CONDITIONS AND THE AGREEMENT OF PURCHASE AND SALE
Prior to signing the Agreement of Purchase and Sale, a purchaser should obtain legal advice to ensure that the Agreement is complete and that the appropriate Schedules and Conditions are included.
When making an offer to purchase property, the buyer is acting on limited information. Typically, the buyer has viewed the property a few times and has an estimate of the property value. Similarly, a seller usually can't determine the buyer's ability to pay for the property before accepting an offer. To avoid these and other uncertainties, real estate agents and lawyers insert conditions into the Agreement of Purchase and Sale.
A condition usually states that the deal is off if a given outcome does not occur prior to closing. Some conditions give one side the opportunity to correct a problem before the the deal falls through.
The following are examples of conditions that can be added to an Agreement of Purchase and Sale.
| Conditional upon Arranging a New Charge/Mortgage | Allows the buyer to back out and have the deposit returned if he/she is unable to finance the purchase |
| Condition: Assumption of Existing Charge/Mortgage (Chargee/Mortgagee Approval) | Requires that the buyer assume the seller's existing mortgage |
| Conditional upon Sale of the Buyers Property | Makes the deal contingent on the buyer selling their previous home |
| Escape Clause (Removal of all Conditions) | Allows seller to sell the property to another buyer (typically included if clause 3 above is included) |
| Conditional upon Inspection - Seller Allowed to Remedy | Makes the deal conditional on the buyer arranging a home inspection that is satisfactory to him/her. |
| Conditional upon Review of Condominium Documents | Makes the deal conditional on the buyer's satisfaction with the status certificate, last annual financial statements, current budget, Declaration, by-laws, rules, management agreement and insurance certificates. |
| Conditional on the buyer’s lawyer deeming the offer to be satisfactory | This is sometimes included when there isn’t enough time for the buyer’s lawyer to review the offer prior it being made. |
| Seller Agrees to Provide Existing Survey with Declaration | Declaration is that there were no changes to the property since the survey was completed. |
| Conditional upon Obtaining Insurance | Makes the deal conditional on obtaining insurance for the property to the buyer’s satisfaction. It's not usual to include this condition unless the buyer has reason to believe that it will be difficult to obtain insurance for the property. |
| Conditional upon Obtaining Fire Insurance | Useful for older homes which might be difficult to ensure for fire. |
| Conditional upon obtaining permission for the change of use or being able to determine that the current zoning will permit intended use | Useful if the buyer intends to use a property for a particular use that the seller advertises. |
| Conditional upon determining that the sewage and water systems are appropriate | Typically not included in urban areas. |
| Conditional upon obtaining consent to sever the property | Useful if the buyer intends to sever the property after purchase. |
| Condition regarding an Oil Tank - Aboveground or Underground | This condition usually states that the buyer must be able to obtain a report from a fuel oil distributor that the tank is in a safe operating condition. |
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