The agreement of purchase and sale (APS) is the legal document that outlines the terms and conditions between the buyer and the seller of a home. Although most of the contract is boilerplate and some just outline the parties involved, property details, and legal descriptions, there are several other important elements and clauses to look out for.
Did you know we have a podcast? Listen to The Last Honest Realtor right here.
Common Terms to Know in a Real Estate Purchase Agreement
Purchase Price: The total amount the buyer agrees to pay for the property and the seller agrees to accept.
Deposit: Details of the deposit amount and the brokerage’s trust account where it will be paid. The deposit is to be made within 24 hours of an accepted agreement of purchase and sale and is roughly a minimum of %5 of the purchase price. It is held in the listing brokerage trust account until closing.
Irrevocability: The offer expiry or time limit within which the offer must be accepted.
Completion Date: The date when the transfer of ownership will take place.
Title Search: The date by which the buyer’s lawyer must conduct a title search to ensure clear ownership.
Chattels Included: A list of items that are included in the purchase, typically consisting of all the chattels and fixtures sold with the home, such as all existing appliances, windows coverings, light fixtures, and closet inserts.
Fixtures Excluded: A list of items that are excluded in the purchase. For instance, sometimes the seller will want to take a special chandelier with them!
Rental Items: Details of any appliance rentals that will be passed on to the buyer, such as a hot water tank and its monthly rental cost.
Common Expenses (for condominiums only): The common expenses or maintenance fees the buyer will be responsible for to maintain and operate shared facilities and utilities.
Planning a real estate move in the near future? Check out these posts next to help you get started:
- Offer Tips for Buyers: How to Win in Any Market
- Why Waiting for the Market to Improve Doesn’t Make Sense
- Can You Fire Your Realtor® if it’s Not Working Out?
Clauses and Conditions in a Real Estate Purchase Agreement
Schedule A is the section where we can insert and customize any special clauses or conditions. Here are some of the common clauses and conditions that might be included.
Clauses are specific provisions and obligations of the parties involved and often cover the following;
- Balance of purchase price: Specifies that the remaining amount of the purchase price will be paid by the buyer on the closing date.
- Visits: Outlines the number of visits the buyer is allowed to make to the property before closing. These visits are used to show family and friends, take measurements, have contractors walk through for renovations, or other preparatory visits.
- Keys relating to the property: Specifies that the keys, garage door openers, or access devices that will be provided to the buyer on closing.
- Broom Swept Condition: The property should be clean, free of debris, and generally tidy.
Selling a vacant home? Here’s everything you need to know about selling a vacant property right here.
Conditions are the terms that must be met for the sale to proceed and the agreement to be binding. If the conditions are not fulfilled by the noted deadlines, the deposit is returned in full and the agreement becomes null and void.
- Home inspection: A condition that allows the buyer to have a professional home inspection conducted. If significant issues are discovered, the buyer may renegotiate the terms or withdraw from the agreement without penalty.
- Financing approval: A condition that the buyer must secure financing (a mortgage) for the purchase by a specified date. If the buyer is unable to secure financing, they may terminate the agreement.
- Status Certificate (for condominiums only): For condo purchases, this condition allows the buyer to review the status certificate with their lawyer, which provides important information about the condo corporation’s financial health, rules, and any legal issues. If significant issues are discovered, the buyer may withdraw from the agreement without penalty.
- Sale of the buyer’s current home: This condition is rarely seen and stipulates that the purchase of the new property is contingent upon the successful sale of the buyer’s existing home.
These elements form the core of the Agreement of Purchase and Sale (APS) in Ontario, ensuring that both the buyer and seller are clear on the terms and conditions of the property is essential for a successful closing!
Looking for answers to your real estate questions? Get in touch with us directly by calling 416.642.2660 or emailing us at admin@torontorealtygroup.com.
Want More Insights From TRG Experts?
Sign up here to receive Insights Magazine delivered to you. This resource is full of market advice and industry intuition from our team and colleagues to keep you up-to-speed on the ever-changing Toronto real estate market.
