You’ve visited a property you like and want to make an offer to purchase as soon as possible before it gets snapped up by someone else? Here’s how to submit an offer without a real estate agent, to make sure the seller has your proposal in hand as soon as possible.
What is an Offer to Purchase?
An Offer to Purchase is a legal document that states the terms and conditions of a real estate transaction between a buyer and a seller. It usually includes the agreed purchase price, the closing date, any conditions (such as a home inspection or financing) and any other requests or special conditions. Once both parties have signed the Offer to Purchase, it becomes a legally binding agreement that paves the way for the final sale and transfer of ownership.
How to prepare an Offer to Purchase
To submit an Offer to Purchase without an agent, get your hands on a form and fill out all the sections. Indicate the purchase price and all the conditions of the sale, such as the financing terms, any inspections required and the closing date. List appliances or accessories that are included in the sale, any liens on the property, etc. Here is the information you will need to include:
Price offered
Timeframe for responding
Description of the property
Financing condition: the buyer agrees to apply for a mortgage
Inspection condition
The purchase being conditional on the sale of another property (if applicable)
Reading the Declaration of Co-Ownership (if applicable)
Reading the Declaration of the Seller
The presence or the absence of a legal warranty
Inclusions and exclusions (e.g. household appliances, furniture, light fixtures, etc.)
Date of occupancy of the premises
Date the deed of sale will be notarized (signed)
The buyer and the seller must both sign the document in order for it to be binding. It is advisable to consult a real estate professional or lawyer when drafting such a legal document to avoid any unpleasant surprises.
Is it possible to cancel an offer to purchase?
Can you change your mind after signing an offer to purchase? It’s very difficult, but not impossible. The law allows for certain exceptions that can lead to the cancellation of the contract of sale. However, withdrawing from the process can be rather complicated.
In the best-case scenario, the contract of sale can be cancelled upon mutual agreement of the parties. In that event, it is preferable to make an amendment to the initial Offer to Purchase to put this intention into writing. This would save you a lot of time.
1. If the conditions were met
If the offer to purchase is accepted in the indicated timeframe and all the conditions have been met, the buyer and seller have to respect the terms of the contract. The buyer must buy the property and the seller must agree to transfer ownership to the buyer. Failing to comply with the listed conditions can expose both parties to legal consequences.
To cancel a promise to purchase without a specific reason, you will have to move quickly to withdraw the offer before it reaches the seller. The Civil Code of Québec allows a buyer to withdraw with a written notice and to come out unscathed. However, if the seller has already received the Offer to Purchase document, the buyer is bound by the law even if the seller has not yet communicated his or her decision (that they are accepting the offer, refusing it, making a counteroffer, of if they simply ignore it).
As long as the time period the seller is given to make their decision has not elapsed, the contract between the two parties remains in force. The Offer to Purchase, considered irrevocable during this period, can only be enhanced by the buyer, always to the other party’s advantage. However, if the offer does not stipulate a response time, the potential buyer can withdraw it as long as it has not yet been accepted by the seller.
2. If the conditions have not been met
Several clauses are usually included in the contract that allow the offer to purchase to be cancelled under certain conditions. If one of the conditions is not met, the process can be brought to a halt. These can include the inspection clause, which allows the buyer to withdraw their offer in the event of an unsatisfactory inspection report. Also, a sale is often conditional on obtaining a sufficient mortgage loan or on the buyer selling their current house within a reasonable time.
If the pre-purchase inspection report brings to light certain defects, the offer to purchase can be cancelled. The clause will usually state that the inspection must reveal a major issue that will considerably lower the property’s value to be valid.
If the seller refuses to remedy the issue or to lower the selling price, the buyer would then have valid reason to cancel the offer to purchase. As some details may escape the inspectors, look out for these eight things before making an offer to purchase.
3. If the offer contains an escape clause
If the offer to purchase contains a clause called “right of cancellation” or “waiver,” this means that additional reflection time may be granted to the buyer. If so—and this is quite rare—the buyer can be freed of their obligations by respecting the deadline, even after having signed. As for the termination clause with penalties, it minimizes the repercussions of a withdrawal, regardless of the reason. One of the parties has the option of withdrawing from the offer in exchange for financial compensation.
If you don’t feel comfortable doing this on your own, you can always call on a real estate professional.
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