Buying a home is one of the biggest investments you’ll ever make. It’s in your best interest to learn about the implications and considerations that can be involved. This article explores basic concepts and presents situations that may come up when you sign a promise to purchase.
No, they are the same. The term “offer to purchase” is often used, but the correct term is actually “promise to purchase.”
It is a contractual document where the buyer makes the seller a formal offer to purchase their property. The offer includes a proposed purchase price and certain terms and conditions for the transaction to take place.
If the seller agrees to the proposal, they sign it and return it to the buyer.
If you work with a real estate agent, they can help you fill out your offer to purchase. If you do it alone, you’ll find templates on the web that you can tailor to your situation. All offers to purchase should at least include the following clauses:
The property address and unit number, if applicable. As with any contract, you also have to enter your name and contact information, as well as the seller’s. You can also add a description of the property.
This is where you indicate your proposed purchase price to the seller, which can either be the asking price or a number that’s higher or lower.
In some markets and situations, multiple buyers may put in offers above the asking price (overbidding) in hopes of beating out other potential buyers.
The payment terms and schedules are also outlined in this section.
This is where you lay out the conditions that are important to you before you buy the property. Below are a few other clauses typically included in a promise to purchase:
Pro tip: Take the time to do your homework and really think about the conditions you want. If you ask for too much, the buyer may decide to pass on your offer. On the other hand, if you dispense with them entirely, you could be stuck buying the house even if it no longer meets your needs.
You ask the seller to provide you with their valid deed (or title) and certificate of location. That way, you know you’re dealing with the actual owner of the property.
The seller must also agree to deliver the property in the same condition it was in and in accordance with any conditions listed in the offer.
If you have to take out a mortgage, you will need to commit to getting confirmation of the loan, usually within 3 to 10 days.
This is where you indicate when the seller must vacate the premises so you can take possession of the property.
This section is where you give the seller a specific amount of time (usually between 24 and 72 hours) to accept or reject your offer to purchase or else it will be cancelled. The offer to purchase also usually includes time limits for satisfying conditions and meeting with the notary.
Not usually: Once the offer to purchase has been accepted and signed, it is irrevocable. If the buyer fails to uphold their commitments, the seller can sue for breach of contract. It’s important to be absolutely sure before signing and submitting an offer to purchase.
However, there are a few exceptions that could revoke your offer:
The seller’s declaration is a legal document the owner is required to complete to provide a comprehensive overview of the condition of the property for sale. This form is available free of charge from the Organisme d’autorégulation du courtage immobilier du Québec (OACIQ). The seller must communicate this information honestly and to the best of their knowledge. The seller’s declaration is an important tool that protects both parties against hidden defects and possible recourse.
For example, the seller must indicate if there have ever been any water infiltrations and when they were repaired, or if the house had to be underpinned due to subsidence.
This is a defect affecting the property that is serious enough to reduce its value or prevent the buyer from taking full advantage of it. To be a latent defect, the problem must generally be difficult to detect and must exist at the time of purchase.
Pro tip: Be very careful and investigate further if you suspect a problem. It is also a good idea to have the property inspected by an expert to avoid such situations.
Under the Civil Code of Quebec, houses are sold with a guarantee of quality. Sellers of a property are therefore required to guarantee it against any latent defects except those they have been declared. However, to avoid this obligation, they can sell the property without a legal guarantee. In this case, the buyer will have no recourse against the seller if a latent defect is found. This is a risk you have to be prepared to take.
An easement is a right granted by the owner of one property to the owner of a neighbouring property. For example, a person who owns a lakeside home may allow their neighbour to use their property to launch their rowboat.
It is important to know about any easements because they can reduce the value of the property you want to buy.
Keep in mind that for an easement to be enforced when a property is sold, it must be established by contract or will and be published in the Quebec Land Register.
In short, the offer to purchase is the first step in a process that can take weeks. It is a vital document that establishes your agreement with the seller, protects you and lets you add any conditions you may have. By carefully following the procedure, you’ll avoid unpleasant surprises and enjoy greater peace of mind when you seal the deal.
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