Going on the hunt for a new home is likely one of the most exciting adventures in a person’s life. Putting pen to paper and signing an offer to make the purchase official can make your heart race and your palms sweat. That excitement can quickly turn to anxiousness should you realize something may be amiss with the house or that perhaps you are over your budget.
So, what happens when a purchaser wants to get out of an Agreement of Purchase and Sale?
Provinces regulate real estate laws via individual real estate boards. In Ontario, the Ontario Real Estate Association (OREA) speaks to legal documents like an Agreement of Purchase and Sale. Once a seller agrees to an offer from a purchaser and the documents bear the signatures of those involved in the deal, it becomes a legally binding document and is difficult to rescind unless there are conditions in the offer.
How Conditions Can Help
When an offer contains certain stipulations or conditions, it may give you a way out of a deal. You may safeguard yourself by making the offer conditional upon:
- Adding a financing contingency. If you cannot secure financing as specified in the agreement, you may have the right to terminate the contract
- Adding a home sale contingency. If you cannot sell your current home before buying the new home you may have the right to back out of the deal
- Adding a home inspection contingency. If the inspection reveals significant issues that were not previously disclosed, you may have the option to cancel the agreement or negotiate the listing with the seller
If you waive all conditions in an offer and still choose to walk away from the deal, you will likely lose any deposit you put down. There is also the potential that if the seller takes a financial blow because of a loss of the deal, he/she could attempt to sue the buyer for damages.
Cooling Off Period For Condos
In Ontario, there is a cooling-off period for certain types of real estate transactions, including agreements of purchase and sale for residential condominiums. With condominium purchases it usually comes with a 10-day cooling off condition that is outlined in the Condominium Act, 1998, and it provides buyers with an opportunity to reconsider their decision and potentially withdraw from the agreement without penalty. Although, it is important to note that a cooling-off period does not apply to all types of real estate transactions. It specifically applies to Agreements of Purchase and Sale for residential condominiums.
Where To Turn For Support
Terminating an agreement of purchase is a significant decision that should be made carefully and in accordance with the terms of the contract and applicable laws. As the real estate industry is rife with legalities.
The dynamics of an Agreement of Purchase and Sale may be easier to understand with the assistance of legal counsel. When Ontario residents bring an experienced lawyer into the picture prior to or during a real estate deal, they may significantly increase the odds of avoiding the financial consequences of mistakes that can be made during this time.
