Buying or Selling Real Estate privately?
NOTE: the article below is general information and does not constitute legal advice. Please contact a real estate lawyer to ensure you are receiving advice that covers your particular situation.
From time to time, I will get a call from a potential buyer or a seller asking about the steps to complete their real estate transactions without the use of a real estate agent. My suggestion is to always sit down with a local real estate agent who knows your market and has the requisite skills to assist you with your transaction. One should aim to understand the services realtors provide; the value they add to the transaction and how this can help you in the long run. That being said, if you are absolutely certain that you are prepared to do without the services of a real estate agent, some general steps are outlined herein.
First, the buyer and seller would have to determine who is making the initial offer and thereby having their lawyer draft the agreement of purchase and sale. The lawyer will have a fee for this, usually based on time spent or they may have a set fee. If you work things out in advance, it can help simplify the real estate contract which may save you some money on legal fees. Remember, the lawyer is not and cannot play realtor. The lawyer is generally not going to visit the subject property or have much of an opinion about the true market value – this is the area of expertise of real estate agents. That being said, from a contract perspective, below is a general list of questions that we require from someone looking to have an agreement of purchase and sale drafted. Be advised that these are basic questions and that your transaction may differ and have additional moving pieces that need to be considered. For general information, this is what we would ask of the parties:
Agreement of Purchase and Sale (Private Questionnaire)
• What are the names of the buyer(s)? – Please provide full legal names as they are to go on the title.
• What are the names of the seller(s)? – Please provide full legal names as they are to go on the title.
• What is the address of the property? – Please include any parking/locker details, if any.
• What is the offer/purchase price?
• What is the amount of the deposit?
• Who is the deposit being paid to? – Usually, it is being paid to either the realty company or the seller’s lawyer, in trust. It is advised not to make a cheque directly payable to the seller.
• Who is making the offer (buyer or seller)?
• What is the irrevocability date?
In other words, how long does the other party have to accept your offer?
• What is the closing date?
• Which items are being purchased as a part of this transaction?
When in doubt, list it out. Usual items include a fridge, stove, washer, dryer, electric light fixtures etc.
• Are there any rental items on the property?
The buyer typically assumes these rental contracts.
• Is the property a single-family residential dwelling or is it a duplex/triplex/multi-unit. Please provide details.
• Are there any realtors involved in the transaction at all? If so, please provide their name and contact details.
• What type of conditions are you looking to include in the agreement?
Generally speaking, a buyer may want to make it conditional to financing or home inspection to name a few or possibly subject to the sale of an existing home or confirmation that home/fire insurance can be obtained by the buyer. Further details would be required.
• Are there any Tenants on the property? If so, are the tenancies being assumed? Please provide copies of the leases.
• What is the name and contact information for the lawyer representing the other party?
• Are there any other items you wish to share?
As you can see, there is a lot of information that needs to be gathered. Note that if there are any conditions included in the agreement of purchase and sale, they need to be drafted to meet the intentions of the buyer and seller. Further, the conditions also need to be addressed once they are satisfied by signing further documents/ schedules.
Another note is to make certain of which items are being kept by the buyer and which are going to be removed by the seller. Generally speaking, chattels do not form a part of the agreement unless specifically referenced as included. Chattels are items of personal property that are not ‘attached’ to the real estate such as washers, dryers, stove, tables, chairs and various other items that make up ‘stuff’ inside a house. On the other hand, items that attach to a building/house are generally known as fixtures. These items are known to be sold with the property unless specifically excluded. An example of a fixture may be a built-in workbench or a built-in wall safe. Though there is some grey area, one suggestion is that if it will cause damage to remove it from the property, it may be considered a fixture. This is the reason to work it out in the agreement and as usual, real estate lingo goes, ‘when in doubt, spell it out’. Not only will this avoid unpleasant surprises, but it will also assist with any potential litigation if a dispute arises.
There are a number of other items that need to be considered and clients (buyers or sellers) may require more contact with their real estate lawyer since they do not have the benefit of working with a real estate agent. The main message here is that if you’re going to decide not to proceed with the assistance of a realtor, be aware of your rights and speak to a real estate lawyer before signing anything.
VRS Law is a real estate law firm serving Kitchener, Waterloo, Cambridge, Guelph, and other areas west of the GTA. We offer assistance in buying, selling, refinancing along with other practice areas. If you have any questions about real estate lawyer Kitchener, give us a call!Read More