So you found “the house”. You fell in love. You signed the offer, and now it’s accepted. You’re already mentally placing furniture, picking paint colours, and planning the garden. Time to call over the in-laws and break out the bubbly to celebrate, right? WRONG.
We don’t want to burst your bubble, but a lot of people don’t realize the process of purchasing a home. Although in some cases, an Agreement of Purchase and Sale can create a firm and binding contract with the first signature, this is rarely the way the process unravels.
Usually, there are several conditional clauses that require fulfillment within a period of time before your offer is absolutely firm and binding. The following conditions can vary – and by no means is the list complete. Here are a few standard items typically found in an offer when purchasing a home:
- Home Inspection. The buyer should always have the right to inspect the property for issues related to its structure. This includes many things: cracked foundations, water damage, outdated wiring, mould… the list could be endless.
- Insurance. For the benefit of the Buyer, this allows the purchaser to ensure that insurance can be obtained upon closing. House insurance is mandatory in Canada, and the bank won’t finance you without it, so this one is rather important! Although many would believe this is a no-brainer, many insurance companies are tightening up their policies – even when a home is brand new… fireplaces, wiring, plumbing, heritage designation – there are countless qualities that impact insurance policies and premiums.
- Financing. Likely, you were preapproved well before you even began your house hunt. However, the bank will want to review your purchase before giving you the green light. Sometimes further credit checks are required from you, and the bank might wish to do their own appraisal on the property to ensure it won’t be a liability should you default (hopefully not!)
- Status Certificate. When purchasing a condo, this clause grants permission for the Buyer to acquire a copy of the financial information pertaining to the condominium corporation to ensure it is well -run and financially-sound.
Should any of these clauses fail to be fulfilled, or should problems arise as a result, a Buyer has a few options in determining how to proceed. If the property is deemed to be unsatisfactory, the Buyer has the right to refuse to move forward and walk away from the deal without any further repercussions. Otherwise, negotiating can continue in order to come up with a solution that will work for all involved parties.
Once you have signed off on all conditional clauses in your offer, only then can you celebrate your purchase. Don’t get too far ahead of yourself prematurely – it could only lead to disappointment if issues arise.