When we walk into that sales centre, all ready to buy our beautiful new home, perhaps the most important piece of the puzzle we need to have is security in our financial arrangements. A tragedy waiting to happen occurs when you sign an unconditional offer, give your hard-earned, harder-saved deposit to the builder and later find out you do not qualify for the mortgage. In other words, don’t buy the home unless you have a mortgage commitment or a conditional deal. This leads us into the next part of the discussion – what happens if your financing falls through?
An Agreement of Purchase and Sale for the purchase of land is a contract, and once it is signed it binds both parties to certain obligations. If either party does not hold up to their end of the arrangement, they can be held liable to the other party for either specific performance or damages. Firstly, if the purchasers default, they will likely lose their deposit. The builder will then have the option of suing to force them to close the deal and pay all legal fees related thereto, or sue them for any damages the builder might suffer before he resells the condo (for items such as interest, changes and price differential) and legal fees. Sometimes, in a booming market, kindhearted builders will release purchasers who have made a mistake or encountered personal tragedies. But don’t count on it!
The moral of the story is to make sure you have financing or that the offer is conditional for a few days on both financing and review by a lawyer. It is critical you get the right advice, and only a lawyer can provide legal advice – that is the law. When you select a lawyer, find one who cares about you and a long-term relationship.
Happy home hunting!