At this stage you will need to enlist the services of a real estate lawyer or a notary. The notary or real estate lawyer is a professional you hire to help you with the contract and other legal documents involved in a real estate transaction. Note that even if you were selling through the MLS and with the help of a realtor, you would still require (and pay for) the services of a real estate lawyer or notary. Discuss with the legal representative that you've chosen what service they provide and the associated costs.
It is important to be upfront with the potential buyer from the start, you don't want things to fall apart later because of any surprises. Advise the buyer of any deficiencies, easements or tenancy and also whether GST applies to the sale. Your legal representative can help with these and other questions.
I. The Offer:
Your hard work has paid off; you have an interested buyer that is ready to make you an offer. An Offer to Purchase is a written contract that specifies the terms under which the buyer agrees to buy. An Offer to Purchase (also known as a Contract of Purchase and Sale) can be bought at most stationery and office supply outlets or they may be available from your legal representative.
Self Counsel offers a package of forms for sale, they can be downloaded from the Self Counsel Website. It may be in your best interest to have a few blank copies yourself, in case an inexperienced buyer is uncertain where to start.
The Offer to Purchase is presented by the buyer to the seller and normally specifies the following:
- Purchase Price
- Amount of Deposit - money placed in trust by the buyer and usually held by the seller's legal representative until closing date when it is given to the seller
- Dates for Completion, Adjustment and Possession
- Completion Date - also known as the Closing Date - must be a business day- the date that ownership/title is transferred from the seller to the buyer
- Adjustment Date - also known as the Date for Proration - for property taxes, utilities, insurance, liability any prepaid house expenses
- Possession Date -- the date when the new owner takes possession (and keys)
- Fixtures and Chattels - specifies Items Included in the Purchase Price and Items Excluded from the Purchase Price
- Conditions or Subjects - fully understand each condition that is specified and that it is clear how and when the condition is to be removed. Talk to your legal representative about each of them. More on conditions later in step III.
You have three options when you are presented an Offer to Purchase:
- Reject the Offer - unless the offer is ridiculously low you should always counter offer
- Counter Offer - if any of the terms in the buyer's offer are unacceptable make a counter offer. All of the terms in the Offer to Purchase are negotiable.
- Accept the Offer - before accepting any offer, review the offer with your legal representative
III. Accepting The Offer And Removal Of Conditions:
If you decide to accept an offer, ensure that you review it with your legal representative before signing. Even though you have accepted the offer, the conditions have to be removed before the sale can proceed and the deal can be closed.
Common Conditions or Subjects are:
- Subject to financing - as part of this condition the buyer's lender will normally order an appraisal
- Subject to a satisfactory home inspection (paid for by the buyer)
- Subject to the seller providing a satisfactory PCDS (Property Condition Disclosure Statement) your lawyer/notary can assist you
Ensure that the conditions are taken care of promptly. Each of the conditions will have a date by which they must be removed for the sale process to continue. Make sure that conditions are removed by the dates specified.
If you are purchasing another property an important consideration is coordinating the closing dates in the contracts. Discuss this with your legal representative prior to signing any of the contracts.
Once all the subjects/conditions have been fulfilled they must be removed from the contract in writing. Visit your legal representative to sign the documents. It is the seller's responsibility to provide clear title by the closing date. Discuss with your legal representative the documents that you need to supply and what you are responsible for on closing. You don't want any last minute surprises.