For a clear understanding of the promise to purchase
The Real Estate Brokerage Act provides the OACIQ with a range of tools to protect you. The Promise to purchase form is one of them.
The promise to purchase is a defining step. By signing it, you engage in one of the most important transactions in your life. It’s better to be well-informed!
What’s a promise to purchase?
The promise to purchase is the means by which you inform the seller of your firm intention to purchase his property under certain conditions. In this form you establish, among other things, the conditions under which you wish to purchase the desired property. It becomes a formal commitment binding on you once it’s accepted by the seller. This is therefore a step that should be taken seriously and dealt with in good faith.
What are the steps of the promise to purchase?
The Real Estate Brokerage Act clearly defines the duties and obligations of the professionals authorized by the OACIQ. Here is an overview of what you can expect from your broker during each step of the promise to purchase.
The promise to purchase includes several clauses. The professional authorized by the OACIQ must advise and inform you objectively.
He must, among other things:
- help you fully understand the information provided by the seller on the history of the property mentioned in the Declarations by the seller of the immovable form.
- ensure that the desired property suits your needs and the budget you established.
- help you set the price you will be offering to the seller by presenting you with his analysis of comparable properties. Since the price should take into account the seller’s declarations, you cannot then invoke elements mentioned therein to get a price reduction.
- ensure that the intended use of the property is compliant with the regulations. Example: is the lot contaminated or can it be used for the intended purposes?
- make sure you have all the necessary documents on hand in order to make an informed decision. For instance, if the certificate of location is more than ten years old, the notary may require a new one. So it’s better to discuss it with your broker at the time of the Promise to purchase. For more information, read this article Importance of an up-to-date certificate of location.
Take the time to carefully read the Promise to purchase before signing it and don’t hesitate to ask questions.
- Check with your broker that all of your conditions are listed: financing, building inspection, items that are included or excluded from the sale (lighting fixtures, dishwasher, alarm system, etc.). Be clear and precise in order not to leave room for interpretation.
- With your broker, check the time period given to the seller to respond to your offer and the desired dates to sign the deed of sale at the notary and take possession of the premises.
The seller can refuse your offer, accept it in full or make a counter-proposal.
Even if your offer meets all the seller’s conditions, the latter can refuse it. If you are interested in the property, nothing prevents you from presenting a new Promise to purchase to the seller.
Once your offer is accepted, you must fulfil the conditions set out in the Promise to purchase within the specified time period. The most common ones are to obtain the necessary financing and have the property inspected by a recognized expert.
If you receive a Counter-proposal to a promise to purchase, this means that the seller refuses your offer, but could accept it under certain conditions. This could be an enhanced price or items he wishes to exclude or modify. In turn, you may accept, refuse or respond through a counter-proposal as well.
Note that a counter-proposal cancels all the previous ones. To modify the terms of a promise to purchase that was already accepted by the parties, your broker will need to use the Amendments form.
For any questions, please contact Info OACIQ.