This week on Les Oranges Pressées on CIBL, we will highlight the importance of the promise to purchase in a real estate transaction. This step is often deemed trivial, but in reality is far more essential than thought.
In November, Les Affaires published a special report on the subject titled La promesse d’achat: plus qu’un souhait, un engagement, which made a solid case for the importance of this document and how it shouldn’t be taken lightly. The promise to purchase is a form created by the Organisme Autorèglementation du Courtage Immobilier du Québec (OACIQ), which ensures the protection of both the seller and buyer. It also enables the notary to prepare the deed of sale which will then be copied into the land registry. If the seller accepts the buyer’s promise to purchase, both parties become legally bound.
The broker’s role
Purchasing a property is a significant event in one’s life and signing a promise to purchase can be stressful. It is highly recommended to have a broker by your side to support you during this momentous adventure. They will guide you, represent you at the time of purchase, and use their expertise to warn you of particular problems. With a buyer’s contract, you can trust your broker who will be able to move beyond their comfort zone to find the property that corresponds to your needs. If a home meets your expectations but is not listed in the MLS Home Price Index, a register listing real estate for sale in Canada, your broker will let you in on this exclusivity.
In an ideal real estate transaction, brokers representing each party are present to ensure that everyone’s wishes are respected. For example, if a buyer wishes to know the financial state of a building over the last few years, or simply wants to see how the condo is managed, it falls within the broker’s responsibility to gather all the necessary documents. If the buyer is dissatisfied with the outcome, the promise to purchase may be broken.
Conditions leading to the cancellation of a promise to purchase
Although the promise to purchase represents a commitment between the seller and buyer, there are cases where this agreement can be invalidated.
- If a building is revealed to be in poor condition following a thorough inspection, the promise to purchase may be terminated
- If particular factors, such as water infiltration, affect expenditures on the property or reduce its initial value, the buyer can withdraw the promise to purchase. The buyer will have many options: they can withdraw from the transaction, negotiate the price, or decide to go through with the purchase after all.
That said, a promise to purchase cannot be nulled due to a simple change of heart, hence the importance of being assisted by a broker with whom you can discuss matters, voice your concerns, and fully trust.
To enable future buyers to purchase a property with full knowledge of the facts, the OACIQ issued an informative document to guide them every step of the way in what could be the transaction of their lifetime.
Follow us on Facebook