By Garry Shapiro BCL, LLB, MBA

While Toronto’s housing market is often defined by its flurry of activities, frenetic pace, and confident buyer culture, it’s always recommended to slow things down for a moment and educate yourself before entering into any binding contract. There are a number of issues to be considered by both Buyers and Sellers in preparing an Agreement of Purchase and Sale.

Here are several items to consider:

DEPOSITS – Deposits can be used strategically by buyers when purchasing a property, especially in multiple offer situations. A high deposit provides the seller with sense of security that the buyer will complete the transaction, as well as demonstrating to the seller how serious the buyer is in purchasing the property.

NAMES OF THE PARTIES TO THE AGREEMENT –
a) If the buyer’s name in the agreement uses the word “in trust”, the seller should seriously consider requesting a higher deposit from the buyer to offset the risk that – in the event the transaction not be completed – the deposit may be the only monies the seller may receive.
b) Where the seller is described as an ‘Estate’, it is common for a provision to be included in the Agreement allowing the seller to extend the closing until the Estate has obtained the Certificate of Appointment of the Estate Trustee to complete the transaction.

CONDITIONS – There are commonly used conditions in an agreement; pertaining to mortgage financing, house inspections and status certificates where the property is a condominium. In practise, the use of any of these conditions is dependent on market conditions. In a seller’s market, there will be limited use of conditions by buyers while the opposite is true in a buyer’s market. Where the dwelling is older, a buyer should be cautious about submitting an offer without an inspection condition. A buyer, having arranged a mortgage pre-approval can have some measure of confidence should the agreement not have a condition on mortgage financing.

RENTAL CONTRACTS – The parties must consider whether there are items other than the hot water tank, such as the furnace or a security system.

CHATTELS – There should be a comprehensive list of all chattels included in the purchase price; these should include such items as wall mirrors, wall units/cabinets, and wall light fixtures.

ACCESS RIGHTS – A provision allowing for access rights is usually inserted in the Agreement; the buyer should try to retain one access right to be exercised no later than the day prior to closing to assess the condition of the property; however, this right is not an opportunity to have another house inspection.

CONDOMINIUM SUITES – Determine whether the parking and/or locker unit(s) are deeded ownership or exclusive use; ownership allows the buyer to sell the parking or locker unit separately from the suite, while the parking or locker units cannot be sold separately from the suite if they are exclusive use.

For more information on Agreement of Purchase and Sale, contact Shapiro Real Estate & Business Lawyers at 416 224 0808.