Agreement of Purchase & Sale Review in Ontario

Conditions are your only exit

Once an offer is accepted, it is a binding contract. The conditions written into it are the only circumstances in which you can walk away without consequence, and each one has a deadline that is enforced strictly.

• Financing. Not a pre-approval, a firm commitment from the lender for this property. Lenders decline on appraisal all the time, and a buyer who waived financing is bound regardless.
• Home inspection. Usually five business days, and worth having on any resale property.
• Status certificate review. Essential for any condominium. Typically ten business days, since the corporation has ten days to produce the certificate after payment.
• Sale of the buyer’s existing home, with or without an escape clause allowing the seller to continue marketing.
• Lawyer’s review. Where an offer must be submitted immediately, a short review condition preserves the ability to get advice.
• Water and septic for rural properties, and confirmation of permits for any work that has been done.

In a competitive market, buyers are routinely pressured into unconditional offers. That is a commercial decision you are entitled to make, but make it knowing that if the financing falls through, the deposit is the beginning of your exposure, not the end of it.

What the deposit really is

The deposit is not a cancellation fee. It is part payment, held in the listing brokerage’s trust account, and it is only the first measure of what a buyer loses on a failed closing.

Where a buyer fails to close, the seller can keep the deposit and sue for the difference if the property later sells for less, plus carrying costs and the expenses of reselling. Ontario courts have awarded substantial judgments against buyers who walked away from firm deals in falling markets. A deposit that felt like the extent of the risk can turn out to be a fraction of it.

Dates that cannot slip

• Condition deadlines. Miss one and the condition is either waived or the deal is dead, depending on how it is drafted. There is no grace period.
• The requisition date. The last day your lawyer can raise objections to title. After it, most title issues become your problem.
• The closing date. Failing to close is a breach, exposing the defaulting party to damages.

This is why instructing a lawyer at the offer stage rather than two weeks before closing matters. The title search, the searches of the municipality and utilities, and the raising of requisitions all have to happen before that requisition date.

What we check on a purchase

• Title: ownership, registered easements, restrictive covenants, liens, and executions against the sellers
• Whether the survey or title insurance adequately covers boundary and encroachment risk
• Municipal compliance: zoning, work orders, outstanding permits, and open building files
• Unregistered interests, tenancies, rights of way, and unregistered easements
• Realty taxes, utility arrears, and anything that could become a lien on title
• Chattels and fixtures: what is actually included, and whether anything is under a rental contract
• Rental equipment: hot water tanks, furnaces, HVAC, and water softeners, and whether the buyer is assuming those contracts
• Whether the seller is a non-resident of Canada, which triggers withholding obligations under section 116 of the Income Tax Act
• HST: new builds, substantially renovated homes, and any property used commercially