Top Ten Real Estate Tips - Should I sign?

 You may download a copy of our Top Ten Real Estate Tips here.


When considering whether or not to sign an agreement of purchase and sale consider these tips: 

10.      Do the curtains come with the property? 

In many cases when you are purchasing a property, you are not just purchasing the land and the buildings. Sometimes you are also buying other items such as furniture, lawn equipment and tools or, even boats and motors. In a typical agreement of purchase and sale the, agreement allows for you to add in details of things that are being purchased or sold which are in addition to the land and buildings. These items are called chattels. A chattel is something that is not attached to the building and can be removed very easily with minimal disturbance to the building. Chattels are usually excluded from the sale unless they are specifically listed as being included.

Best Practice: If you want to make sure the curtains are included, have them listed as chattels which are being purchased. Make sure that the chattel is properly described; it is not enough to simply say that the chattels included are “as viewed”. The reason is that it lacks clarity as to exactly what the purchasers believe they are purchasing and exactly what the sellers believe they are selling.  All contract terms must be clear to all parties and, more importantly, must be clear to a third party such as a judge who may have to interpret the agreement. 


9.         Do I have to leave behind the light fixture in the dining room? 

Unlike a chattel, fixtures are items that are in some way attached to the building or the land such that the removal of the fixture would not be done easily and would cause some disruption to the condition of the building. Light fixtures, built in appliances, bathroom fixtures, heating and ventilation equipment are all typically fixtures. Normally all "fixtures" remain with the home and all "chattels" are to be removed and are not sold with the home.  Whether an item is a fixture or a chattel depends upon the degree of annexation to the land or the building.

Best Practice: Be sure to specify with as much detail as possible the chattels the purchaser wishes to include in the transaction as well as all those fixtures that the vendor will be taking with him.


8.         This agreement has been faxed so many times I can no longer read it? 

Certainty of contract” is a legal concept that requires the subjectmatter and the terms of the agreement be known and certain. The Agreement of Purchase and Sale is the blueprint of the transaction.  If a builder cannot read the blueprint, he or she cannot build the home. Make sure that the Agreement of Purchase and Sale does not get "over faxed" to the point where it cannot be read.

Best Practice: If the offer is starting to become illegible due to multiple sign back transmissions, start fresh with a new offer. If you cannot read the agreement, then you may not in fact have a binding agreement at all.


7.         What do you mean I have to pay a penalty to pay off my mortgage? 

Before signing an agreement to sell your property, you will need to consider whether there is a mortgage on the property and, more importantly, what it will cost you to pay out the mortgage when you sell. When you agreed to borrow money from your bank you would have selected a term for your mortgage. This term can be as short as six months and, in some cases, longer than five years. The term is the period of time that the bank has agreed to loan you m,oney. During this time the bank has agreed to charge you a set rate of interest and as such, has an expectation that it will earn a certain amount of interest. If you decide to pay off your mortgage before that time period has expired, your bank has the legal right to expect you to pay a penalty.

 In some cases you will also have to pay off any business and/or personal lines of credit that may be secured against the property you are selling. This sometimes comes as a surprise and an unexpected selling expense.

Best Practice: Before you agree to sell your home, check with your bank and ask them to set out in writing exactly how much you will have to pay them to pay off your mortgage and whether or not you will have to pay off your line of credit as well.


6.         HST - The 13% Mistake. 

Some real property purchases and sales are subject to HST.  HST is 13% of the purchase and sale price and, therefore, can represent a significant amount of money.  The first thing you must ask before you sign the offer is whether HST is applicable.


If HST is applicable, then you should ask whether the HST should be included in the purchase price or be in addition to the purchase price.

A price of $100,000.00 HST “included in” means that the actual price for the land is $88,459.57.  The HST is deducted from the $100,000.00.

A price of $100,000.00 with HST not included, i.e., “in addition to”, means that the price for the property is $100,000.00 with $13,000.00 of HST being added on top, for a total of $113,000.00.

Best Practice: You should consult with your lawyer and with your accountant prior to signing an agreement of purchase and sale to determine whether the real estate transaction you are contemplating is subject to HST.

 5.      Allocation of the Purchase Price - How much for each piece is just as important as how  much for the whole.

When dealing with a commercial property, a farm property or even a residential property that has a large acreage or one that includes a number of chattels you must, at the negotiations stage, allocate the purchase price among things like land, buildings, chattels and the residence. Failing to do so will cause problems for both the seller and the buyer after closing. The reason why is that not all portions of the proceeds are treated and taxed the same by Canada Revenue Agency.

Best Practice: Agreeing on the total purchase price is only the first step. A proper allocation of that purchase price should be part of the agreement of purchase and sale.


4.         The Closing Date - Is it a Sunday? 

The closing date must be a business day, i.e., neither a statutory holiday nor a weekend date.  The busiest closing dates are always Fridays in any given week and, of those, the last Friday of the month is often the busiest closing date in any given month.

Care needs to be taken to ensure that the closing date can be accommodated by a number of third parties who will be helping you with the completion of your purchase or sale. These might include inspectors, bankers, lawyers, insurance agents, movers and contractors.  Do not forget to check with your employer as well to ensure that you will be able to take the necessary time off work to attend to all of the pre-closing tasks.

As well, sometimes negotiations can take weeks. The original closing date in that very first offer may no longer be reasonable. Be sure to review all dates each time you are asked to sign an offer or counteroffer.

Best Practice: Carefully check all of the dates listed in the agreement before you sign it to make sure the dates are reasonable and that you and your closing team will have enough time to do all the work that needs to be done prior to closing.


3.         Conditions, conditions, conditions…. 

Nearly every agreement of purchase and sale will contain one or more conditions which make the agreement conditional upon some event occurring. If that event does not occur, then the agreement is usually declared to be at an end. A conditional contract is not a firm agreement until each and every condition has been met and waived.

 The most common condition is financing. Such a condition might look like this.

 This agreement is conditional until June 30, 2014 upon the Purchaser arranging suitable financing to complete this transaction, failing which this agreement shall become null and void and the Purchaser’s deposit shall be returned in full without interest or penalty.  This condition is for the sole benefit of the Purchaser and may be waived at any time prior to the aforementioned date.

If the condition is not fulfilled by the date specified, then the agreement will be terminated.

Best Practice: Carefully consider what you will need to do, discover or confirm before you become 100% committed to completing the transaction. Adding in a condition will allow you to secure the opportunity to complete the transaction while giving you time to complete your due diligence.


2.         Are you in the zone? 

What do you want to do with the property you are purchasing? Build your dream home or cottage? Add on a deck? Run a small business from it? Divide the land into smaller pieces and sell the lots? The development of each property will be controlled by a number of different rules and regulations. Some of these rules are made by the local municipality in the form of a zoning by-law while others may be registered directly on the title to the property in the form of a restrictive covenant. A zoning by-law will set out what a particular property can be used for and in some cases it may even set out when the property can be used.

Best Practice: Before you purchase any property ask yourself why you are making the purchase and become really clear on what your future plans are for the property. With these things in mind you should then speak with you real estate agent and lawyer  to check the zoning and other regulations and restrictions that may affect the property to ensure t you will be able to use the property as you intend.


1.         When in doubt – call your lawyer. 

            Best Practice: Make the call before you sign.


The foregoing is meant to provide information only and does not constitute legal advice.  You should always consult with a lawyer prior to signing any contract.



THE MILLER LAW GROUP   Muskoka Lawyers   705.789.0400