Contract of Purchase and Sale
The Contract of Purchase and Sale is how a Realtor writes up an offer on your behalf for a property in which you would like to purchase. The CPS is comprised of the following elements:
- Personal Info
- Property Info
- Terms and Conditions
- Completion/Adjustment/Possession Dates
The price listed on an initial offer is not necessarily the final purchase price of the property. It takes negotiation and ultimately agreement on both parties to determine the final fair purchase price for the property. You realtor will provide recommendations on a fair offer price based on recently sold comparables.
The deposit is usually 5-10% of the purchase price and is required after subjects have been removed making the sale firm. The deposit provides consideration for the contract to be considered enforceable. You Realtor will recommend a fair deposit amount for the property.
Terms and Conditions
Terms and conditions are also referred to as subjects. These allow you to do your due diligence and consult legal advice regarding the property you intend to purchase. The terms and conditions must be removed by the date set out in the contract in order for the contract to proceed. If these conditions are not waived or removed, then the contract in null. Some common subjects that realtors will recommend are:
- Subject to Financing
- Subject to Inspection
- Subject to Title Search
- Subject to Insurance
- Subject to Documentation- Strata Properties
There are three key dates to understand in a Contract of Purchase and Sale
Completion Date: the date in which funds and title are transferred from the seller to the buyer
Adjustment Date: the date in which all financial responsibilities are adjusted for and become the responsibility of the buyer. This date is usually the same as the possession date.
Possession Date: The date in which the purchaser takes vacant possession of the property or subject to existing tenancies. This is usually 2-3 days after the completion date. This is also known as the move in date.
The acceptance is the area of the CPS where the seller officially signs off stating that everything in the contract has been agreed upon. At this point, the CPS is considered an accepted offer.