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What's in a Contract of
Purchase and Sale?

 So, the deal's done. You're buying, or selling, your home. The realtors are happy. They've even filled in those pages with all the fine print: the contract of purchase and sale.

This contract governs the relationship between a buyer and seller. Although real estate agents are experts in their field, they may not understand the legal impact of all the terms of the contract. You should ask a lawyer to review the contract before signing it. What do all those terms mean?

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Subject clauses

Most contracts of purchase and sale are "subject to" financing, inspection or other conditions which must be satisfied before the deal closes. These must be worded very carefully, or the contract may be void because they're too broad, vague or subjective. Poorly worded subject clauses may allow a seller to cancel the agreement if she gets a higher offer, or a buyer to change his mind. A subject clause should be set out in clear terms, and hinge on an event that neither party can control. "Subject to satisfactory inspection" is unlikely to be enforceable.

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Completion, adjustment and possession dates

The completion date is the day that you register the property transfer, after which you pay the purchase price to the seller. The adjustment date is the day for dividing the costs, such as property taxes, utility bills, rents, etc. The seller is responsible for those costs before the adjustment date, and the buyer is responsible for the costs after that date. The possession date is the day that you actually take possession of the house.

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Easements, rights of way and other charges

Often, when reviewing the property's title, you will find easements, rights of way, restrictive covenants and other items registered. These may give other parties rights to enter your property for certain purposes, restrict what you can build on the property, and in some cases, may even attempt to restrict what kind of people can own the property!

The standard contract of purchase and sale says that you agree to purchase the property, including certain restrictive covenants and rights of way, and other charges. Thus, it is important to have these reviewed by a lawyer...before you sign.

This list, of course, is not exhaustive. To better understand your rights and obligations under the contract, you should obtain professional legal advice.

More questions? Phone us at (604) HELP-LAW.

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Legal disclaimer:  The information provided on Lawyers-BC.Com is not intended to be legal advice, but merely conveys general information related to legal issues commonly encountered. Your access to and use of this Web site is subject to additional terms and conditions.

This page last updated: August 14, 1999
© copyright 1999 Lawyers-BC.Com Services Ltd.