Buying a property can often involve several rounds of back and forth negotiations between the seller and buyer. Negotiations typically focus on the purchase price of the property and/or the terms and conditions of the sale. If negotiations are successful, the negotiated terms are finalized in an Agreement of Purchase and Sale. 

What is an Agreement of Purchase and Sale?

An Agreement of Purchase and Sale is a written contract between the buyer and seller of a property. It is the main document that outlines important details of the transaction such as the purchase price and the applicable terms and conditions.

An Agreement of Purchase and Sale is the culmination of a process that begins when a prospective buyer makes an offer to the seller. If this offer is ultimately accepted by the seller, the agreement converts into a legally binding contract within a timeframe laid out by the buyer. 

Once entered into, the written contract cannot be withdrawn without the consent of both parties.

What Is Included In An Agreement Of Purchase And Sale?

An Agreement of Purchase and Sale should be carefully worded. In particular, any special terms or conditions should be properly documented in writing, since verbal agreements are difficult to both prove and enforce in a court of law.

Most agreements of purchase and sale follow a similar structure. There is basic information about both parties (the buyer and seller) as well as the property that is being sold. Common elements include:

  • The offer price – the amount the buyer is offering to the seller in exchange for the property, and any deposit amount.
  • The closing date – the date that the legal ownership of the property passes from the seller to the buyer. Sometimes also referred to as the completion date.
  • The legal names of the buyer and seller.
  • The property address including its legal description.
  • The expiration date – an irrevocable date upon which the offer expires.
  • A listing of chattels (movable property) and fixtures (attached to the property) included and not included in the sale. Chattels commonly include things like blinds or window coverings, as well as appliances such as refrigerators, stoves and washers and dryers. Fixtures may include outdoor structures such as a garden shed. If any fixtures are particularly valuable, model numbers should be recorded. 
  • Any rental items which are being transferred as part of the sale, such as a hot water heater or furnace. These should include the transfer of any renal contracts.
  • Clarification as to whether Harmonized Sales Tax (HST) is included in or in addition to the purchase price. HST must be paid on new home purchases but not resale homes. 
  • A title search or requisition date – the date by which the buyer must complete all necessary searches and examinations of title to ensure there are no unknown liens or encumbrances on the property.
  • Any conditions related to the sale of the property. The inclusion of conditions will depend on individual circumstances and the competitiveness of the market. Common conditions include:
  • the buyer securing financing
  • a successful home inspection, 
  • a property survey provided by the seller
  • the sale of the buyer’s property by a certain date 
  • A holdback provision if the buyers wish to “hold back” a portion of the purchase payment until after the closing date and the condition of the home has been verified. Holdback provisions are not customarily included in an Agreement of Purchase and Sale and must be expressly negotiated to be included.

Once a seller accepts an offer, and all conditions are either satisfied or waived, the offer to purchase converts to a legally binding contract. 

In Ontario, the most common template for an Agreement of Purchase and Sale is provided by the Ontario Real Estate Association (OREA), which is the professional association that represents real estate agents and brokers in the province. 

Why It’s Important to Have a Real Estate Lawyer Draft or Review an Agreement of Purchase and Sale

An Agreement of Purchase and Sale is required for the sale of all real estate transactions. This applies to all sales, even private sales completed without the assistance of real estate agents. While the Agreement of Purchase and Sale does not have to be drafted by a lawyer, it is highly advisable. Agreements of Purchase and Sale, as with most legally binding contracts, are quite technical, complex and highly nuanced. Further, the legal and financial consequences of a poorly drafted agreement can be quite significant.

In addition to drafting or reviewing the Agreement of Purchase and Sale, real estate lawyers assist buyers with title searches, help coordinate the production and exchange of documents, protect parties against fraud, title issues and other uncertainties. Real estate lawyers also assist buyers with a variety of problems or issues that frequently arise in real estate transactions, such as:

  • Liens against the property – claims by other parties, such as creditors that may restrict property ownership.
  • Conflicts between asserted property lines and those that appear on legal surveys
  • Insurance issues that arise from a property being located in an area at high risk for flooding, wildfires or other natural disasters.
  • Construction defects that may be uncovered during a home inspection.
  • Municipal heritage designations that may restrict the owner’s ability to renovate or alter a home.
  • Planned municipal projects, such as the building of roads or rail lines, that may interfere with the character of a property or the new owner’s ability to enjoy it.
  • Situations where the seller is not in fact the legal owner of the property!

Contact the Residential Real Estate Lawyers at Tierney Stauffer LLP, Serving Clients in Ottawa, Arnprior and across Ontario

At Tierney Stauffer LLP, our real estate lawyers have over 70 years of combined experience representing clients in residential real estate transactions, commercial real estate transactions, and commercial leasing disputes. We provide our clients with timely service that is cost-effective and personalized. Whether it is the purchase of your first house, the sale of a condo, or refinancing a property, our real estate team is ready to assist. Call us at 1-888-799-8057 or contact us online to set up a consultation with an experienced real estate lawyer.


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