- Identification of Parties
- Property Description
- Purchase Price and Deposit
- Irrevocability
- Adjustments and Closing Date
- Requisition Date
- Conditions
- Warranties and Representations
- Time is of the Essence
What is an Agreement of Purchase and Sale (APS)?
An Agreement of Purchase and Sale (APS) is a legally binding contract establishing the terms and conditions under which a property is sold from a seller to a buyer. This document contains all the essential details of the transaction, such as the purchase price, property description, closing date, and any conditions that must be met before the closing, such as financing or inspection, as well as any items included or excluded from the sale. The APS serves as a guide for the transaction, ensuring both parties understand their responsibilities and the steps required to complete the sale. Additionally, it provides legal protection by outlining the remedies available if either party fails to fulfill their obligations as specified in the agreement.
Insight Law Professional Corporation is a real estate law firm located in Toronto. Our real estate lawyer can assist with reviewing the Agreement of Purchase and Sale. Contact us for more information.
What is the OREA Agreement of Purchase and Sale (APS)?
The OREA Agreement of Purchase and Sale (APS) is a specific version of the APS tailored for real estate transactions in Ontario, Canada, standardized by the Ontario Real Estate Association (OREA). This document is crafted to meet Ontario’s real estate market’s unique legal and regulatory requirements.
What are the Standard Clauses in an APS?
Here are some of the standard clauses in an OREA APS:
Identification of Parties
Clearly states the names and roles of the buyer(s) and seller(s) involved in the transaction.
Property Description
Provides a detailed description of the sold property, including address and legal description.
Chattels Included
The “Chattels Included” clause in the Agreements of Purchase and Sale specifies which moveable property items are included in the sale, such as appliances, furniture, and window coverings. This clause helps avoid misunderstandings between the buyer and seller.
Fixtures Excluded
The “Fixtures Excluded” clause in an Agreement of Purchase and Sale (APS) specifies which items are physically attached to the property but not included in the sale. The seller removes these fixtures before the transfer of ownership. Fixtures that are bolted, nailed, screwed, or permanently attached to the walls, floors, or ceilings are typically included. However, the seller can retain ownership of certain fixtures by listing them in the “Fixtures Excluded” clause. This clause provides clarity and transparency to avoid misunderstandings.
Purchase Price and Deposit
Specifies the agreed-upon purchase price and details regarding the deposit amount, including how and when it will be paid.
Irrevocability
In an Agreement of Purchase and Sale (APS), “irrevocability” is a specific period during which the offeror cannot withdraw their proposal. During this time, the offer remains open for acceptance by the offeree. Including an irrevocability clause provides a timeframe for decision-making and demonstrates the offeror’s commitment to the transaction.
Adjustments and Closing Date
This defines the transaction’s closing date and any adjustments to be made at closing (such as property taxes and utility bills).
Requisition Date
The Requisition Date is a deadline by which the buyer must examine the title to the property and raise any objections. This allows the buyer to conduct due diligence, verify that the property title is free of any issues, and notify the seller of any issues found. If the buyer fails to raise any issues by the Requisition Date, they may forfeit their right to object to title issues discovered later.
Conditions
Lists any conditions that must be met for the transaction to proceed, such as financing approval, home inspection results, or the sale of the buyer’s current home. These are typically outlined in Schedule “A” attached to the APS agreement.
Warranties and Representations
Statements by the seller regarding the condition of the property and any guarantees or warranties being made.
Time is of the Essence
“Time is of the Essence” is a legal principle in contracts, like Agreements of Purchase and Sale (APS), to signify that deadlines and schedules are critical and must be strictly followed. Failure to meet deadlines can be considered a breach of the contract. This clause elevates punctuality and schedule adherence from expectations to binding, enforceable obligations. Its purpose is to ensure the timely fulfillment of duties, facilitate a smoother transaction process, and provide a clear basis for legal recourse in case of undue delays.
Common Conditions Used in APS
Common conditions used in an Agreement of Purchase and Sale (APS) are provisions that must be met for the transaction to proceed to completion. These conditions are designed to protect the parties’ interests, allowing them to perform due diligence and ensure that specific criteria are met before the sale is finalized. Here are some of the most common conditions found in APS documents:
Financing Condition
This condition allows the buyer a specified period to secure financing or mortgage approval from a financial institution. If the buyer cannot arrange the necessary financing within the stipulated time, they can opt out of the purchase.
Home Inspection Condition
It grants the buyer the right to have the property inspected by a professional home inspector. If significant issues not previously disclosed are discovered, the buyer can renegotiate the terms, request repairs, or withdraw from the sale.
Sale of Buyer’s Property
Sometimes included if the buyer needs to sell their current home to finance the new property purchase. This condition makes the purchase contingent upon successfully selling the buyer’s existing property within a certain timeframe.
Title Search
Allows the buyer to thoroughly search the property’s title to ensure it is free from liens, encumbrances, or legal disputes. The buyer may withdraw if significant title issues are uncovered.
Legal Review
It gives the buyer or their lawyer time to review the legal aspects of the APS and any associated documents or conditions. This is to ensure the buyer fully understands their rights and obligations.
OREA APS vs. Custom Agreements
While the OREA APS is a standardized document widely used in Ontario, buyers and sellers can use a custom agreement instead. Custom agreements can be tailored to meet the parties’ specific needs, but they are typically more complex and might require assistance from a lawyer to draft and negotiate.
Legal Considerations
The OREA APS is a legally binding document, and buyers and sellers must understand its terms and conditions before signing it. A real estate lawyer can review the agreement to ensure that it is fair and reasonable and that the client’s interests are protected. They can also advise clients on any legal considerations that may arise throughout the sale process.
The OREA Agreement of Purchase and Sale is a critical legal document governing Ontario’s real estate transactions. Buyers and sellers should understand its terms and conditions before signing it and seek legal advice to protect their interests throughout the sale process.
The information provided above is of a general nature and should not be considered legal advice. Every transaction or circumstance is unique, and obtaining specific legal advice is necessary to address your particular requirements. Therefore, if you have any legal questions, it is recommended that you consult with a lawyer.
About the Author
Demet Altunbulakli is the owner and founding lawyer of Insight Law Professional Corporation with 8+ years of experience spanning real estate law, business law, estate planning, litigation, strategic consultations, and customer service. Throughout the years, she has gained a verifiable track record in overseeing the delivery of legal services including commercial & residential real estate purchases & sales and corporate & commercial transactions. With many accomplishments and demonstrated ability in managing multi-client portfolios, promoting quality service delivery, encouraging referrals, leading client consultations, assessing needs, and providing solutions. Demet is looking forward to enabling clients to achieve their objectives, establishing strong relationships with stakeholders, and boosting client satisfaction. Demet obtained her LL.B. from the prestigious Galatasaray University in Istanbul, Turkey. Her studies were in French and Turkish, except for the period when she was an exchange student at the University of Florence. There, she studied law in English and Italian. Mrs. Altunbulakli attended the University of Alberta Faculty of Law for her training in Canada.
