THE PRELIMINARY CONTRACT
You have finally found the house of your dreams. You want to acquire it. How do you go about it? It is very important not to rush into things. Before signing any pre-purchase documents, you need to take the utmost caution. Do you know, for example, the difference between an offer to purchase and a promise to purchase? Are you in a position to assess their respective legal effects? Before signing any document whatsoever for the purpose of buying property, you will be well advised to consult your notary. The latter is in a position to verify the content of such a document, to determine its exact nature and, above all, to tell you precisely what you are committing to. Your notary will advise you so you avoid any unpleasant surprises. Let your notary guide you towards a perfectly successful property purchase. As the saying goes: “An ounce of prevention is worth a pound of cure”...
THE VARIOUS PURCHASE OFFERS
The offer to purchase differs from the promise to purchase in many respects, in particular with respect to the right to revoke it at any time prior to receipt of the acceptance (if the offer does not come with a time limit) and with regard to the applicable liability regime in case of non-compliance. But, as far as we are concerned here, when the purchase proposal is validly accepted as such by its recipient, it generally becomes a bilateral promise for purchase and sale, that is to say a pre- contract that is binding on both parties. This constitutes a preliminary contract and, as its name implies, it presupposes that another contract will come into effect later, for the actual sale. However, at the pre-contract stage, the buyer is obliged to purchase and the seller is obliged to sell in accordance with the terms and conditions of the preliminary contract. Also, be careful of preprinted forms that are prepared in advance. Without really understanding all the fine print, you could for example commit to:
CAN THIS AGREEMENT BE CANCELLED?
Unless both parties decide by mutual agreement to cancel it, this preliminary contract cannot be terminated, except for causes recognized by law. Also, as a general rule, you are bound by this pre-contract. The other party has the right to compel you, through the courts, to perform all the obligations you committed to. Depending on the circumstances, the judge may proceed with an action in passing of title or may simply award damages; sometimes, the court will be in a position to both endorse the sale and order payment of damages.
But aren’t you allowed to change your mind within three days? Or within ten days? No!
If you have not written into the contract that you retain a cancellation option or unless you have entered into a downpayment agreement, your commitment is normally irrevocable.
IS A NEW CONSTRUCTION AN EXCEPTION?
Yes, but only in certain cases.
The law grants ten days to the buyer to be able to renounce an offer to purchase, usually for the payment of certain expenses, if it is the builder or the developer selling a residential building to an occupying owner, that is to say a person who intends to personally acquire and occupy it.
THE CONTENT OF A GOOD PROPOSAL
The notary understands the importance of a good offer to purchase. This offer must protect the interests of both the buyer and the seller. That is why the notary will take care to include all the elements essential to the sale in this offer, including:
Let your notary shed all the light on the subject... and you will find your decision-making is much easier! It does not cost much to talk to your notary, but you may save a bundle!
Notaries are all too familiar with the serious problems resulting from an incomplete, poorly drafted, or misunderstood proposal.
Meet with your notary to talk about your project. Your notary is a legal advisor who can help with contracts and who understands real estate transactions. Thanks to the notary’s help, both buyer and seller will be able to avoid unfortunate and often irremediable situations.
Make your purchase or sale project a success by letting your notary help start things off on the right foot.
Special rules are in place for purchases involving some sort of condominium or co-ownership. Be sure to protect yourself by discussing it with your notary beforehand.
To familiarize yourself with the subject, read our article on co-ownership of a building.
Source : Chambre des notaires du Québec (Translation)
Consult your notary, who leaves nothing to chance.