The Purchase Agreement

You have found a property that checks your boxes — the right neighbourhood, the right size, and within your budget. Now comes the most consequential step in the home buying process: putting your offer in writing. The document that makes it official is the Agreement of Purchase and Sale (APS), and understanding it thoroughly before you sign is essential to protecting yourself.

What Is an Agreement of Purchase and Sale?

The Agreement of Purchase and Sale is the legal contract between you (the buyer) and the seller. Once both parties sign it, you are legally bound to the terms. This is not a casual expression of interest or a handshake deal — it is a binding contract with serious financial consequences if either party fails to follow through.

In most of Canada, the APS follows a standardized form provided by the local real estate board. In Ontario, the Ontario Real Estate Association (OREA) form is the standard. In British Columbia, the standard form is provided by the BC Real Estate Association. While the forms vary by province, the core elements are consistent.

Your realtor will prepare the APS on your behalf, but you should understand every clause before signing. Do not rely solely on your agent’s verbal explanation — read the document yourself, and ask your real estate lawyer to review it.

What the Agreement Contains

A standard Agreement of Purchase and Sale includes the following key elements:

Legal Description of the Property

This includes the municipal address (the street address you know) and the legal land description registered on title. The legal description identifies the exact parcel of land using the province’s land registry system — in Ontario, this is the Land Titles system administered by the Land Registry Office. This ensures there is no ambiguity about which property is being sold.

Purchase Price

The amount you are offering to pay. This is where your market research, your realtor’s comparative market analysis (CMA), and your budget all come together. The purchase price in your offer may be at, above, or below the asking price depending on market conditions and your negotiation strategy.

Deposit Amount and Timing

How much earnest money you are putting down and when it must be delivered. Deposits typically range from 2% to 5% of the purchase price in most markets, though in competitive situations, a larger deposit (up to 10%) can strengthen your offer. The deposit is held in trust until closing.

Inclusions and Exclusions

What stays with the property and what the seller is taking. Inclusions are items the seller agrees to leave behind — typically appliances, window coverings, light fixtures, and garage door openers. Exclusions are items the seller will remove, such as a specific chandelier, a mounted television, or a portable hot tub.

Be specific. If you want the Samsung fridge in the kitchen, list it explicitly. Vague language leads to disputes.

Conditions (Subjects)

Contingencies that must be satisfied before the deal becomes firm and binding. Common conditions include financing approval, satisfactory home inspection, and review of the status certificate (for condos). Conditions are covered in detail in the next section.

Closing Date

The date on which ownership legally transfers from the seller to you. This is the day you get the keys and become the homeowner. Typical closing periods in Canada range from 30 to 90 days after the offer is accepted, though this is negotiable.

Choosing a closing date requires coordination. You need to align with your mortgage lender’s timeline, your current lease expiry (if renting), the seller’s preferred date, and any logistical needs like moving arrangements. Your realtor can advise on what closing dates are most attractive to the seller.

Irrevocability Period

The deadline by which the seller must respond to your offer. During the irrevocability period, you cannot withdraw your offer — it remains open for the seller to accept, reject, or counter.

Representations and Warranties

Statements the seller makes about the property’s condition and history. These might include declarations that the seller is not aware of any environmental contamination, that the property complies with local zoning bylaws, that there are no pending work orders from the municipality, and that the property is not subject to any undisclosed liens or encumbrances.

If these representations turn out to be false, you may have legal recourse after closing. This is one reason why having a real estate lawyer review the APS is so important.

Key Clauses to Understand

Chattels vs. Fixtures

This distinction trips up many first-time buyers. A chattel is a movable item — the fridge, washer, dryer, and portable dishwasher are all chattels. A fixture is something permanently attached to the property — light fixtures, built-in shelving, hardwired smoke detectors, and towel bars are fixtures.

The general legal rule is that fixtures are included in the sale unless specifically excluded, and chattels are not included unless specifically listed as inclusions. However, the line between chattel and fixture is not always clear. Is a wall-mounted television a fixture? What about a shelving unit that is screwed into the wall but can be easily removed?

To avoid disputes, be explicit in your offer. List every item you expect to receive, and confirm that the exclusions make sense. Your realtor should review these carefully with you.

Title Search

Your real estate lawyer will conduct a title search to verify that the seller actually owns the property and has the legal right to sell it. The title search also checks for:

• Liens — Outstanding debts registered against the property (unpaid taxes, contractor liens, mortgage balances)
• Easements — Rights that other parties have to use part of the property (e.g., a utility company’s right to access a hydro corridor, a neighbour’s right of way)
• Encumbrances — Any restrictions or claims against the property that could affect your ownership
• Zoning compliance — Confirmation that the current use of the property complies with local zoning bylaws

Your lawyer will ensure you receive clear title on closing — meaning the property is free of any unexpected claims or restrictions. Title insurance (typically $250 to $500) is also commonly purchased to protect against title defects that may not be discovered through the search.

Seller Representations

The seller’s representations in the APS are legally significant. Common representations include:

• The seller is not aware of any existing or pending work orders, deficiency notices, or compliance issues from any municipal authority
• The seller has not received notice of any environmental contamination
• The property is not a grow-op or former grow-op
• All renovations were completed with proper permits
• The seller has the legal authority to sell the property

If the seller makes a representation that later proves false — for example, they claimed no knowledge of water damage but your contractor discovers evidence that the seller repaired a flooded basement before listing — you may be able to pursue legal action. Document everything and consult your lawyer.

The Irrevocability Period in Detail

When you submit your offer, you specify how long the seller has to respond. During this irrevocability period, your offer remains binding on you. You cannot change your mind and withdraw.

Typical irrevocability periods:

• Standard market — 24 to 48 hours is common, giving the seller adequate time to consider and respond
• Competitive market with offer presentation date — The irrevocability period is usually set to expire shortly after the designated offer presentation time (e.g., offers presented Tuesday at 7 PM, irrevocable until Wednesday at 11:59 PM)
• Bully (pre-emptive) offers — Often have shorter irrevocability periods (a few hours to overnight) to create urgency

Tip

Work with your realtor to set a reasonable irrevocability period. Too short and the seller may feel pressured or not have time to properly review your offer with their agent. Too long and you could be locked into an offer while missing another opportunity. In a multiple-offer situation, the listing agent will typically communicate when offers will be reviewed, and your irrevocability period should extend past that time.

What to Review with Your Realtor and Lawyer

Before submitting any offer, ensure you have discussed the following with your realtor:

• The offering price and how it compares to recent comparable sales
• The deposit amount and when it needs to be delivered
• All conditions and their timelines
• The closing date and whether it aligns with your needs
• All inclusions and exclusions
• Any special clauses or provisions

Before the deal goes firm (when all conditions are waived or fulfilled), your lawyer should review:

• The Agreement of Purchase and Sale in its entirety
• Title search results
• Status certificate (for condos)
• Any amendments or changes to the original offer
• The mortgage commitment and its terms

Caution

Never sign an Agreement of Purchase and Sale that you have not read and understood. If your agent is rushing you or telling you “it is standard — do not worry about it,” that is a red flag. Every clause matters, and once you sign, you are legally committed. Take the time you need, and do not hesitate to ask questions about anything you do not understand.

The Agreement of Purchase and Sale is the most important document in your home buying journey. Treat it with the seriousness it deserves, and make sure you have qualified professionals — your realtor and your lawyer — guiding you through every line.

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Next: Conditions That Protect You