THE PROMISE TO PURCHASE: BECAUSE PEACE OF MIND IS PRICELESS!

When it comes to acquiring real estate, whether we are talking about a single-family home, a condominium, a semi-detached property, an income property, or simply a piece of land, it is essential to sign with the seller what is commonly called an “offer to purchase” or a “promise to purchase.” The good old days when everything was settled with a handshake are well and truly over with the help of M&A advisor

When the seller and the buyer have agreed on a sale price and other essential conditions of the transaction via the game of offers and counter-offers, it is essential to record this agreement in writing to ensure the safety of the parties. The offer to purchase, a preliminary contract signed by the seller and the buyer, constitutes a formal commitment on both sides to conclude the transaction at the prices and conditions set out therein.

In the event of a refusal by one of the parties to the offer to purchase to enter the transaction without just cause in law, a petition for a transfer of title may be filed with the court to compel the other party to comply with the promise to buy or sell. It must then be understood that this is a document that must be drafted with the greatest care, because as soon as it is signed, the parties are bound, and the agreement can only be modified by mutual agreement.

When the seller has entrusted the sale of his property to a real estate broker, the latter will guide the parties through the process leading to the signing of the notarial deed of sale, including the drafting of the promise of sale. On the other hand, during a sale made directly by the owner, the parties are often left to themselves when it comes time to put on paper a clear, clear, and precise agreement through M&A advisory.

When in doubt and especially if it is the purchase of your first home, it would be wise for you, before signing a promise to purchase, to consult a notary, who, by its very nature, is an expert in real estate law and the drafting of all kinds of contracts.

When drafting the promise to purchase, no detail should be left to chance and every point that is likely to be contentious should naturally be settled in this preliminary contract. This document must naturally provide the name of the parties (seller and buyer), a sufficient description of the building, the sale price (including taxes if applicable), a list of the furniture included or excluded from the sale, the date of signature of the deed at the notary, the date of taking possession of the building and the extent of the quality guarantee (legal guarantee).

It is also provided, in most cases, that the seller must provide a compliant and up-to-date certificate of location, prepared by a land surveyor. The promise to purchase can also be linked to other conditions, such as obtaining mortgage financing by the buyer, the availability of the premises for an inspection by a professional in the field, the possibility of building a garage or a residence of pre-established areas or the sale of the buyer’s own house.

If these are cases that are out of the ordinary such as the purchase of a commercial building, a farm, an income building, or residential or agricultural land, several other specific conditions may be provided concerning the quality of the soil, blasting costs if there is a rock, tax credits for new constructions, public utility easements, the permitted dimensions of the buildings, the use or zoning of the building and the authorizations required from various competent authorities.

Never purchase such importance lightly. Before signing a promise to purchase, whether as a seller or buyer, consult the real estate law specialist, consult your notary!

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