What Is an Agreement of Purchase and Sale in Ontario?

An Agreement of Purchase and Sale outlines the terms of a real estate sale in Ontario. Once both parties sign an APS, it becomes a legally binding document. By signing, both parties indicate they agree to the document’s terms, making it an enforceable contract. The agreement can go back and forth between the buyer and the seller multiple times before they reach an agreed-upon contract. 

To ensure all your bases are covered, have a lawyer or a real estate professional assist you during this process. Understanding the APS’s clauses, terms, and obligations before you sign is critical, as breaching this contract can lead to legal and financial consequences.

What Information Should an Agreement of Purchase and Sale Include?

1. Basic Details About the Buyer and Seller

The APS should include the full legal names of the Buyer and the Seller. Both parties’ names in the APS must match those on official identification documents. Having the names match ensures compliance with legal requirements and avoids complications.  

2. Description of the Property

This section should describe the type of property being sold (whether it’s a condo, house, mobile home, duplex, etc.). You also need to note the property’s address and legal description. You can find the property’s legal description on a tax assessment, mortgage agreement, or land title. If you’d like, you can attach a property description with more details, such as the number of bathrooms, bedrooms, and more. 

You’ll also need to outline the general condition of the property and specific disclosures. In Ontario, you must include whether the property has material latent defects that would render it unfit or unsafe for the buyer’s purposes. Check out our APS article to learn more about disclosures and how to identify what needs to be disclosed. 

3. Offer Price and Deposit Information

The APS should state the purchase price of the property, which usually changes during the negotiation process. Remember, appraisals or inspections can lead to sales price adjustments. The document should also specify the timeline of when payments should be deposited. You’ll need to include: 

• The amount the Buyer is to deposit

• The date the deposit is due

• Who is to hold the deposit until the end of the deal 

• Where the Buyer will obtain financing (e.g., a  bank, private  lender, or the seller)

4. Irrevocability and Completion Date

The Irrevocability date is a specified date by which the party receiving the Offer must consider and accept it. If the party receiving the Offer does not accept it by the Irrevocability date, the Agreement becomes void. 

The Completion Date (aka the Closing Date) is the day the Buyer takes physical possession of the property. You can give the buyer the option to terminate the contract after signing it. This would mean the buyer can terminate the Agreement for any reason provided they pay a fee. 

5. Chattlets Included

The Buyer and the Seller need to note which items (Chattlets) they want to include with the sale. Chattlets are not automatically included and must be added to the APS for clarity. The Seller should agree with the items to be included as part of the purchase price. It’s a good idea to list all the Chattels the Buyer wants to take with the property, and which items the Seller is willing to leave behind.

6. Fixtures Excluded

Fixtures are items attached to the property, but the parties have agreed that they won’t be included in the sale. The details of which Fixtures will remain with the property and which will be removed should be drafted into the (APS).

See some examples of Chattlets and Fixtures here.

6. Rental Items

Any rental items that are included with the property should be clearly defined in the APS. Rental items include furnaces, air conditioners, and more. The Agreement should address which rental items can and will be transferred from the Seller to the Buyer. 

7. HST

This section details whether the Government of Ontario’s harmonized sales tax (HST) is to be paid. Pre-owned residential property transactions are typically HST-exempt. The HST was paid by the original Buyer when the property was first built. 

For a newly-built property, the Buyer typically pays HST. The APS should state whether the property is HST-exempt and if HST is to be paid.

8. Title Search Date

A Title Search Date is a deadline by which a Buyer can conduct research to ensure no legal issues impact the property’s ownership. Certain title issues can lead to the termination of the APS. 

The Buyer and Seller must agree on a reasonable Title Search Date that allows adequate time for a thorough search. Title-related concerns must be addressed before the transaction is settled. 

10. Terms and Conditions of the Sale

Certain conditions must be met before the sale is finalized, like a satisfactory home inspection. If a condition isn’t met, the Buyer or Seller is within their rights to cancel the APS. These conditions protect both parties, ensuring a smooth and fair transaction. It’s important to list all conditions in the Agreement to prevent confusion. 

11. Successors and Assigns

If one party passes away or cannot complete the transaction, that party’s heirs successors, or assigns are bound by the APS. This enables the other party to rest assured, knowing the transaction can still be completed.

12. Spousal Consent Signature

Spousal consent may be required for the real estate transaction to be authorized. This is intended to protect spousal rights under the Ontario Family Law Act, R.S.O. 1990, c. F.3.