The Contract in a Real Estate Purchase and Sale is incredibly important for any real estate purchase. It dictates everything that is expected of both the Buyer and the Seller during the transaction. If these expectations are not met at the time indicated in the contract, legal action can be taken (though that is a worst case scenario).
Real Estate Agents in Vancouver use a standard Contract that was prepared by the Real Estate Board. However, this contract has room for each agent to input specific subjects and terms, which is where each contract becomes different from the other. I’ve seen some terribly written contracts, so you want to make sure that you’re working with an agent who is competent, understands how terminology can affect the contract and knows how to protect your rights and expectations in writing.
This information is SO much easier to discuss in person, so contact us to chat about how we can protect your rights when you’re purchasing a home.
Standard Real Estate Contract Subjects (i.e. Conditions)
Typically, real estate contracts in Vancouver include a few conditions on the contract that allow the Buyer to do some due diligence prior to officially purchasing the property. The Buyer and Seller come to an accepted offer once the price, dates and inclusions/exclusions are negotiated and agreed upon, forming the “accepted offer”. This contract (typically) also includes subject clauses or conditions on the contract that allow the Buyer to spend a few days to a week to do further research to ensure that they know what they’re buying. These subjects clauses are usually:
Subject to the Documents
These documents are everything from the Title (indicating that the Seller does own the property), the Property Disclosure Statement (filled out by the Seller), the Strata Documents from the Property Management Company (for condos and townhouses), Survey’s, Oil Tank Certificates and more (for houses). The Buyer is allowed to review these documents, and the contract to purchase should be subject to the buyer receiving and being satisfied with what they read. This subject clause isn’t needed if Buyers and their Real Estate Agents read these documents prior to submitting an offer.
Subject to a Home Inspection
I have a lot of Buyers who aren’t convinced that Home Inspections are worthwhile (they’ll cost you about $500, more for larger houses), but I am a huge supporter of Home Inspections. The Home Inspection will give you a much more thorough review of the interior and exterior of the property by an industry professional. The home inspectors I work with on a regular basis have discovered some things about the property that a regular Real Estate Agent, Buyer or Seller wouldn’t know, but can affect the property long term. Your offer to purchase should be conditional on you getting a home inspections (though, you can opt out if you’re confident in the building).
Subject to Financing
Mortgage Pre-approvals are an indication from the Mortgage Lenders that they will give you a mortgage after being satisfied with your employment and financial history. However, a mortgage can never be officially approved until there is a specific property in question. Enter the Accepted Offer. Once your mortgage broker receives your accepted offer they can pursue your official mortgage approval. This approval can take a few days to receive (and can be denied if the mortgage lender doesn’t like the building or doesn’t see the value) which is why we have this condition in the contract.
Other conditions to the contract can include anything from the Buyer being able to sell their home before a specific date, the Buyer ensuring that dogs are allowed, the Seller ceasing to be obligated to a previously accepted offer, subject to an oil tank inspection (for older homes) and more. if there’s anything that’s very important to you that needs to be verified prior to officially purchasing the property, it should be a condition to the contract.
Standard Real Estate Contract Terms
The terms in a Real Estate Contract of Purchase and Sale dictate information that the Buyer and Seller are either agreeing too, or acknowledging. These terms can include everything from acknowledging that the room sizes are approximate, to indicating that the the Seller is to remove the wall mounted TV and fix the holes, to allowing the Buyer to visit the property a few times prior to taking possession, to more.
Our Team has discussed our subjects clauses, contract terms and terminology with a real estate Lawyer we work with often in order to ensure that these additions to the contract are written in a way that protects your best interests. If you want to be well protected through the negotiation, to the contracts, to the final purchase – contact us. We’re pros.