If you are in the process of buying a house in British Columbia, it's highly likely you will come across a contract of purchase & sale document. This document is used for producing a written contract in order to buy a house in BC. The document is legally binding and is used by both the buyer and seller within a transaction. A standard version of a contract of purchase and sale is published jointly through collaboration between the BC Branch of the Canadian Bar and the BC Real Estate Association (BCREA).
No matter where in British Columbia you are located, using a contract of purchase and sale document is standard practice. Even in areas of the province with their own real estate board, such as in Vancouver’s housing market which has the Real Estate Board of Greater Vancouver, using the BCREA contract of purchase and sale is still the standard practice.
The reason this contract is so important is because it outlines key information on the agreement, the parties involved, and the property, along with the obligations that both parties have. Some of the most important details in a contract of purchase and sale document are:
If you need to change or add anything in the contract, this can be done through a contract of purchase and sale addendum. An addendum is especially useful when getting rid of certain sections and clauses in the contract, as it makes the document easier to read versus striking these items out.
This section includes the property’s street address, the city or town it is located in, the postal code, and the property’s Parcel Identifier (PID). A PID is a 9 digit code that is used when identifying a parcel of land within the land title registry in BC. As well, there is a separate box to fill out with the properties legal description, which describes the plot of land and legal boundaries associated with it.
W hen you are submitting an offer or a counter-offer, you are able to outline specific conditions before the contract is finalized. Two of the more common conditions are:
Subject to financing means that the transaction is contingent on the buyer being able to obtain the money needed to complete the purchase through a mortgage. Especially if you are not pre-approved, you risk potentially losing your deposit or facing legal action if you can’t complete the transaction and don’t have this condition in the contract.
Subject to home inspection means that the buyer is able to get a home inspection on the property, and if anything serious is found, the buyer can walk away from the property. This can save you potentially thousands of dollars in repairs.
The offered price the buyer decides on for the property will all depend on factors about the property and the overall real estate market. In terms of the deposit amount, the average amount tends to be around 5% within the British Columbia market.
The sale completion date is when the sale will be completed at your appropriate land title office. This is also important because this will be when most of your closing costsare due. The possession date is the official date that the buyer will have vacant possession of the property, and the seller will be gone by. This may be more simply known as the closing date, and usually occurs the day after completion.
This date is used in calculating your final amount owed in your statement of adjustment. This is where fees and BC property taxes that are paid in advance by the seller will need to be adjusted for in the purchase price. This date is used to calculate the total amount owed for the fees and taxes that the buyer will need to pay the seller for, and is usually the same day as the completion date.
These sections include all the items that the seller is either including or excluding in the sale. Common inclusions are:
The easiest way to determine what is included is through the real estate listing information. If the information is not included, contacting the seller's agent can give you a better idea of what comes with the property. As well, certain items in the house may be up for negotiation through discussing with the seller and the sellers agent.
In order to protect the buyer from any damages that may occur after acceptance, this clause requires the property and included items to be in the same condition as when viewed on the viewing date chosen. This is standard in BC because pre-closing walkthroughs are uncommon.
This section is where both the buyer and seller in the transaction will indicate who their respective real estate agents are. If you are entering the sale without the help of a real estate agent, you will still have to initial it. If you're a buyer, finding a real estate agent can be very helpful in guiding you throughout the process, and should be considered before submitting an offer.
This is how long the offer or counteroffer is good for. The amount of time usually ranges from 24 to 48 hours. Especially depending on the seller's schedule, leaving extra time to review the offer might be necessary.