Understanding A Real Estate Offer
There's a lot of misunderstanding about what a Buyer's obligations are/may be when they make an offer on a residential real estate property in Ontario. Here are some examples of things buyers often ask (or worse, just assume)
1. IF WE CHANGE OUR MINDS WE CAN ALWAYS PULL OUR OFFER BACK, RIGHT?
The answer is no you can't. If your written offer has been presented to the Seller (or even in the possession of the Seller's agent), your offer is "live and real" until the expiration of the Irrevocable time specified in your offer. If the Seller signs and accepts your offer, you're committed to the contract. An exception to this is a new build condominium where the law permits a 10 day cooling off period.
2. WE HAVE A HOME INSPECTION CONDITION. WE CAN ALWAYS FIND SOMETHING WRONG TO GET OUT OF THE PURCHASE, RIGHT?
The short answer is probably not. Until recently, home inspection clauses contained language saying the offer was conditional on receiving a "satisfactory report on home inspection in the sole and absolute discretion of the Buyer". A ruling by the Supreme Court of Canada (Basin v. Hrynew) has changed that. It obligates principals in a contract to complete their obligations in good faith under that contract. Unless there is some major latent (hidden) defect discovered that would have caused the Buyer to make a different decision, you're obligated to continue the transaction.
3. IF WE CHANGE OUR MINDS WE AUTOMATICALLY GET OUR DEPOSIT BACK, RIGHT?
The short answer is it's not automatic. Return of a deposit depends on Buyer and Seller agreeing in writing to release each other from a contract. If you have a firm deal (conditions removed), and attempt to cancel a deal, or fail to close as agreed, it's quite possible you will not see your deposit back. The Seller can make an application to court for the deposit to be directed to them as damages for your failure to close, and it's highly likely they will get it.
4. WE NEED TO CHANGE THE CLOSING DATE BY A MONTH. WE CAN DO THAT, RIGHT?
Possibly, but not unilaterally. It can only be done in writing, and with the agreement of both Buyer and Seller. It can be done by an Amendment of the Agreement of Purchase and Sale, or by another instrument generated by the lawyers representing the Buyer and the Seller.
5. OUR AGENT FORGOT TO PUT THE FRIDGE AND STOVE IN THE AGREEMENT, BUT THEY'RE ON THE LISTING, SO WE GET THEM ANYWAY, RIGHT?
No. The only document that matters here is the Agreement of Purchase and Sale. If it's not in the Agreement, it's not part of the deal.
6. WE'RE BUYING A CONDO APARTMENT, SO WE DON'T NEED TO PUT IN ANY CONDITIONS, RIGHT?
Professional advice is you should ALWAYS have a home inspection. If you choose not to, you should sign a waiver (Form 127) that you are acting against our advice. Our experience is that inspections have revealed many important issues in condo apartments related to health and safety, and structural integrity. Another important consideration is your lawyer's examination of the condo documents, called the Status Certificate. When you buy a condo, you're buying into the financial condition and obligations of the condo corporation. Legal advice is important here!
When you sign an Agreement of Purchase and Sale, you are signing "under seal". A seal on a contract is a solemn commitment, a pledge to go forward. You will be held to its terms. You need professional advice from a REALTOR® and, in some cases, your lawyer BEFORE you commit to signing an offer.