THE PRELIMINARY CONTRACT
OFFER TO PURCHASE
You have finally found the house of your dreams. You want to acquire it. How to do? Above all, hasty gestures must be avoided. Before signing any purchase proposal, the greatest caution is advised. Do you know, for example, how to distinguish an offer to purchase from a promise to purchase? Are you able to assess the legal effects of either?
Also, before signing any document whatsoever in order to buy a building, you will be well advised to consult your notary. The latter is able to verify the content of such a document, to determine its exact nature and, above all, to tell you precisely what you agree to. The notary will be able to advise you to avoid any unpleasant surprises. Let your notary guide you to a perfectly successful property purchase: as the saying goes, prevention is better than cure.
THE VARIOUS PURCHASE PROPOSALS
The proposal to buy a building can take several forms:
- The offer to purchase;
- The counter offer;
- The unilateral promise to purchase (or option).
The offer to purchase differs from the promise to purchase in many respects, in particular with regard to the right to be able in principle to revoke it at any time before receipt of the acceptance (if the offer is not with a time limit for acceptance) and with regard to the liability regime applicable in the event of non-compliance. When the purchase offer is validly accepted as it is by its recipient, it generally becomes a bilateral promise to purchase-sale, that is to say a preliminary contract which commits both parties.
This preliminary contract, as its name indicates, supposes the conclusion of another contract to intervene later, the sale itself. But already, at the stage of this preliminary contract, the buyer is obliged to buy and the seller is obliged to sell in accordance with the terms and conditions of this preliminary contract. Also, beware of the many forms already prepared in advance. Without really understanding all the subtleties, you could for example commit to:
- Make a non-refundable deposit;
- Respect deadlines;
- Waive a warranty.
CAN THIS PRELIMINARY CONTRACT BE CANCELED?
Unless both parties agree to cancel it, this preliminary contract cannot be terminated, except for causes recognized by law. Also, as a general rule, you are bound by this preliminary contract; the other party is entitled to compel you, by legal means, to perform all the obligations for which you are liable. Depending on the circumstances, the judge may follow an action for the transfer of title or may simply award damages; on occasion, he will be in a position to both endorse the sale and order payment of damages.
Unless, perhaps, to turn around within three days? Or even within ten days? False!
If it is not written that you keep "a right of withdrawal", your engagement is normally irrevocable.
A NEW HOUSE, AN EXCEPTION?
YES, BUT ONLY IN CERTAIN CASES.
The law obliges indeed to grant ten days to the promising buyer to be able to withdraw from his promise, most often, by the payment of certain costs, if it is the builder or the promoter who sells an immovable for residential use to an owner-occupant, that is to say a natural person who intends to acquire it to occupy it himself.
THE CONTENT OF A GOOD PROPOSAL
The notary understands the importance of a good purchase proposal. This proposal must protect the interests of both the buyer and the seller at the same time. This is what the notary does. He will therefore take care to record all the essentials for the sale, including in particular:
- The conditions precedent to the sale;
- The precise designation of the building and the list of other goods included in the sale;
- The respective obligations of the buyer and the seller;
- The price and method of payment;
- The amount of the deposit he will keep in trust;
- The conditions and guarantees of the sale;
- The documents to provide;
Dates and deadlines for:
- Inspection of the building;
- The signing of the mortgage contract;
- The signing of the act of sale;
- The occupation.
The notary knows all too well the serious problems resulting from an incomplete, poorly drafted, or poorly understood proposal.
Meet your notary to tell him about your project. He is the legal advisor of the agreement and the professional of real estate transactions. Thanks to his help, buyer and seller will prevent unfortunate and often irremediable situations.
TO MAKE YOUR CONTRACT A SUCCESS, YOU HAVE TO KNOW HOW TO START ON THE RIGHT FOOT.
The texts come entirely from the brochures of the Chambre des notaires du Québec.