BUYING AND SELLING HOMES IN TIMMINS - THE AGREEMENT OF PURCHASE AND SALE
Since first entering the practice, I’ve come to accept the fact that most clients will sign this contract before consulting me. In these busy times, many clients have signed without even taking the time to read it. This can have disastrous effects for a party to a real estate transaction. You may not receive what you bargained for and, unfortunately, these problems cannot always be resolved. The purchase and sale of a home is one of biggest transactions people will ever enter into. With that in mind, parties are strongly encouraged to call on our Timmins office for advice. Provided below is a short list of items that may impact your purchase and/or sale. For more specific questions, including fee estimates, please contact my office, 24 hours a day, 7 days a week at bdawkins@ebslawyers.com or 705-264-1285 ext. 131.
Conditions
The term “condition”, within a real estate context, refers to a prerequisite that must be satisfied before a party agrees to go ahead with the transaction. They can relate to matters such as financing, home inspections, and/or the sale of an existing residence. If you are purchasing a property with a specific use in mind, you should also have a lawyer include compliance with local zoning-bylaws or, alternatively, obtaining a permit for a units in an apartment building. There are many other conditions that you may wish to include, such as:
· Environmental audit(s);
· Suitability of draining/well;
· Reports on soil conditions; and/or
· Compliance with certain statutes – i.e. Bulk of Sales Act and/or Planning Act.
Conditions must be carefully drafted so as to ensure that changes do not occur on or before the date of closing. In satisfying such conditions, it bears mentioning that purchasers are required to act reasonably and in good faith. Simply put, purchasers are generally not able to walk away from a transaction without having first used honest efforts to fulfill a condition. I can assist purchasers in drafting such clauses. I can also help vendors ensure that conditions are drafted properly so that they will know, well before the closing date, whether there is a sale or not.
Chattels (Personal Property)
At law, every sale of land is deemed to include certain objects that are affixed to land. Whether items will be included is determined by degree of attachment. Traditionally, items that have been included, unless specifically excluded, are, inter alia, houses, barns, stables, yards, gardens, trees, woods, fences, lights, etc. An Agreement of Purchase and Sale will not automatically include property that is not attached to the land. In any transaction, purchasers are encouraged to ask which, if any, chattels are going to be included. These items must then be incorporated into the Agreement of Purchase and Sale. Such items commonly include:
· Detached fridges and stoves;
· Rugs; and
· Televisions.
Objects that are mounted on a wall are somewhat more complicated – the bracket may be considered a fixture, while the television may be properly classed as a chattel. When in doubt, spell it out. Have your lawyer include any and all chattels that you wish to include as part of the purchase price. Conversely, vendors are encouraged to spell out fixtures that he or she intends to exclude – such as wall to wall carpeting, build-in cabinets, built-in ovens, counter tops, etc. Going forward, this will help ensure a seamless closing day – where the parties can focus on moving, rather than what is missing.
Size/Description of the Property
The words “more or less” are usually added into an Agreement of Purchase and Sale. This serves as a protective clause that incorporates a margin of error. But, what if subsequent inquiries reveal that you are not getting what you bargained for? Courts have held that where there is a difference between what the vendor agreed to sell and what he or she actually had the power to convey, the purchaser will generally be entitled to an abatement of the purchase price. More serious discrepancies can lead to a rescission of the entire contract. If acreage is important to you, such as for development purposes, you should insist upon a clause which states that the price is based upon a fixed calculation, such as Z$ per acre or foot. May also wish to make your offer conditional upon a new and up-to-date survey.
Deposit
There is no rule concerning the amount required as a deposit. Generally speaking, the amount should be high enough to demonstrate that the buyer is serious about purchasing the property. In the event the transaction proceeds, the deposit will be a considered a pre-payment that will be adjusted on closing. Where the transaction does not proceed, the buyer risks forfeiture. Sellers should be cautioned that in some circumstances, less is more. Relief has been granted to purchasers where the amount of the deposit was considered to be unreasonable. Even though the vendor is not required to demonstrate that it has suffered any damages, the deposit itself should not serve as a windfall. What will be considered reasonable will depend upon the circumstances of your transaction.
What if one of the parties dies before closing?
This situation is rare, but has been known to occur. Generally speaking, an Agreement of Purchase and Sale that was signed by an individual who died before the transaction closed is still enforceable. In most cases, the rights and obligations of that party will simply pass to his or her estate. Parties facing such circumstances are encouraged to contact our Timmins office.
The foregoing paragraphs are not meant to be an exhaustive list of the potential pitfalls associated with real estate transactions. Rather, there remains many issues, including, but not limited toinsurance, timelines, HST, etc. For more specific questions or estimates relating to your property, please contact our Timmins office.
- Benjamin Dawkins is a real estate lawyer with the Northern Ontario firm Evans, Bragagnolo & Sullivan www.ebslawyers.com. You can contact Benjamin at bdawins@ebslawyers.com.
