What should purchasers know about a resale freehold offer?

Buyers who have purchased multiple times, are probably familiar with the standard resale freehold offer, but what if this is your first time? This whole process may seem foreign to you. When your realtor provides you with a preprinted offer or agreement of purchase of sale (APS) put out by the Ontario realtors association called an OREA 100. Don’t be intimidated – you always have your lawyer to speak to.

OREA 100

One of the first things to be aware of is the dimensions of the property you are purchasing. This is set out on the first page of the OREA 100. The offer will list the frontage and depth. This is important because as a purchaser you need to know exactly what you are purchasing. You should walk the boundaries and make sure you know where they are. Not all properties have a survey available but if you can get your hands on a survey for the property, this will help. You can then measure the boundaries. This is important particularly, in the older areas of the city, to avoid issues such as disputes with your neighbours, pool and deck placements and set-backs, and to know exactly what you are buying.

On the same page as dimensions are the purchase price and deposit. Review this to make sure everything is accurate. Special Conditions or Schedules are also listed on the first page and attached at the end. Some agents use a schedule for this and frankly it’s not a bad idea as it keeps the offer neat.

The second page of the OREA form shows what chattels are included and what fixtures are excluded. Chattels are items not built in to the floors or walls, such as the fridge, stove, washer, dryer, chandeliers and even the curtains. You should list all the things you are supposed to be getting under the APS because if you don’t list them, they are not yours. Fixtures are attached to the house and can’t be moved without doing damage to the home. Examples of fixtures are the furnace and the air-conditioner.

Letter of Requisitions

The Title Search date is shown on page three of the OREA form. This is where your lawyer is especially important to your purchase. The lawyer will search title and send a Letter of Requisitions to the seller’s lawyer to ensure you receive clean title on the day of closing. This means clear ownership and free of any liens or mortgages. Ideally, a lawyer should be given at least five days before closing to complete this, especially since the seller’s lawyer needs time to request any mortgage discharge statements.

One more thing the APS provides is that certain defects in title can be insured over and you are stuck with those defects on title. Have this removed or modified. You are entitled to receive your title free of defects.

Additional clauses can be included in the Schedules, such as: Make sure you have a current survey (last five years) showing all structures, including pools and decks on the property; if you do not have your financing finalized, then make the offer conditional on financing, as you do not want to be in a position where you may lose your deposit because the seller doesn’t want to provide you with an extension; make sure the offer is conditional on building inspection meeting your discretionary approval; ensure that there is a clause making the vendor responsible for compliance with all city requirements at his or her cost prior to closing; put in a clause making the transaction conditional, for a given period of time on your lawyers review and approval in order that you an opportunity to see your lawyer, get suggestions, changes and explanations, and then return and negotiate.

This is a brief overview of some of the things you should consider. I cannot stress how important it is for you to have a lawyer review the APS before it is firm, to ensure that you are adequately protected.