Purchase and sale agreements - learn the 5 most important clauses

Buying a home in the Comox Valley is an exciting time. It can also be stressful and even confusing. There is legal documentation, bank information, and administrative procedures to coordinate when buying a property. With all of that, you are likely to come across a few words you may not understand.

Before you sign on the dotted line, review these five important terms that every buyer and seller should know.

Note: Purchase and sale agreement terminology and practices may vary by region.

Closing date:

The closing date is also referred to as the completion date. It is the day the buyer officially becomes the new owner of a property. At this time all necessary legal and financial parts of the transaction are completed. Typically a couple of days before the closing date, there are a couple of things that take place. The buyer will sign their mortgage loan and property title documents. The buyer will also provide the balance of funds to their lawyer to complete the purchase. The closing date is often the day before the possession date. Sometimes the closing and possession dates are the same, but that will vary depending on circumstances. The possession date is the day the new owner (buyer) receives the keys to the home.

Deposit:

When a buyer submits an offer, they include a deposit. The deposit is taken at the time of the offer or within a certain number of days after an accepted offer. The amount varies in different areas. A deposit demonstrates that the offer is made in good faith by the buyer. The deposit is provided to the buyer’s real estate brokerage upon acceptance of the offer and is held in trust until the closing date. The deposit is applied toward the total purchase price.

Irrevocable date and time:

When submitting an offer to purchase, there is a limited amount of time for which that offer remains open. This is known as the irrevocable date and time. By this specific day and time, both the buying and selling parties are required to agree to the terms and conditions of the offer or sign off on it. If this does not happen, the offer becomes null and void. An irrevocable date can vary depending on the urgency of the transaction. As well, it is often dependent on the availability of all parties and how much time is deemed appropriate for the contents of the offer to be reviewed. Usually, it can vary from a short couple of hours or up to 48 to 72 hours from the time the agreement is submitted.

Chattels and fixtures:

When buying a home, how do you know if the curtain rods, stove, or garage door opener is included in the sale? The chattels and fixtures section of the purchase and sale agreement will tell
you. Chattels are any items that are considered removable from the property, such as kitchen appliances, curtains and the washer and dryer. A fixture, on the other hand, is permanently attached to the property, such as a built-in microwave, cabinets, a security system or a built-in dishwasher. When the buying party has an offer drafted by their realtor, it’s important to clearly state what they wish to have included in the sale. If items are not included and agreed upon, it’s presumed that the previous owner will take any and all chattels with them.

Anything the sellers do not want to include should be specified in the listing. Some things, such as built-ins, outdoor plants and special light fixtures, can fall into a gray area. It can be time-consuming and stressful if there are disputes between buyers and sellers over what stays and what goes. The best way to avoid this is to get it in writing.

Clauses and conditions:

Each purchase and sale agreement includes a list of assurances that the seller and/or buyer sign off on, which are known as clauses. Some clauses are not as important as others, such as acknowledgment that square footage is approximate. Conditions, however, are very important and must be completed within a specific time frame for the home to be officially sold. For instance, a conditional sale can rely on a professional inspection of the property within a certain number of days of the offer’s acceptance. This means the inspection would need to be completed, approved, and signed off on by the buyer for the sale to go ahead.

It is best to review any terminology that you do not understand in the Contract of Purchase and Sale with your REALTOR – Get in touch with Janice to learn more!