Real Estate
Buying and Selling a Home and the Agreement of Purchase and Sale
Whether you’re buying or selling for the first time or you’ve done it before, real estate transactions can be stressful. Residential and commercial purchases and sales include contract preparation; therefore it is crucial that each party to the transaction understands their rights and obligations as outlined in the Agreement of Purchase and Sale, commonly referred to as the “APS”.
Because of the nature and complexity of these agreements, it is generally a good idea to seek legal advice from a lawyer who can provide a more detailed and thorough explanation of the terms set out in the said agreement. There are a number of terms and conditions that must be satisfied by both parties; therefore it is important that one does their due diligence. Thus, retaining a lawyer for a purchase or sale will prevent you from agreeing to something that is not in your interests.
Furthermore, when buying a new home from a builder there are numerous additional provisions and/or attached schedules in the agreement, including those relating to extra charges and changes to the closing date for the purchase of a home. However, these standard agreements are familiar to most agents and are drafted to reflect the interests of the vendors and/or the purchasers. Therefore, it is recommended that each party has the agreement reviewed by their lawyer before signing, since the said agreement becomes a legally binding document that cannot be cancelled unless both parties mutually agree.
The agreement thus provides a general layout for addressing the main issues of the purchase and sale of the property. This includes but is not limited to the purchase price, the deposit to be held in trust for the seller along with the date of the offer being irrevocable. The agreement also deals with fixtures and chattels, as well as title searches, closing arrangements, etc. Therefore, completing an APS can be complicated and technical insofar as the said APS can be modified before becoming final, creating disputes between the buyer and the seller. It is best to have the agreement reviewed by a lawyer before the purchase or sale of land is finalized to avoid these issues.
As stated earlier, these agreements are lengthy and may (often do) contain many provisions which are contrary to one party’s interests, therefore it is imperative that one takes the opportunity to seek independent legal advice to know about what they are agreeing to. Most essentially, your lawyer will make sure that you obtain good title to the property, free of liens, encumbrances, etc. It is the lawyer’s job to make sure that one does not have to “buy” someone else’s legal problems and/or debts when purchasing a property.
Similarly, when selling your home, one expects to be provided with what was agreed upon in the agreement. This includes making sure that the funds are properly received before releasing the title deed. Therefore, it is your lawyer that will ensure of same, while also paying any outstanding mortgages on title, the Real Estate Commission, delivery of the keys and notifying the utility companies of the closing.
Closing Adjustments
Often more when being an assignee to a pre-construction condo purchase agreement or a first time buyer, closing costs become an unwelcoming surprise to the new buyer. As such, they are asked to deliver funds to the assignor’s/vendor’s lawyer for multiple costs. These costs include but are not limited to the Land Transfer Tax and Registrations Fee, Legal Fees/Costs, Disbursements, Title Insurance, HST along with fees associated with the Tarion Agreement schedules attached thereto to the Purchase agreement.
The Land Transfer tax for example is payable by all purchasers of homes unless they are a first time buyer. This amount will generally represent 1-2% of the purchase price. As for legal fees, lawyers charge a fee for legal serves in addition for charges for disbursements done for assurance of title, title searches, couriers, etc.
These adjustments are items that have all been prepaid by the Seller and which are applied beyond the closing date. This credit is given thereafter to the seller on closing.
Generally, there is a schedule attached to the Purchase agreement that reads as “Statement of Adjustments”. The said statement is usually drafted and prepared by the Seller’s/Vendor’s lawyer. As the purchaser, you will want a lawyer to review with you the Statement of Adjustments to ensure that all items to the purchase price are included. Once again, these adjustments include but are not limited to realty taxes, levies along with enrollment fees to the Tarion agreement.