Review in Advance
Review in Advance – Protecting Your Interests
A real estate agent will normally have all the necessary forms you will require to make a deal, and will quite often review them with you at the time of the listing. It is very unusual for a lawyer to be involved in the negotiation or writing of the contract. This is what your real estate agent has been trained to do.
If you are selling a home privately without the help of a realtor, talk to a lawyer first. A lawyer will help you review the Offer to Purchase and assist you to complete any Counter-Offer you may wish to make.
A lawyer will also ensure that when all conditions, if any, are removed, the purchasers acknowledge in writing that the agreement is binding. This is done by completing a Removal of Condition form or by way of correspondence between the respective lawyers.
Occasionally a buyer attempting to complete the Offer to Purchase document on their own will not complete important items or will fail to properly list specific terms that are advantageous to the seller.
If a proper review is not conducted by either your lawyer or realtor before you endorse the acceptance section on the document, you may wind up with a very unsatisfactory contract or perhaps no contract at all. Therefore, speak with your realtor or lawyer first and ask questions. Either person will help you avoid such pitfalls.
Conditions and Inspections
Conditions and Inspections – Fine State of Affairs
A conditional offer is designed to allow the purchaser the right to not proceed with the deal if any one of the conditions cannot be met or satisfied. If a conditional offer is accepted but the conditions cannot be removed despite everyone’s best effort, then the purchaser is entitled to a return of all the deposit money.
Conditions a seller may see in an Offer to Purchase include:
– the purchaser is able to sell their own home first
– the purchaser is able to arrange a mortgage sufficient to complete the sale price
– the seller’s home is professionally inspected and found to be in satisfactory condition
– specific items such the furnace or a swimming pool pass inspection
– the seller provides a written statement called a Property Condition Disclosure Statement disclosing their knowledge of the condition of the property.
– the seller provides an acceptable surveryor’s certificate/real property report
An Offer to Purchase may also be conditional upon the seller having to make certain repairs to the property or provide proof that the location of improvements, like a detached garage, was not constructed over a buried gas or telephone line.
Depending on the type of property, additional conditions may be requested such as a well-water quantity and quality test or confirmation that a septic system was installed properly, according to municipal by-laws. There may also be a condition that it be confirmed that there are no environmental concerns with the property.
There might be many conditions that a purchaser could make depending on the situation. If the conditions require the seller to perform some task, once it is completed, the seller should ensure the purchaser knows this has been performed so the condition is removed promptly.
The purchaser may want to inspect the property again shortly before the move in date. Usually, this is not a problem. Allowing access to your home after the contract is completed so that a purchaser can plan renovations or make moving arrangements easier is done out of courtesy, but the seller is not obligated to do so.
When moving out, be careful not to cause damage to the property. The purchasers are entitled to receive the property in basically the same condition as they saw it at the time they made their Offer to Purchase. If there are new holes in the walls or broken banisters that resulted during the move, the sellers will be obligated to compensate the buyers for the costs involved in repairing the damage.
Possession Date – Turning Over the Key
This is the day the seller is supposed to move out of the house so the buyer can move in.
A seller should not give the keys directly to the purchaser. The only person to receive the keys is the seller’s agent. The seller’s agent will check to ensure everything is in place before releasing them to the buyer or the buyer’s agent.
If you plan on purchasing a new home with the money coming out of the sale, you will want to pick a possession date that enables you to receive your sale proceeds in time to buy your next house while still keeping your “move out” and “move in” dates relatively close. Picking these dates is a bit easier when you have a realtor helping you.
For example, if the sellers have a move out date of August 1st but are not scheduled to take possession of their new house until August 20th, this can be problematic.
If the possession dates for the sale and subsequent purchase are not properly considered at the time the Offer to Purchase is made, the sellers may have to stay in a hotel, eat at restaurants and temporarily store their personal property somewhere until they are able to move into their new home. In effect, the sellers would be really moving twice and typically, there are additional expenses associated with having to do so.
In other instances, the sellers may buy a house with a possession date earlier than the possession date on the sale. For example, the sellers may be entitled to move into their new home on March 1st but they are not expecting to receive any money out of the sale of their old home to complete the purchase until April 1st.
While this scenario means the sellers can easily move into the new home without the above considerations in mind, it does present problems of a financial nature that need to be addressed.
Items Included in the Offer to Purchase
Table of Contents
A section of the Offer to Purchase details what items are normally included as standard in the sale price of the house, such as blinds and draperies. If you want to include additional items as part of the deal, you must list them in writing in this section. Any deletions can be listed as part of a Counter-Offer.
The seller should avoid making verbal arrangements regarding what items are included in the sale price. In the event of a dispute, there will obviously be no record of what the “real” deal was. Verbal arrangements complicate things and make your deal rather difficult to enforce.
Items that buyers may request be included in the sale price of the house are:
– an up-to-date Real Property Report or Surveyor’s Certificate, if one is available
– appliances like a garborator, dishwasher, washer, dryer and refrigerator
– a garage door opener with all remotes
– the attachments to a power vacuum system
– a garden or utility shed
– certain unique “as is” features of a house like a chandelier or custom landscaping.
Making sure these kinds of items are agreed to in writing will help prevent hard feelings after the deal is done.
Representations – Defining the Property
A real estate listing includes a number of statements that expressly describe the main features of a house. When the listing is made public, it becomes a representation the seller has made about the house in order to attract a buyer.
A representation can be made either in writing or while having a conversation with potential buyers. They can be rather general or quite specific in nature. Representations are generally made to induce a potential buyer to enter into a binding contract. The seller must describe the features of the property as accurately as possible to the best of their ability.
Do not make careless or dishonest representations. If you engage in this kind of activity, you could be sued later by the purchaser.
Warranties – Be Cautious
When a home that is not new is sold, warranties are seldom, if ever, given to a purchaser by the seller. You are essentially moving on and leaving this property behind.
Sellers will not typically warrant that certain items are and will be free from defect for a certain time after they move out of the house. Doing so would obligate the sellers to return and repair the item personally or arrange to have it replaced with a similar item of equal value. This kind of guarantee is simply not contemplated as part of a normal sale transaction on a used home.
We strongly recommend that a seller not give a purchaser warranties about any item or condition of the property being sold unless you are fully prepared to stand behind them. Warranties are different than representations – if you give a warranty on some item or condition, the purchaser can rely on it completely.
Condition of the House
Condition of the House – Just the Same
The seller must leave the property in basically the same condition it was in at the time the Offer to Purchase was made. There cannot be fresh damage that catches the purchaser by surprise such as burn holes in the carpet or cabinetry removed. Similarly, a seller cannot switch items such as a dishwasher or hot water tank that was included in the sale of the property with a similar item that is older and less valuable. Doing something like this may result in the purchaser making a claim against you in court.
It is also extremely poor taste to leave the house without light bulbs, in a filthy condition or without the grass having been cut for a long time. We receive calls from clients on this issue far too often.
In many cases, the purchasers are buying a home for the first time. They are excited and looking forward to the experience. They are not expecting to move into a mess. Also, the moving company will likely be on a timeline to perform a job for a certain price. If it takes longer to complete the move because of problems left behind by a seller, the purchaser may be put to an unnecessary expense. Depending on the circumstances, a claim may be made against a seller related to clean-up expenses.
Moving into a “new” home should be a happy occasion for everyone. Take some time and wash out the cupboards and clean the carpets before the possession date. If you promised to remove junk from the basement and back yard, follow through on that. These are simple matters of courtesy that you will expect of others as you move into your next home.