PrivateList: for sale by owner (fsbo, private sale) real estate in Canada

Offer To Purchase - Guide
For more purchasing tips and tools, visit www.privatelist.com

NOTE to buyers and sellers: Although purchase or sale of a residential property is normally not that complex, you should have your lawyer/notary check any contract before you sign it, to ensure that it accurately reflects your intentions.

Use this summary as a GUIDE in filling out a formal Purchase Agreement (obtained from your lawyer or local stationer), during face-to-face negotiations, or as a "letter of intent" to be taken to the purchaser's lawyer and converted into a binding contract, ready for final signatures.

Purchaser(s)

Purchaser name(s): _____________________________________________________________________

address: ____________________________________________ phone number: ____________________

Purchaser lawyer: ______________________________________________________________________

lawyer address: ______________________________________ business phone: ___________________

Vendor(s)

Vendor name(s): _______________________________________________________________________

address: ___________________________________________ phone number: _____________________

Vendor lawyer: ________________________________________________________________________

lawyer address: ____________________________________ business phone: _____________________

Property

civic address: _________________________________________________________________________

legal description: _______________________________________

Purchase Price

accompanying deposit: $ . . . . . . . . . . . . . . . .

balance of deposit (if any): $ . . . . . . . . . . . . . . . .

first mortgage: $ . . . . . . . . . . . . . . . . (see details under "Other Clauses")

second mortgage: $ . . . . . . . . . . . . . . . . (see details under "Other Clauses")

balance of down payment: $ . . . . . . . . . . . . . . . .

_____________

TOTAL: $

Š1999 PrivateList

"Subject To" Conditions

This offer is made subject to the following conditions, any or all of which may be waived at the discretion of the Purchaser(s), by written notice to the Vendor on or before the associated expiry date:

Fixtures and Chattels Included or Excluded

Encumbrances

The Vendor(s) will pay off , prior to closing, any outstanding financial claims (eg. loans) against any chattels or fixtures included in the sale except for:

In addition to the non-financial encumbrances (if any) often registered against this type of property (such as easements, rights of way, or covenants not affecting marketability), the following claims or restrictions apply to this property:

The Purchaser(s) will assume responsibility for outstanding balances on the following existing claims (eg. local improvement charges) against the property:

Warranties and Disclosures

Each Vendor warrants that he/she is a resident of Canada; that there are no outstanding municipal work orders or deficiency notices against the property, and that no buildings included in the property have ever been insulated with urea formaldehyde foam insulation. Additional warranties (if any) by the Vendor(s):

Š1998 PrivateList

Completion, Adjustment and Possession Dates

This agreement will be completed at noon on the _____ day of ____________________________, _______.

Normal adjustments for property taxes, utilities, etc. shall be calculated to noon on the _____ day of

___________________________, _______.

The Purchaser(s) may take possession at noon on the ____ day of ________________________, _______,

vacant and free of all tenancies except ______________________________________________________.

Associated Costs

The Vendor(s) will bear any costs entailed in clearing the Title and preparing its transfer, in preparing any take-back mortgage(s), in discharging any encumbrances not assumed by the Purchaser(s), in any mortgage prepayment penalties, and in any real estate commission.

The Purchaser(s) will bear any costs involved in the Title search and registration, in obtaining any new mortgage(s), and in any property appraisal and/or house inspection.

Other expenses to be borne by either party:

Tax Issues

The Vendor(s) will pay the taxes relating to realtor fees (if any) involved in the sale or to other expenses to which they've committed. The Purchaser(s) will pay any GST or PST applicable to the purchase of a new home or to other expenses to which they've committed.

Transfer of Risk

Buildings and chattels included in the sale will remain at the risk of the Vendor(s) until the Adjustment Date; insurance policies and the proceeds thereof will be held in trust for the parties as their interest may appear.

Cancellation and Default

The deposit will be returned to the Purchaser(s) if the offer is not accepted, falls through because a condition could not be satisfied in time, or if the Vendor defaults (in which case the Purchaser(s) may pursue other remedies as well). If the Purchaser defaults, the deposit is forfeit to the Vendor(s), who may also seek other remedies against the Purchaser(s)

Spousal Clause

As non-owner spouse(s) of the Vendor(s), I/we affix my/our signature(s), signifying consent to this sale:

________________________________________ _________________________________________

Š1999 PrivateList

Other Clauses

For an assumed mortgage (if any):

mortgagee: _____________________________________________

amount: $ _____________

interest rate: _______% per annum

end of term: _______ day of ________________________, _______

IP: $ _______/month

For a new mortgage (if any):

maximum amount: $ ______________

maximum interest rate: _______% per annum

maximum amortization: _______ years

maximum term: _______ months

maximum IP: $ _______/month

Other:

Deadline For Acceptance

This offer is open for acceptance until 11:59 p.m. on the ______ day of _______________________, ______ after which time (if not accepted) it will become void and the deposit will be returned to the Purchaser(s).

Signatures

____________________________ ____________________________ _____________

Purchaser Witness date

____________________________ ____________________________ _____________

Purchaser Witness date

____________________________ ____________________________ _____________

Vendor Witness date

____________________________ ____________________________ _____________

Vendor Witness date

Š1999 PrivateList

Notes

The notes below provide further details on link items in the preceeding contract. For additional information, check the other resources in our sellers library or contact your lawyer or notary.

adjustments The adjustment date is used to calculate what portion of any pre-paid bills (property taxes, utilities, local improvement charges, furnace/water-heater leases, etc.) the purchaser owes the vendor. If the possession date is half way into the year, he'll owe the vendor one-half of any bills that the vendor had prepaid for the whole year, for example. NOTE: Closing, adjustment and possession dates normally coincide.

chattels see "fixtures"

civic address This is the full street address, including town, province and postal code

completion date The closing date. If possible, avoid closing on the last or first day of the month, as Land Registry Offices are at their busiest then.

deposit The deposit is normally a cheque made out in trust to the vendor's lawyer (eg. "payable to Perry Mason, In Trust."
As to size, $1000 is a standard minimum, but a larger deposit will enhance your credibility with the vendors and perhaps help you win concessions on other issues.
If the deposit is large and possession a ways off, consider adding to the "Other Clauses" section a statement like "Deposit monies shall be placed in an interest bearing term deposit and interest earned credited to the Purchaser on closing."

expenses The following costs are typically borne by the Purchaser, but a highly-motivated Vendor might be persuaded to help out (eg. "Vendor will contribute $_______ towards purchasers closing and moving expenses on closing.") . . .

appraisal fee (if your lender requires a new appraisal)
inspection cost (not mandatory in Canada, but a good idea)
property survey (indicates property boundaries and encroachments
insurance fee for high-ratio mortgage (when loan exceeds 75% of sale price)
mortgage loan insurance fee (if any - term insurance may be a better option)
home insurance
land transfer tax (applied by some provinces; usually a percentage of the purchase price)
interest adjustment (when the closing date and the first payment date of your mortage leave a gap in interest payments)
pre-paid tax and utility adjustments
legal fees and disbursements
sales taxes (if any)
estoppel certificate fees (for condominiums)
moving expenses
hook-up charges
immediate repairs
appliances

Š1999 PrivateList

fixtures If you need tools to remove it, it's a fixture and will be included in the purchase price unless specifically included. Anything not firmly attached to a building is a chattel and would not stay with the property unless specifically included in the purchase price.
Be careful to list all major appliances and items of furniture to be included in the purchase, noting makes and model numbers where possible. As well, you may wish to include, under the "Warrantees" section of your contract, a statement guaranteeing the working condition of specific appliances.
To avoid being stuck with a loan balance against a recently-purchased appliance, be sure to write "None" on the appropriate line in the "Encumbrances" section.

GST The 7% GST applies to new housing or to resale homes which have been very substantially renovated. However, there is a rebate, to a maximum of 2.5% on homes costing less than $450,000. For possible recent changes to the rules, contact your local CMHC office.
National and provincial sales taxes may also apply to any services you purchase in putting the sale together, eg. appraisal or realtor fees.

legal description The "lot/block/plan #" description, available from your municipal tax bill or land titles office. If you have trouble finding it, call your lawyer.

negotiations It is normal for an offer to go back and forth several times between purchaser and vendor before an acceptable price and terms are determined. This should always be done on paper! Here's how . . .
The original offer, signed and witnessed by the purchaser(s), is presented to the vendor(s). The vendor(s) make any changes by crossing out the relevant details - price, chattels, possession date, deposit, etc., replacing them with the preferred alternatives, and initialling each amendment. Then the document is returned to the purchaser(s) for consideration. This can happen several times.
Once all final changes have been initialled by all parties, you have a SALE (pending removal of any subject-tos, of course).

possession date As with the closing date, it is best to avoid the last or first day of the month - in this case to ensure availability of a moving van!
In any case, DO NOT take possession of a property before the closing date, as that could leave you in a difficult situation should the condition of the property come into dispute on closing.

purchaser The full names and contact information for all purchasers should be noted.

Š1998 PrivateList

"subject to" conditions Conditions are usually inserted, and waivable, at the discretion of the purchaser, and are often prefaced with a statement like "The following conditions are inserted for the benefit of, and may be waived at the sole option of, the Purchaser."
Each condition must set specific objectives which the purchaser must attempt to meet in good faith, and must include a deadline for completion.
NOTE: the fewer the conditions, and the shorter their deadlines, the more attractive the offer to the Vendor. Some examples:
This offer is conditional on the Purchaser arranging for, and receiving within 10 days from the date of acceptance of this offer, a satisfactory professional home inspection of the property.
This offer is conditional on the Purchaser arranging, within 10 business days of the date of acceptance, mortgage financing of not less than _________ thousand dollars, at an interest rate not to exceed _____% per annum, and IP payments of no more than $_____ per month.
This offer is conditional on the Purchaser obtaining an unconditional agreement for the sale of his or her property, located at _____________________________ within 30 days of the date of acceptance of this offer.
This offer is conditional on a review and approval by the Purchaser's lawyer, within 5 business days of the acceptance of this offer, of its form and content.
If purchasing a condominium: This offer is conditional on the Vendor's providing the Purchaser(s), within 5 business days of the date of acceptance of this offer, with a satisfactory and current estoppal certificate (in Quebec, a "statement of common expenses") providing information on the development's current finances and insurance and on any restrictions on the renovation or use of the subject property.
NOTE: conditions may also be inserted for the benefit of the Vendor:
This offer is conditional on the removal by the Purchaser(s) of all subject-to clauses within 72 hours of receiving written notice by the Vendor of an unconditional bona fide backup offer, failing which removal, this offer will become void and all deposit monies shall be returned to the Purchaser(s). This condition is inserted for the benefit of, and may be waived at the sole option of, the Vendor.
This offer is conditional on the Vendor's receiving within 5 business days of the acceptance of this offer, written confirmation from the Vendor's bank that all liabilities of the Vendor relating to the existing first mortgage shall cease upon said mortgage being assumed by the Purchaser(s).

vendor List the full names and contact information for all persons who are part owners of the property.

warranties Some examples:
The Vendor warrants that both the roof and basement of the house are leak-free.
The Vendor warrants that all appliances included in the purchase price will be in good working order as of the possession date.
The Vendor warrants that the heating, plumbing and electrical systems of the house meet current regulatory standards and will be in good oworking order as of the possession date.

Š1998 PrivateList