Understanding the Offer to Purchase Form is essential once your
house hunting expedition is a success! You have found the perfect home,
one that satisfies your needs, most of your wants... and best of all,
fits your pocketbook. Now comes one of the most important phases of
your home-buying experience: making an offer to purchase the home.
Basically, the offer is a precisely worded document that sets out the
terms and conditions between the buyer and the seller. Once the offer
is made and accepted, and after any conditions/contingencies of the
offer are met, the offer becomes a legally binding contract-meaning
that the buyer and the seller are obligated under law to hold up their
end of the agreement and complete the transaction. For that reason, you
must be very sure you understand what's in your offer before you sign
it.
A properly drafted offer should leave no room for interpretation. It
should contain everything that is important to you about the home and
the transaction. For example, if the MLS listing
states that the washer and dryer are included in the sale, put that
fact into the offer. How about that satellite dish in the backyard? If
you want to be sure it's sold with the house, say so in your offer.
Having a written agreement about these things now will avoid
complications later.
Preparing the offer:
If this is the first time you've purchased a home, you probably have never seen an Offer to Purchase Form before, let alone a drafted one. Not to worry. The Real Estate Sales Representative
is knowledgeable about this subject and will prepare your offer taking
into account all the factors that are important to you. Fortunately, Real Estate Sales Representatives don't have to reinvent the wheel every time there's an offer to be drafted. Standard Offer to Purchase forms are used by almost ALL Real Estate Boards. The wording on these forms has been thoroughly reviewed and tested through the legal system, and is broadly accepted.
That doesn't mean, however, that your specific offer cannot also
include special conditions you want. Every sale/purchase is different,
and your offer will contain the wording that suits your needs.
Let us look closer at some of the specific areas in the Offer the
Purchase agreement that will be custom tailored to fit your specific
needs.
Purchaser/Buyer: That's you (unless you are selling the home).
If you're buying the property with a spouse or other partner, each of
your names should be listed exactly as you will want them to appear on
the ownership document (deed) when the property is yours.
Vendor/Seller: That's the seller. If jointly owned, each
seller's name should be listed in full, exactly as shown on the
existing ownership document.
Real Property: This is the exact legal description of the
property you intend to purchase. It should include the postal address,
lot and plan number, as well as frontage and depth dimensions. The Real
Estate Sales Representative and lawyer/attorney (some areas it is the
title office or escrow officer) will make sure the property description
is specific and accurate. This is most important.
Purchase Price: The price you are offering for the property.
Deposit (Earnest Monies): When you submit an offer to purchase,
normally you are requested to include a deposit to demonstrate a
serious intent to buy the property. This deposit will usually be in the
form of a cheque (check), payable to the listing broker, who will place
it in a trust account until the sale is completed or terminated. Your
deposit provides the seller with some assurances that you will go
through with the sale when the day of completion arrives.
NOTE: the deposit is not the same thing as the down payment.
However, when an agreement is reached and the transaction is completed,
the deposit will be credited in full towards the purchase price. There
is no standard amount for a deposit, but the size of your deposit says
something about how serious you are about buying the home.
Clauses particular to the agreement: As we mentioned earlier,
every transaction is unique, so space has been provided (sometimes on a
separate document) for any provisions that apply specifically to your
offer. Sometimes there are provisions stated in the form of
"conditions/contingencies" to the agreement. Conditions/contingencies
are generally inserted at your request and for your protection. If a
condition is not satisfied within the time allowed, your offer is no
longer valid.
Often times, for example, the buyer will want to insert a
condition/contingency in the offer to purchase that is subject to the
buyer arranging a specific amount of money required for financing.
Conditions must always be satisfied by a specific date or within a
certain time. An unconditional offer that is signed by the buyer and
accepted by the seller becomes a contract binding on both parties.
However, if the seller accepts an offer containing one or more
conditions, the contract is subject to those conditions. When the
conditions are satisfied or "waived" (relinquished), the transaction
becomes firm.
Keep in mind that if the seller receives two offers at or near the same
purchase price, and one contains conditions/contingencies which the
other does NOT, the seller may well be inclined to accept the
Unconditional offer. Your Real Estate Sales Representative or Lawyer/Attorney can counsel you on the use of the wording of conditional clauses.
Chattels included and Fixtures excluded: In order to attract
buyers, it is common for sellers to include in the selling price some
chattels that are not normally considered part of the dwelling itself.
These are MOVABLE pieces of personal property. Some examples are
fridges, stoves, washer, dryer, microwave ovens and these chattels are
listed as items to be included with the sale.
Fixtures are permanent improvements to a property that normally stay
with the property as part of the sale. However, it isn't always clear
what constitutes a fixture or whether it will stay. For example, the
seller will naturally want to retain a dining-room chandelier that is a
family heirloom. Since the chandelier could be defined as a fixture, it
SHOULD be listed as an exception in the offer. From a legal standpoint,
if it is a fixture and not mentioned in the agreement as an exclusion,
it is then considered part of the purchase price.
If there is any doubt in your mind as to whether chattels are fixtures
and part of the agreement, specifically list the items you are
concerned about in writing in your offer. Where appropriate, give make
and model numbers, or describe the items by colour and location. Leave
nothing to chance. You will avoid surprises later, when you take
possession of the home.
Irrevocability of the offer: This is the period during which you
leave the offer open for consideration by the seller/buyer. If you are
not notified before the precise time and date specified that your offer
had been accepted, the offer becomes "null and void" (no longer valid).
The Real Estate Sales Representative can assist you in determining how
long you should let the seller think about your offer, but it is often
a period of less than 48 hours.
Completion Date: This date, often referred to as the "closing
date" is the glorious day when the parties expect to complete the
transaction. All documentation is filed, all monies are paid out - and
the property is yours. Closing dates are often scheduled for 30-60 days
from the date of the agreement (and some as long as 90 days unless it
is a new home and this date could be substantially longer), although
this period will vary with circumstances. Your Real Estate Sales
Representative can help to negotiate a mutually acceptable closing date.
Time to examine title: When buying a home, you are really paying
for ownership rights that go along with it. The "title" is the legal
evidence of ownership, and you want to be sure your
lawyer/attorney/title/ or escrow officer has time to search the
seller's title to make sure it is free of restrictions. If the sellers
don't have title to clear ownership, there may be complications in
transferring title to you on the closing date. Give your
lawyer/attorney/title/ or escrow officer as much time as possible to
search title prior to completing the transaction. Also speak to your
Real Estate Sales Representative lawyer/attorney/title/ or escrow
officer about Title Insurance.
Involve Your Lawyer/Attorney: You may want to have your lawyer
review the offer before you sign and submit it to the seller. Why?
Because when it's all said and done, you and the seller are legally
responsible for what the offer says.
If you believe you will miss an opportunity to buy a home because you
have to wait for your lawyer to review the offer, there is a simple
solution. Ask your Real Estate Sales Representative to insert a
satisfactory review by lawyer, usually within a period of 24 hours is
appropriate. Most lawyers are very responsive to your request and
almost all use fax email communication, so they can look at the offer
right away. Do NOT expect your lawyer to comment of the VALUE on the
property. His/her job is to review the document and ensure your rights
are protected.
