A promise to purchase (or purchase offer) includes the offered price, financing and possession terms, as well as any special conditions the buyer wishes to include in the offer.
Here are 8 important facts to know before submitting a promise to purchase:
1- A promise to purchase is legally binding
A promise to purchase is a contract. Once accepted and signed, both the buyer and seller are legally bound to the conditions attached to it. If either party fails to honor their commitment, they may be sued for breach of contract.
Whether you decide to purchase alone or with the help of a Proprio Direct real estate broker, the legal implications are the same. That’s why it’s in your best interest to be well-accompanied by a broker! You’ll avoid making mistakes that could cost you dearly!
2- A deadline can be imposed on each sales or purchase condition
In order to meet their obligations, both the buyer and the seller can stipulate deadlines to be met within the promise to purchase. These may include the acceptance or rejection of the promise to purchase by the sellers, the commitment to sign a deed of sale, the inspection, mortgage financing, or even the date of possession.
3- Waiving the legal warranty involves risks
Purchasing a property by waiving the legal warranty means waiving your right to take legal action against the seller in the event of a latent defect. Fortunately, the Civil Code of Quebec explicitly states that homes must be sold with a warranty of quality. The seller must therefore clearly express their desire to sell without a legal warranty if they wish to avoid this obligation.
4- Multiple Offers Benefit the Seller
Multiple offers can occur when several buyers submit a promise to purchase on a property at the same time. In this case, the seller can choose the offer that best meets their needs.
5- Counteroffers are common
Negotiations can take place between the buyer and the seller after the submission of the promise to purchase. These negotiations may concern the price or the conditions of the offer and continue as long as both parties have not reached an agreement.
Considering the complexity of some of the legal and financial aspects, the negotiating skills of a Proprio Direct real estate broker could prove to be a valuable asset in ensuring that you complete a transaction to your satisfaction.
6-Some sales are taxable
Was the property you wish to purchase used for commercial purposes before being sold? Before submitting a promise to purchase, check with the current owner to see if the listed selling price includes applicable taxes.
7- The Seller’s Declaration is not always mandatory
Since July 1, 2012, the seller’s declaration has been a mandatory document for any transaction involving a real estate broker. By using the services of a Proprio Direct real estate broker, the latter is required to obtain this document from the seller. The seller’s declaration contains essential information about the condition of the property, such as work carried out, known problems, and environmental issues. Its purpose is to protect the buyer from unpleasant surprises after the sale by allowing them to make an informed decision about the purchase. They must read it and acknowledge receipt.
Please note that if your transaction does not involve a real estate broker, it is strongly recommended to include this condition in your promise to purchase since, otherwise, the seller has no legal obligation to provide you with this document.
8- An up-to-date certificate of location is essential
After 10 years, a certificate of location is considered to be “outdated” or “no longer representing the current state of the property”. When selling, the notary will therefore have to request a new one due to the 10-year prescription period provided for in article 2917 of the Civil Code of Quebec.
To avoid any unpleasant surprises, it is best to request one directly in the promise to purchase you submit.
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