When considering dates in an Agreement of Purchase and Sale you or your real estate agent should give attention to setting out a timeline that allows for a successful transaction on both sides.
Sellers are often eager to sell quickly and try to establish a quick closing. When this happens, it is important to have the remainder of the dates "tumble" backward as well. The consequence may be that there is not enough time between dates for the real estate lawyer to do a proper job. To ensure that dates tumble appropriately, rather than specific dates, timelines should be established as a number of days following acceptance (e.g. "4 days after acceptance" rather than "August 24"). It should be specified if these are business days or calendar days as this will affect the calculation of the date.
The important dates are as follows:
Condition on Solicitor Review of the Agreement of Purchase and Sale
Although rarely found on residential real estate agreements for resale properties (common in Agreements for new homes), these may be inserted for either the Buyer's or Seller's benefit. A solicitor review condition of a standard OREA form should be a 2-3 day period after acceptance.
This condition should run concurrently with the Status Certificate Review condition, but not with the home inspection and financing condition.
Condition for Review of Status Certificate on Condominium Purchases
This date should be approximately 15 days after acceptance. Many sellers or agents want to push this to 5 to 7 days. These dates are unrealistic. The Condominium Corporation's property manager is entitled by law to 10 days from request to deliver the Status Certificate. Then the Lawyer needs a few days to review the status certificate and draft a report to the Buyer. The Buyer needs a day or more to review the report from the lawyer before waiving conditions.
Condition for Financing
Financing conditions are often 5 to 10 days. It should be specified if these are business days or calendar days as this will affect the calculation date for expiration of the condition. A typical "A" lender will need 10 days to complete its commitment to you. I do not recommend waiving conditions until the lender provides an unconditional commitment - one that is conditional on appraisal of the property can still fall through if the appraisal is not satisfactory to the Bank - and YES, this does happen.
Condition for Home Inspection
Very likely this is the most important condition. Most Agreements will have this condition due on the same date as the Financing condition. You need enough time to attend to the Inspection, allowing time for the report to be generated, and time to review the report with your agent or general contractor if repairs are needed.
Condition for Insurance
This is relatively new in residential real estate but is a good idea. Allow yourself the same time for Insurance as you do for home inspection and financing.
Title Search Date
This is extremely important. The real estate lawyer needs enough time between the expiration of the last condition and the title search date for three things to occur: 1) the title search is to be ordered (4-7 days depending on the season); 2) the Title search to be reviewed (2-3 days depending on the complexity of the property); 3) Any issue on title to be identified and relayed to the real estate lawyer for the Seller (1-2 days). Approximately 2 weeks is required to ensure that there is enough time for your real estate lawyer to do a proper review of title and off-title matters.
Your completion date is the date on which you will take title to your new home. This date should be at least 1 week after your title search date. This will allow for time for preparation of documents, receipt and review of the Mortgage Instructions, ordering a title insurance policy and a time for you and your real estate lawyer to meet and review all of the documents.
When completing the Agreement of Purchase and Sale for your initial offer, carefully consider the timeline set out above and ensure that you are protecting your investment. A quick closing may be a disservice to you. You are investing hundreds of thousands of dollars into a property - you should protect that investment by allowing the people who work for you (the home inspector, mortgage broker/banker, real estate lawyer) to do their jobs properly.
If you have any questions, or would like the writer to represent you in a real estate transaction, contact Noah by email at [email protected] or call 613-563-6692.