Agreements of Purchase and Sale are legal documents in which a purchaser makes an offer to purchase a property from a vendor. The Agreement contains a monetary offer and lists the conditions to be fulfilled before the purchase of the property is completed.
The purchaser can rescind the Agreement if the vendor has not signed the Agreement, even if the vendor had verbally agreed to the contract. The purchaser must purchase the property after the vendor signs the Agreement. The vendor can legally enforce the Agreement if the purchaser withdraws from the contract.
The vendor will probably be able to keep the purchaser’s deposit if from the Agreement. The vendor may also sue for other damages, such as having to sell the property for a lesser price, or other losses the vendor suffers as a consequence of the purchaser’s withdrawal.
Under certain conditions, the purchaser can withdraw from a signed Agreement without consequences. These include:
- Conditions set out in the Agreement have not been fulfilled. An Agreement can contain many types of conditions:
- a financing condition in which the purchaser must obtain a mortgage
- home inspections
- review of status certificates for condominium purchases
- The purchaser hasn’t paid the deposit to the vendor. The vendor can sue the purchaser to pay the deposit.
- The Agreement may be cancelled if the contract cannot be performed through no fault of either the purchaser or the vendor. This includes an ‘act of God’ in which the property was destroyed by flood or fire before the purchaser could take possession.
A purchaser who wants to cancel an Agreement of Purchase and Sale should consult with an experienced real estate lawyer for assistance.