyers would be glad to see you on fairly short notice to review your Offer and assist you prior to your making any commitment.
View the original scanned pages →
Originally published in bout de papier, Vol. 5, No. 1 (1987) — Spring 1987 // Printemps 1987, p. 50. Read the rest of this issue →
