Making An Offer
When you have found a home that meets your personal and financial criteria, you will be ready to make an offer. Now you need a lawyer – an experienced real estate lawyer and preferably one knowledgeable about the purchase of newly constructed homes and condominiums.
If you don’t have a pre-qualified mortgage, you will also need a financial institution on your team. Mortgages are discussed later.
Agreement of Purchase and Sale
The document that details every aspect of your purchase is the Agreement of Purchase and Sale. Everything that is included, such as appliances, must be listed. This is the document that establishes the closing date, which is when you take possession of your new home. This is a legal document that you should never sign without the advice of your lawyer. For freehold homes, many of our members use the standard BILD Agreement of Purchase and Sale – if not, you can request it – which has stood the test of time, was updated recently, and is familiar to real estate lawyers.
Make sure that anything said by your sales representative or shown on marketing materials is reflected in this agreement.
If you are purchasing a condominium, you will have a few other issues to be concerned with, including your occupancy closing (when you take possession of your unit) and the building registration (when the condominium is registered as a corporation and when you receive title). Note also that as a condo purchasers you have a 10-day cooling off period, providing you sufficient time to review all of the documents with your lawyer.
You can make a firm offer (you will be bound once the seller accepts) or a conditional offer (valid only if certain conditions are met, such as securing financing, selling your existing home or getting a satisfactory building inspection). If the builder changes the offer by making a counter-offer, you will have a specified amount of time to accept or make your own counter-offer.
Whatever kind of home you purchase, usually a 5 to 15 per cent deposit is required along with the offer. This is an advance on your down payment to prove that you are serious. Builders require the deposit in order to protect themselves from building a house, which can take several months, and the purchaser not closing.
The province's warranty program (TARION) guarantees deposits up to $40,000 for a freehold home and up to $20,000 for a condominium. The Condominium Act further requires that all deposit money be put into a trust fund that the builder can access only after buying an insurance policy.
Before you sign the Agreement of Purchase and Sale, even with your lawyer’s review and approval, check that the document accurately reflects your understanding. For instance, is the price exactly as negotiated with the sales representative? Is the lot, unit or model correctly identified? Are all the extras you negotiated or purchased specifically included? Most agreements call for staged payments of the deposit, so ensure that the agreement reflects your understanding of when the various payments are due. It is common for the builder to ask for post-dated cheques for staged deposits.
Finally, make sure the closing date is correctly stated and be aware of the irrevocable date, which is how long the offer is valid for.