After you have seen a property and decided that you would like to purchase it, the next step is to enter into an Agreement of Purchase and Sale.  Usually, the real estate agent who showed you the property will prepare it for you.  The agreement will contain information such as the following:

• names of purchasers;

• names of vendors;

• municipal address of the property;

• legal description of the property;

• amount of deposit;

• purchase price;

• chattels included;

• fixtures excluded;

• irrevocable date;

• closing date; and

• any conditions you choose to add to the agreement.*

Once your real estate agent has completed the agreement to your satisfaction and you have signed it, the vendor will decide if he or she wants to accept it.  If it is accepted by the vendor prior to the irrevocable date, you will proceed to purchase the property, subject to any conditions contained in the agreement.

There are many reasons why you would want to have conditions in your agreement.  An example of a condition would be:

• "This offer is conditional for 7 clear business days (Saturdays, Sundays and holidays excluded) from acceptance, upon the purchaser obtaining at his expense, a firm commitment for a new first mortgage from a financial institution of his choice, at terms and conditions suitable to him, failing which this Offer shall become null and void and the purchaser’s deposit shall be returned in full without interest or deduction and neither party hereto nor the Agent nor any other real estate broker shall be liable for any damages or costs.  This condition is included for the benefit of the purchaser and within the conditional period specified may be waived by him by written notice to the vendor."

In this case, the purchaser would arrange for suitable financing and, once having done so, would sign a waiver of this condition and deliver it to the vendor prior to the end of the conditional period.  Here, it is 7 clear business days.  In this example, if the condition is not met and waived, the agreement does not go through ("failing which this Offer shall become null and void").  Any conditions you put in the agreement should be worded very carefully so you are not obliged to purchase the property if you cannot meet your conditions.  Your real estate agent or lawyer will know what wording to use.  Some other examples of items that would be conditions to an agreement are:

• vendor to provide a survey of the property;

• purchaser to obtain a clear water potability certificate;

• tenant to be notified that property must be vacated;

• purchaser to obtain an inspection of the property; and

• vendor to remove debris from the property. 

These are just a few examples.  There are many other items that could give rise to a conditional agreement.

The Agreement of Purchase and Sale is considered conditional during the period specified in condition.  There could be three or four separate conditions in the same agreement and the agreement would be considered conditional until the last of the conditions has been waived.

Once your agreement is unconditional, your lawyer can start work on the file.  Remember to give your agreement to your lawyer as soon as you have signed it, so that he or she is aware of the any conditional periods and can follow up on them.  Also, you can always involve your lawyer in the negotiation of the Agreement of Purchase and Sale, if you like.  In this way, your lawyer can help you decide which conditions are necessary for you, depending on the type of property you are wanting to purchase.

* For a more detailed description of the terms commonly found in an Agreement of Purchase and Sale, read the article, "Common Agreement of Purchase and Sale Terms".

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