When buying or selling real estate, the main legal document is the purchase contract. A purchase contract, also called an offer to purchase needs to be in writing. It is an important legal document that needs several pages of text to address all the relevant topics. If you are using a ‘back of the napkin’ offer, or wrote something up on one page, you are likely missing some key terms.
A purchase contract should include the following information:
- Basic information about the property (e.g. address and legal description);
- The purchase price;
- The deposit made on the purchase price;
- Who holds the deposit and in what circumstances is it released to either side;
- How GST applies;
- The pieces of personal property (e.g. hot tubs, light fixtures, etc.) that are included;
- The encumbrances that will remain on title, if any;
- The seller’s representations and warranties, including representations about dower rights;
- Closing and possession dates;
- Liability for insurance coverage;
- Remedies for breach of contract; and
- The parties’ signatures.