What's covered in an Agreement of Purchase and Sale?
An Agreement of Purchase and Sale is like a conversation in writing that expresses the buyer's wish to purchase a property and the proposed terms of sale.
It only becomes legally binding when everything is mutually agreed upon and signed by both parties.
Commonly referred to as an offer, this document summarizes the terms that the buyer is seeking. They might need to make their offer conditional on the sale of their home. Or perhaps, like many buyers today, they insist on getting a home inspection. Some offers spell out more unusual conditions, such as the inclusion of chickens and pigs in a rural property.
The offer is first presented to the seller. At this point, the seller can accept the offer as is or alter it return it to the prospective buyer for approval. The process continues until an agreement is reached.
While an Agreement of Purchase and Sale covers many different areas, here are some worth boning up on:
Deposit: The buyer must include a deposit. The deposit shows that the buyer is sincere. The amount is treated as a credit for the buyer against the price on closing. If one of the Condition's in the Agreement Of Purchase And Sale are not Waived by the Buyer(s) the Deposit would be returned.
Chattels: This covers items separate from the home that the buyer wants included in the purchase price, such as appliances and window coverings. The buyer and seller need to agree on the chattels included before signing the offer.
Fixtures Excluded: These are items attached to the property - such as an heirloom chandelier - that are not to be included in the transaction. A detailed description of the items to be excluded should be outlined here.
Adjustments: This is for calculating and adjusting such items as property taxes, maintenance fees, utilities, rentals and such. The buyer is responsible for the closing day adjustments, while the seller is accountable for them up to the closing day. If, for example, property taxes have been paid for the month of April by the seller and the buyer takes over the property on April 20, there will be an adjustment showing that the buyer owes one third of the already paid taxes to the vendor for that month.