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What should a buyer put into an Agreement of Purchase and Sale?

Homebuyers often think that the only important part of their offer to purchase ids the price they are offering to pay. You should also be thinking about how to protect yourself if something goes wrong.

  • If you're selling at the same time you are buying, you may be worried about ending up with two houses if your offer is accepted but you haven't sold. You can put a clause into your offer that is conditional on your being able to sell your current house within a stated period of time. If you try to but don't sell your house within that time, you don't have to go through with purchasing the new house.
  • If you need a mortgage to buy the new house and you haven't been pre-approved by a mortgage lender, you don't want to be legally bound to buy unless you get financing. Put a clause in the offer that is conditional on your being able to get financing in a stated amount and at a stated interest rate. If you can't get the mortgage you need, then you don't have to complete the deal.
  • If you'd like to be able to assume the vendor's existing mortgage on the house in order to finance your purchase, you'll need the mortgage lender's approval first- and it will take a few days to get an answer from the lender. Write in to the offer that it's conditional on your being able to assume the vendor's mortgage. Or if you want the vendor to help you finance the purchase, you can put in a clause by which the vendor agrees to take back a mortgage from you for a stated amount.
  • Even if you've looked the house over thoroughly, it's a good idea to get the opinion of a qualified home inspector. Make your offer conditional on satisfactory report from an inspector. If the house is in bad shape you may be able to get out of buying it.
  • If you are nervous that the house may be trashed by the vendor and his wild kids between the time of the offer and the closing date, put in a clause allowing you to inspect the house immediately before closing to make sure there's been nothing more than "normal wear and tear". Unless it's a disaster zone you won't be able to get out of the deal, but may be able to negotiate a reduction in the purchase price.

The vendor may be less interested in a conditional offer-especially if others are putting in offers that aren't conditional. Ask your lawyer or real estate agent for advice about putting conditions into your offer.

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Toronto Real Estate Board.

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