The importance for the parties to clearly understand the promise to purchase
When drafting the promise to purchase, the real estate broker must discuss each phase of the buying process with the buyer in order to avoid surprises along the way. This step must include an analysis of the buyer’s needs and objectives and an evaluation of his financial capacity. It is up to the broker to ensure that the buyer clearly determines what he is looking for based on his means.
Tips for the buyer
- Completing a promise to purchase is an important step because it informs the seller about your firm intention to purchase the property under certain conditions. And it becomes a formal commitment binding on you once it’s accepted by the seller.
- You should determine your needs and financial means as accurately as possible. Prepare a realistic budget, based on your lifestyle and ability to pay. Don’t hesitate to give your broker relevant information concerning your financial position; he will help you make an informed decision in complete confidentiality.
- With your broker, take time to read the Promise to purchase form carefully as you complete it, and obtain a list of comparables before setting the price of your offer.
- Carefully verify the dates indicated for occupancy, adjustments and the signing of the deed of sale.
- Closely review the inclusions and exclusions, as these cannot be claimed once the promise to purchase is accepted, unless the seller agrees.
- Make sure that all your conditions are included regarding mortgage, building inspection, verification of the certificate of location, etc. In rural areas, it is a good idea to request a water test (quality and quantity) and a certificate of compliance of the sewage treatment system. Also, make sure an expiry date for the conditions is specified in the contract.
- Check that the certificate of location provided by the seller reflects the reality. If you have any doubts, you may wish to order a new one. However, note that unless otherwise agreed, you will be responsible for the cost of the new certificate if the previous certificate proves not to have been amended, in accordance with clause 10.3 of the various Promise to purchase forms (or clause 10.5 of the Promise to purchase – Divided co-ownership).
Tips for the seller
- Make sure to read carefully and understand the promise to purchase. Ask your broker any questions you may have so that no doubt remains. Your declarations entered in the brokerage contract should also appear on the promise to purchase. If some of the desired elements do not appear on the promise to purchase, you can add them on a counter-proposal.
- Check that the cadastral designation and the land area are accurate.
- Make sure the dates of occupancy, adjustments and signing of the deed of sale correspond to your needs.
- Check that the inclusions and exclusions are entered in accordance with your instructions and that the buyer’s conditions can be fulfilled within the deadlines indicated.
- As a seller, you have the right to receive all promises to purchase made after your property is put on the market. Moreover, you are completely free to reply to them in any order you see fit, or even not to reply at all.
For more information, read the following articles:
- Presenting several promises to purchase
- When the buyer does not show up for his appointment with the notary
- Clause 10.5 of the promise to purchase... to ward off unpleasant surprises