If you haven’t bought a condominium before, or any property for that matter, you’ve probably never seen a purchase contract. It’s a pretty important piece of the puzzle when you’re looking to buy a property so let’s not wait until you’re ready to write an offer to start getting familiar with it. Here is a brief overview of the general terms and conditions:
The first bit of information we will need to include is the legal names of anyone going on the offer, who will also be on title assuming you go firm on the purchase. This means what it says on your ID has to match - spelling and all - not an alias or preferred name, including your parents or anyone else who needs to be on it need to be on it for financing purposes, or if you are buying it under your business/corporation name/number (which will require proof of signing authority so we know that you have the right to act on behalf of the company).
1. THE PROPERTY
1.1(a): Describes the specific details of the condo unit, including address, project name, and legal information. I '(or your Realtor) will fill this out, referencing the Title, ensuring accuracy.
1.1(b): Outlines parking and storage details - might be titled or assigned, your Realtor will fill this out
1.1(c): Mentions any unattached goods - this includes any appliances, window coverings, keys, furniture, electronics, anything you expect to stay with the property on moving day and is negotiable (meaning the seller could strike or add certain items they intend on keeping or leaving). If there is any gray area with attached vs. unattached goods (common ones are TV & wall mount, garage shelving, etc.), it’s better to itemize it out if you have strong feelings one way or the other to make sure there is no confusion or disappointment on moving day
1.1(d): Specifies excluded attached goods - this is often left blank, it could include something like a light fixture (ie. chandelier) that is a family heir loom and the seller plans on taking & may offer to replace with something else that matches the rest of the decor. If there is something intended to be excluded that is typically left behind on move out, the seller usually discloses that at the showing stage so we can prepare the offer properly, or if there is something you very specifically want removed, we will include it here and follow up with verbal communication to the Seller’s Agent to make sure they don’t miss it since it’s commonly left empty.
2. PURCHASE PRICE AND COMPLETION DAY
2.1: States the purchase price - this is ‘the number’ that matters the most, it’s what you’re offering and the seller may counter before hopefully coming to an agreement and moving forward to an accepted offer.
2.2: Confirms if the price includes taxes - most residential re-sale does not need to acknowledge GST in the price. Only new construction, a ‘flipped’ property that has been extensively renovated to sell, short term rentals (looked at as commercial properties by CRA) and commercial property does assess GST in the sale. Only condominiumized short term rental properties (Airbnb/VRBO style rentals) use the contract we are currently breaking down, the others will be on a different contract which we are not looking at right now. Feel free to reach out if you wanted to talk more about GST and when it does and doesn’t apply, the above is an overly simplified ‘list’.
2.3: Specifies the completion day - aka moving day. Your Lawyer will need to have all your down payment funds + lender instructions by today at the latest and you will get keys and can start moving in that afternoon… assuming all goes to plan. The Seller could counter this if they have a specific date in mind. It has to be a business day where the banks & lawyers are working.
2.4: Ensures the property's condition remains the same on completion day and all goods (attached or unattached) must be in good working order - this term is my favorite term to point out. It is what protects Buyers but also sets expectations. The property DOES NOT have to be in BETTER condition than when you achieve an accepted offer. It is not a new build (or it wouldn’t be on this contract) so it will have a little wear and tear; it can’t be in worse condition but it doesn’t have to be in better condition either. If you are concerned about the cleanliness or negotiate that the seller will replace something like the carpet or re-paint a damaged wall, these things need to be included under 9.3) Other Terms or there is little recourse on the completion day if the property is, for better or worse, in substantially the same condition as it was on acceptance. That being said, the appliances, as the included unattached goods, need to be in good working order so if we show up on the completion day and the fridge is not working, we can expect a remedy to that because of this term.
3. GENERAL TERMS
3.1: Lists general agreements, including the use of agents, applicable laws, time sensitivity, and mutual responsibilities.
3.1(f): Requires the seller to disclose significant known defects (the word ‘known’ is key, if a seller isn’t aware of an issue, they can’t disclose it. This is a big reason a home inspection is a good idea, you might find something the seller had no clue about before you brought it to their attention. Once they know about it, there are requirements for remedy or we negotiate a term to ensure the seller addresses the issue prior to closing or a price reduction but all these things require it being or becoming a known/disclosed issue).
3.1(h) and 3.1(i): Outlines due diligence responsibilities for both parties.
3.1(l): Emphasizes the importance of reading and seeking advice before signing.
3.1(m): Allows brokerages and listing services to use transaction information.
3.1(n): Establishes who will provide contract and related documents/information to the Lawyers. This is typically the Seller’s brokerage unless they are unfit to do so or there is some other reason to assign it to the Buyer or a Law Firm.
4.1: Establishes terms for deposit trust.
4.2 to 4.8: Details deposit-related procedures, responsibilities, and disbursements.
The Seller’s Brokerage typically holds the deposit funds unless they are unfit to do so (like in a For Sale by Owner deal) and we assign it to the Buyer’s Brokerage or a Law Firm.
The Deposit is held in trust and is typically around 5% of the purchase price to show capacity - over simplifying here, but if you can’t come up with 5% you can’t get a mortgage so showing the Seller you have that ready to go is a show of confidence.
The Deposit typically needs to be guaranteed funds (bank draft or wire transfer), personal cheques, e-transfers and global money transfers are not guaranteed so most brokerage policies won’t accept those forms of payment.
The Deposit is returned to the Buyer if they are unable to waive conditions by the specified date. If you are successful at waiving conditions and proceed with the purchase (go firm), the funds are forwarded from the holding brokerage to the Lawyers to make up part of the purchase funds on the completion day.
5. LAND TITLE
5.1: Ensures the property title is free of certain encumbrances.
6. REPRESENTATIONS AND WARRANTIES
6.1: Seller assures legal right to sell, non-resident status, and truth of representations.
6.2: Specifies the timeline and enforceability of representations.
7.1: Addresses potential dower rights and the need for specific documentation. Dower Rights are only applicable if there is only 1 seller on title and that person is legally married and their spouse has spent the night in the property at some point throughout their marriage. The Seller will determine if Dower Rights apply and if they do, the non-titled spouse will be included in the sale.
8.1: Requires reasonable efforts to fulfill conditions.
8.2 to 8.4: Outlines buyer's and seller's conditions and the process for satisfaction or waiver. Condo doc review, home inspection and financing are typical but additional conditions could be relevant depending on your situation. If you have a financing condition the ‘typical’ condition period is 2 full weeks, if you don’t need financing, you can generally shorten that as home inspectors and condo doc review specialists generally have availability within a few days of reaching out to them. A shorter condition period is more attractive to Sellers and a way to ‘strengthen’ your offer in a competitive marketplace but you need to make sure you have enough time to do your due diligence and feel comfortable moving forward or not.
9. ATTACHMENTS AND ADDITIONAL TERMS
9.1: Lists attached documents forming part of the contract - This is often not needed, it would be typical if you are assuming tenancy or have a Sale of Buyer’s Home Condition and need to include a property schedule.
9.2: This is the amount for the condo fee & any additional known fees. Your Realtor will fill it out and is generally disclosed in the listing.
9.3: Other Terms - we can include any extras that aren’t already covered with the general terms and conditions. One standard one is a include a walkthrough term on the morning of the completion day to confirm the property is in at least the same condition as when the offer was accepted and all the included goods are in good working order. If we need a professional cleaning term or anything else, we will add it as appropriate.
10. CLOSING PROCESS
10.1 to 10.12: Details the closing process, including document delivery, payments, costs, and potential delays.
11.1: Addresses the party responsible for property insurance until the purchase price is paid.
12.1 to 12.3: Describes potential remedies in case of contract default.
13. NOTICE AND DOCUMENTS
13.1 to 13.4: Clarifies notice procedures and the use of electronic signatures.
14.1 to 14.3: Authorizes representatives for notice purposes.
15. CONFIRMATION OF CONTRACT TERMS
15.1: Confirms the completeness and exclusivity of the contract.
16. LEGAL OBLIGATIONS BEGIN
16.1: Specifies when legal obligations begin and their binding nature.
17.1: Formalizes the buyer's offer and its acceptance timeline. The offer has to have a timeline for response so we will give the seller usually around 24 hours to respond and if they don’t reply in that timeframe, the offer automatically becomes null and void. If they counter, they will generally extend the time so you have time to reply back after receiving the new contract terms back.
18.1: Confirms the seller's agreement to the terms. If the Seller counters (changes) anything, the Buyer will have to initial off on those changes to confirm acceptance. The offer is not accepted until all parties agree to all terms by way of written (initialed) acknowledgement.
This breakdown should help the buyer, with the guidance of their Realtor, understand the key aspects of the condominium purchase contract before signing. It's important to seek legal advice and clarification on any terms that may be unclear. As always, I am happy to dive deeper into any of the topics brought up in this blog post or anything else you have questions about in regards to the Buying and Selling process in Alberta.