Purchase Contract

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Purchase Contract

• Barbara Grodaes

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Successful Completion Binding

• AREA has 3 pre-printed purchase contract forms
  Residential, Commercial or Rural Real Estate
  Purchase Contracts. Make sure you use the correct
  form
• Purchase contract is between the seller(s) and
  the buyer(s)
• Real estate agent is the vehicle to create,
  present and close the deal using the Purchase
  contract form

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Key Concerns Regarding Contract

• All registered owner(s) of property must be
  included as seller(s) and full legal names of
  buyer(s) good idea to have title/listing with
  you
• If either a Dower Affidavit or Consent and
  Acknowledgement of Consent be required, the Dower
  Schedule must be completed and attached to the
  Purchase Contract and indicated in clause 7.6 on
  page 3 for the seller

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Section 1 The Property

• Municipal address including town/city and full
  short legal description (remember if condo check
  parking)
• Clause 1.3 is for unattached goods that will
  remain must be specific
• Clause 1.4 is for attached goods except for
  attached goods that will be removed also be
  specific
• Clause 1.5 buyer must understand obligations
  seller(s) will discharge and which to be assumed

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Section 2 The Transaction

• Details contain relevant and specific information
  about financial terms of purchase, including
  purchase price, handling of initial and/or
  additional deposits, how purchase price broken
  down for financing and balance owing
• If a mortgage is assumed, or if seller(s) provide
  financing, or if other value is involved,
  Financing Schedule to be completed and attached
  to this Purchase Contract

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Section 3 - Deposits

• Indicates where the deposit will be held and how
  it will be handled
• Buyer may make an initial deposit to indicate a
  serious interest in the property and then make
  additional deposits perhaps after offer accepted
  or some condition is removed
• Also indicates the deposit application depending
  on the success or failure of the contract

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Section 4 - Closing

• Sets out the Completion Day and provides for
  standard actions common to the closing such as
  provisions for week-end possessions, payments,
  interests, adjustments, condition of the
  property, documentations, etc.
• This section also clarifies what costs the buyer
  will pay and what costs the seller(s) will pay
  with respect to title encumbrances

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Sections 5 6, Insurance, Warranties and
Representations

• Section 5 requires the seller(s) to maintain
  insurance on the property until the buyer pays
  the seller the full purchase price
• Section 6 details all of the promises or
  guarantees that the seller is making to the buyer
  concerning everything to do with the property
  measures should be taken to make this true

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Section 7 Additional Terms

• Any schedules accompanying the contract must be
  noted in the body of the contract and initialled
  by both parties
• This section enforces the times and dates, the
  agreed upon statements such as gender, etc. and
  the attached schedules, if any
• Additional terms may be filled in the blanks area
  or attached (usually attached)

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Section 8 - Conditions

• A condition precedent allows contract to exist
  only if outcome of specified event satisfactory
• A condition subsequent make contract binding if
  the conditions are not removed
• Real Estate Purchase Contract contains only
  conditions precedent
• A date (Condition Day) must be set to either
  satisfy OR waive the condition and both must be
  done in writing

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Conditions Continued

• 8.1 deals with buyers conditions (benefit buyer)
• Include the Property Inspection Schedule as it is
  fair to both buyer and seller(s)
• 8.2 deals with sellers conditions (benefit
  seller) if not enough room attach addendum
• Party who places condition precedent must give
  notice that either waived or satisfied in writing
  before 900pm on stated Condition Day

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Section 9 Remedies / Disputes

• This section indicates how a party my pursue all
  available remedies such as access to arbitration,
  mediation, or small claims court because some
  condition is not met or a house inspection does
  not meet the buyers expectations
• If a buyer defaults, the seller can keep the
  deposits and can claim for additional damages and
  the buyer is required to pay the costs the seller
  incurs

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Section 10 Advice / Disclosure

• This section contains information that both buyer
  and seller must know
• Contract is intended to create binding legal
  obligations and both are advised to read the
  entire contract carefully
• Clients should be encouraged to obtain legal
  advice before signing the contract (never
  discourage a client from seeking it!)

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Section 10 Continued

• All buyers should consider obtaining an
  independent property inspection to learn the
  condition and measurement of the property
• Special care must be made if acting as dual
  agency
• Clause 10.4 is the only means by which the agents
  involved can ensure that the commissions are paid
• Fax delivery is effective delivery

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Section 11 - Definitions

• These are terms that both the buyer and the
  seller(s) need to understand as their signature
  on the contract implies that they do
• It is important for the real estate agent to make
  sure that the client is clear on these terms as
  it will make the transaction smoother and the
  clients calmer

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12 Representatives / Notices

• Representatives identified represent the buyer
  and the seller(s)
• Specifies that all notices must be in writing and
  must be delivered to the address or faxed to the
  number described. If faxed, fax confirmation and
  original kept on file
• All information should be very accurate and full

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Sections 13, 14 and 15

• Offer (13) indicates the offer and the time it is
  open for acceptance and is dated, signed and
  witnessed
• Acceptance (14) indicates that the offer is
  accepted and the sale is agreed upon according to
  the terms of the contract
• Final Acceptance (15) party last to sign the
  contract fills in the time and initials to
  indicate so

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Schedules

• Provides details of terms or conditions indicated
  in the contract when there is not enough space
  for such details in the form contract itself
• Must have the corresponding purchase contract
  number recorded on the upper right hand corner
• Must be initialled at the bottom of the schedule
  by both parties to ensure the schedule forms part
  of the contract

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Schedules Continued

• Financing Schedule only used assumption of
  existing mortgage, other value or seller
  financing
• Property Schedule transactions that involve
  resale condominiums, manufactured/mobile homes,
  country residential acreages and rental
  agreements
• Property Inspection Schedule, Notice, Sale of
  Buyers Home Schedule, Sellers Notice / Buyers
  Notice, Amendments, Addendums, Dower