BUYING YOUR HOME:
THE FIRST STEPS TO AN AGREEMENT

Introduction
This brochure discusses some of the major steps and decisions made by you in consultation with your real estate agent and/or lawyer leading up to the final execution of an Agreement of Purchase and Sale.

After reading this brochure, we suggest reading our brochure entitled "Buying Your Home - The Steps Following the Agreement," which discusses some of the major steps and decisions made by you and your lawyer from the time at which the Agreement of Purchase and Sale is signed to the time at which the transaction will close.

Agreement of Purchase and Sale (the "Offer To Purchase")
This binding legal contract sets out the obligations of the Buyer (the "Purchaser") and the Seller (the "Vendor") . It governs the conditions and price and terms at which the house will be purchased. It is the blueprint for the transaction. Either the real estate agent or the Vendor's lawyer prepares it.

The Agreement is generally first presented by the Purchaser or his/her agent to the Vendor as an offer. It will specify an "irrevocability" time and date, which is the time and date upon which the offer will be void unless it is accepted by the Vendor within that time period. Before the expiration of this time period, the Purchaser cannot withdraw the offer. The Vendor may accept or ignore the Purchaser's offer, or may present to the Purchaser a counter-offer in the same form Agreement of Purchase and Sale with a new irrevocability date. Where a counter-offer is made by the Vendor, the Vendor cannot withdraw it before the expiration of the new time period, and the Purchaser now has time to consider whether to accept, ignore or counter-offer. This can go back and forth until an agreement is reached or until one or both of the parties realize that an agreement between them will never be reached.

Once an offer or counter-offer is accepted, the Agreement of Purchase and Sale becomes a binding legal contract. A deposit amount is often specified in the Agreement as payable upon acceptance. Cancelling the Agreement may be a breach of contract. The person cancelling it can be liable for any loss, costs or expenses the other party reasonably incurs because the sale did not go through. Do not try to cancel the transaction without discussing it with your lawyer first! Only if there are conditions in the Agreement which are not satisfied can you cancel it without the consent of the other party.

Two other times and dates are specified in the Agreement of Purchase and Sale. The first is the completion date, upon which date the transaction will "close" – i.e. all legal documents, money and keys will be delivered between the parties' respective lawyers and the transfer will be registered in the municipal land registry office. The parties should not schedule for a Saturday, Sunday or statutory holiday as the land registry office will be closed on such days. The final time and date indicated in the Agreement is for the Title Search and is also known as the "Requisition Date". This is the time period in which the Purchaser's lawyer will search title and make all relevant inquiries to determine whether there are any deficiencies in title, zoning problems, municipal work orders, liens or other such matters to contend with. Where possible, you should ensure that there is sufficient time for your lawyer to conduct such matters. In any event, you should ensure that either you or your agent delivers a copy of the signed Agreement of Purchase and Sale to your lawyer as soon as possible in order that your lawyer may have sufficient time to conduct such searches and inquiries.

Review the Agreement of Purchase and Sale with us before signing it. We can advise if something should be added or changed to protect you.

Chattels
Chattels do not remain with the house unless they are specifically included by the Agreement of Purchase and Sale. Typical chattels are: refrigerator, stove, dishwasher, washer, dryer, hot-tub, furniture, window coverings (drapes, curtains, blinds). A chattel is anything that is not affixed, or fastened to the land or building. Ensure that those chattels that you wish to purchase along with the house are specifically included in the Agreement. Furthermore, consider providing for a warranty in the Agreement that such chattels are in "good working order". Without this warranty, the Vendor will not be responsible if any or all of the chattels do not work on the closing date. The Vendor may or may not agree to provide this warranty, but it is often better to make the demand in your offer and let the Vendor decide.

Fixtures
Fixtures remain with the house unless they are specifically excluded by the Agreement of Purchase and Sale. Typical fixtures are: television antenna, air conditioner, central vacuum, satellite dish and satellite receiver, light fixtures and light bulbs, toilet paper and towel holders, curtain rods (but not usually the curtains), blind holders (but not usually the blinds), exhaust fans storm windows and screens, trees and shrubs, flowers, vegetables. A fixture is anything which is "affixed", or fastened to the land or building, with the intention that it should be part of what it is fastened to. The Vendor must leave these in place, in the same condition they were in when he or she signed the Agreement of Purchase and Sale.

Warranty and Home Inspections
For Used Homes: There is no warranty. The legal phrase is "Caveat Emptor - Let the Buyer Beware!" Check the house carefully before signing the Agreement of Purchase and Sale. If you have any concerns, have the house checked by a home inspector or contractor. If you do not wish to have the house checked before entering into an Agreement of Purchase and Sale, consider instructing your real estate agent or lawyer to include in the Agreement of Purchase and Sale that the transaction is conditional upon a satisfactory home inspection report. Otherwise, you take the house "as is".

For New Homes: Builders of new homes must enroll them with the Ontario New Home Warranty Program which gives protection from major defects for five years from the date of purchase.

Rural Properties
Check the septic system and ensure that it works satisfactorily before signing the Agreement of Purchase and Sale or require that the Vendor warrants that the system works satisfactorily in the Agreement of Purchase and Sale. An inspection costs several hundred dollars and may result in costly repairs, and if the Agreement of Purchase and Sale does not cover the matter, you may have to pay for them! It is not our practice to request an inspection of the septic system unless the Agreement of Purchase and Sale specifically provides for it.

Water quality can be tested by obtaining a kit from the health authorities well in advance of closing. Banks and Trust Companies giving a mortgage on the property often require a water quality certificate before lending the money.

Multiple Residential Uses
In the usual circumstance, a municipal zoning by-law will govern the use permitted in a home. If you are contemplating a multiple residential use for your new home or if it already exists (i.e. a home with a basement apartment that appears ready to rent out), you should ensure that it is legal.

Fire Code regulations under the Fire Marshals Act affect multiple occupancy buildings. Whether such use exists or is contemplated in your property, there will be safety standards to meet, the cost of which may be prohibitive.

Mortgages
The loan that the Bank or Trust Company gives you to purchase the house is called a mortgage or charge. The lender is called the "mortgagee" and you are the "mortgagor". (Sometimes "chargor" and "chargee"). It is a security to ensure that the mortgagee gets paid, and gives the mortgagee substantial rights and control over the property.

Where you require a mortgage, but do not have confirmation by a bank or trust company of such financing, ensure that you instruct your real estate agent or lawyer to include in the Agreement of Purchase and Sale that the transaction is conditional upon you obtaining the mortgage. This condition will likely include a limit as to the time you have to make such arrangements, and you should therefore make your application to your bank or trust company as soon as possible.

For more information on buying your home, please see our brochure for The Steps Following the Agreement.

Revision Date: November 9, 2001

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NOTE: This brochure provides general information and is not intended to be a legal opinion. Readers are cautioned not to rely on this information without obtaining legal advice with respect to their own circumstances.