C2 M15 Introducing Residential Agreement Sale and Purchase Print V1

Module 15: Introducing a Residential Agreement of Purchase and Sale
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Module 15: Introducing a Residential Agreement of Purchase and Sale
This module will guide you through the clauses commonly used in residential transactions. The OREA Form 100:
Agreement of Purchase and Sale will be used to illustrate how required clauses are typically presented.
As a salesperson, you will need to understand each clause so you can explain it to a seller or buyer. Some clauses
require information you will need to insert. Accuracy, completeness, and clarity are important whenever preparing
any documentation used for a transaction.
You will also need to understand how to do the given:

 Reference any schedule attached to the agreement of purchase and sale
 Ensure any clause contained on a schedule is accurately written and understood by a seller and a buyer
By the end of the module, you will have a foundation for completing the agreement of purchase and sale to ensure
sellers and buyers are aware of their obligations prior to signing the document.
This module contains information about the given aspects of the agreement of purchase and sale:
 The parties, property description, purchase price, and deposit
 Clauses typically Included in a residential agreement of purchase and sale
 The signing process and attaching schedules

This module also provides opportunities for you to review scenarios that highlight how to discuss, and act
accordingly when faced with the previously listed topics.
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Menu: Introducing a Residential Agreement of Purchase and Sale
Number of Lessons 6 Lessons
Lesson Number Lesson Name

Lesson 1 The Parties, Property Description, Purchase Price, and Deposit
Lesson 2 Clauses Typically Included in a Residential Agreement of Purchase and Sale – Part 1
Lesson 3 Clauses Typically Included in a Residential Agreement of Purchase and Sale – Part 2
Lesson 4 The Signing Process and Attaching Schedules
Lesson 5 Summary Practice Activities
Module Summary

Lesson 1 | Page 1 of 29
Lesson 1: The Parties, Property Description, Purchase Price, and Deposit
This lesson details how to properly complete the contract details: the date of offer, seller and buyer names, the
property description, purchase price, deposit and deposit holder, and any schedule attached to the agreement.

An agreement of purchase and sale is used to document the terms between a seller and a buyer. An offer must
clearly represent the intentions of both parties and fully provide for all agreed terms. This lesson details the
information required to identify the parties, the property description, the purchase price, and deposit provisions.
Upon completion of this lesson, you will be able to identify and explain the information typically required to detail
key aspects of the parties, the property description, the purchase price, and the deposit provisions in an agreement
of purchase and sale.
Throughout this lesson, you will participate in decision points to test your knowledge on the topics presented.

Date of Offer
The date of an offer is the date the document was initially signed. The date will be referenced on any schedule
attached to the agreement of purchase and sale as well as other documents relating to the agreement which are
required throughout a transaction.
Most offers are initiated by a buyer. When the offer is signed, that becomes the offer date. For example, John
Huddle wants to place an offer on a property and the salesperson drafts the offer on September 27, 2019. The
salesperson meets with John to review the offer and John signs the offer on September 28, 2019. The date of the
offer in this scenario would be identified as September 28, 2019.
Does the Date of an Offer Change?
No, the date of an offer will not change. For example, a seller and their salesperson receive the offer made by
John Huddle on September 28, 2019, and decide to wait until the next day to make any decisions on how to
address the offer. The following day, the seller and salesperson discuss the offer and decide to make changes to
the offer and submit it back to John Huddle for his consideration. In this instance, the date of the offer remains
the same. Using our example, the date of the offer would remain as September 28, 2019, and not be changed to
September 29, 2019.

Date of Offer
As an example, the given statement could be used to document the date the offer was drafted:
From OREA Form 100: Agreement of Purchase and Sale. ©2019 Ontario Real Estate Association.
All rights reserved. Used under license.

A buyer wants to place an offer on a property. The buyer’s salesperson drafts the offer
on August 14, 2019. The salesperson meets with the buyer to review the offer and the
buyer signs it on August 15, 2019. The following day, August 16, the seller and listing
salesperson discuss the offer and decide to make changes and submit it back to the
buyer for the buyer’s consideration.
Which of the following statements is true?
There are four options. There is only one correct answer.
1 The date of the offer is August 14, 2019

4 The date of the offer has changed from August 14 to August 15 and then to August 16

Legal Seller and Buyer Names
When drafting an offer, use the full legal names of the seller(s) and buyer(s). If the individual has one or more
middle names, at a minimum identify the initial(s). Whenever possible, include the full middle name(s) as this helps
to distinguish the seller or the buyer who has a common first and last name. If there is more than one seller or
buyer, document each person’s names individually.
For example, John William Smith and Mary Jane Smith.
Buyer Verification
Identify all buyers on the agreement of purchase and sale. A person can be named as a buyer but their name may
not ultimately appear on title at registration. Conversely, an offer may be made in one buyer’s name but the
transaction closes with a second or third buyer also on title.

A minor is someone under the age of 18, which is the age of majority in Ontario. Any offer where the buyer is a
minor could be voided by the minor. For example, if the buyer is a minor and refused to close the transaction, under
contract law the buyer cannot be forced to close. Information on the requirements under contract law were detailed
in an earlier module.
Tip: Under the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), as a salesperson, you are
required to verify the identity of a seller and a buyer. Prior to drafting an offer, obtain the buyer’s identification and
document their full legal name to be used when preparing an offer. In a previous module, the requirements under
FINTRAC were detailed. You will learn more about identification verification later.
Seller Verification
As a listing salesperson, you are required to confirm the seller’s information and must also verify the identity of the
individual(s) acting as the seller. You can verify the ownership of the property using various methods, such as the
transfer/deed the owners received when the property was purchased, information from the Land Registry Office,
Municipal Property Assessment Corporation (MPAC) assessment information, or from the municipality. When
drafting an offer, the seller(s) full legal name can be obtained from the listing information.
Spouses as Sellers and Buyers
When a married couple is buying a property to be registered in both their names, typically both buyer spouses
names are shown as a buyer and both will sign the agreement of purchase and sale.
When a married couple is selling a property they own jointly, both spouses names are shown as a seller. Both will
sign the agreement of purchase and sale as a seller. To confirm joint ownership, both names must appear on the
title. If only one spouse is on the title, but the property is considered a matrimonial home, the spouse on title is
identified as a seller and that spouse signs the agreement of purchase and sale as a seller. The non-titled spouse is
not identified as a seller, but is asked to provide consent to the sale by signing under Spousal Consent. If the non-
titled spouse does not provide their consent, the transaction can be delayed or terminated as the non-titled spouse
has rights associated with the property under the Family Law Act.
A matrimonial home is one in which both individuals have an interest, and that is ordinarily occupied by the person
and their spouse.
It is important to ensure all seller and buyer names are completed accurately on an agreement of purchase and sale
as there may be legal implications if recorded incorrectly.

Implications of Missing or Incorrect Seller and Buyer Names
As a salesperson, it is important you ensure the names of the sellers and buyers inserted in the agreement of
purchase and sale are accurate. The parties named will be legally bound to the agreement and this will be important
in the event the agreement is breached.
Example 1: Buyer Breaches the Agreement
Robert Smith is buying Sally Jones’ property, and they are identified as the seller and buyer in the agreement of
purchase and sale. Robert agreed to pay a deposit of $50,000 upon acceptance; however, he is now refusing to do
so. Robert has breached the agreement. Sally can take legal action against him, but only him, for breaching the
agreement. If Robert has few or no assets Sally’s legal action, if successful, may be futile.

Example 2: A Named Seller Does Not Own the Property
Robert Smith and Barbara Smith are married. An agreement of purchase and sale is prepared showing Robert and
Barbara as the sellers, and Thomas Johnson, as the buyer. The Smiths refuse to complete the transaction on the
closing date. Thomas Johnson, the buyer, has legal recourse against the Smiths, the sellers, for breach of the
agreement. However, after checking the registered ownership of the property, it is discovered that only Robert
Smith is registered on title. Barbara is not a registered owner. Despite not being an owner of the property Barbara
will be exposed to liability because she was named as a seller when she should not have been.
On the other hand, if the transaction is completed, Thomas Johnson may insist upon Barbara being responsible for
all the sellers’ contractual representation and warranties (e.g. Urea Formaldehyde Foam Insulation (UFFI);
mechanical systems being in good working order) despite not being an owner of the property.
Example 3: A Buyer is Not Named in the Agreement
Jill Williams and Kathy Wong are friends and decide to buy a property together. After many months of looking, they
found the perfect property that they want to put an offer on. Before they could sign the offer, Jill had to go out of
town on business, so the offer was prepared showing Kathy as the buyer. Prior to the closing date, Kathy planned to
direct that ownership of the property be placed in her name and Jill’s name, as tenants in common. Kathy’s offer was
accepted by the seller.
Jill and Kathy apply for a mortgage to complete the purchase. The lender notices that Jill is not named as a buyer in
the agreement and refuses to approve the mortgage until the agreement is amended to add Jill as a buyer. An
amending agreement must be prepared. Jill and Kathy must sign it, and the seller must also sign. Will the seller
agree? This extra work and uncertainty could have been avoided by having named both Jill and Kathy as buyers in
the original agreement.
Consider another possibility. While Jill was out of town on business, she decided she did not really want to buy a
property with Kathy. Upon her return, Kathy excitedly told her that she had bought a property for them, but Jill tells
her she is no longer interested. What will happen? Will Kathy be able to complete the transaction on her own? If she
cannot or refuses to complete the transaction, the seller will take legal action against Kathy since she was the only
named buyer. Can Kathy sue Jill? What a mess! This could have been avoided by ensuring that all the buyers entered
into the agreement.
The leading practice is to get all parties to sign the agreement and for them to clearly understand their legal
obligations.

Legal Seller and Buyer Names
For example, the given lines could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale ©2019 Ontario Real Estate Association.

Additional Considerations When Identifying a Seller or Buyer
Sellers and buyers are not always identified as an individual on an agreement of purchase and sale. As a
salesperson, you could encounter situations where a party to the agreement is a corporation or a partnership which
will alter how an agreement is prepared. In some instances, someone other than the seller or buyer will be signing
on behalf of the party. These situations involve an estate, a person acting under a Power of Attorney, or an
individual who is acting in trust for another individual or entity. You will need to verify the correct names for each
situation and request the legal documentation as required to ensure appropriate identification of a party, and
ensure the individual has the authority to sign an agreement on their behalf.
The following five tabs contain information on the requirements for each option of identifying a seller or a buyer.
You must review all the tabs before moving forward.
Corporations as A corporation is a separate entity and ownership is by way of shares in the corporation. A
corporation can include one or more individuals and will have officers and directors named
Seller or Buyer
for the corporation.
Use the full legal name to identify the corporation and ensure the appropriate officer(s) are
identified, and the corporate seal is used with their signature.
In lieu of a seal, individuals signing can write “I/we have the authority to bind the
corporation” on the signature lines on the agreement of purchase and sale.
For the agreement of purchase and sale, insert the legal name of the corporation; for
example:
 ABC Rentals Limited
 1234567 Ontario Inc.
Information on verifying the corporation and the signing officer(s) is in a later module.

Partnership as A partnership is where one or more individuals enter into an agreement to carry on a
business. In some instances, the partnership could be identified as a limited partnership
Seller or Buyer
where one or more persons are general partners and one or more persons are limited
partners. A limited partner does not provide any services for the business, but rather may
contribute money and other property to the limited partnership.
When preparing an agreement of purchase and sale, use the partnership name; confirm
who the partners are, and who has the authority to bind the partnership.
In a general partnership, one partner can sign the agreement of purchase and sale which
binds the partnership. In a limited partnership, a limited partner may not have this
authority. To avoid any problems when the offer is being negotiated or the transaction is
being completed, the leading practice would be to obtain the signatures of all authorized
partners on the agreement of purchase and sale. For the agreement of purchase and sale,
insert the legal name of the partnership; for example:
 ABC Rentals
 smith and Jones, Partnership
Estates and An estate trustee is the only person with the legal authority to manage or distribute an
estate and is named in the deceased’s will. When there is no will, an application for probate
Estate Trustees
in the Ontario Superior Court of Justice is required to give a person the authority to act as
the estate trustee of an estate.
With proper legal authority, an estate trustee may sign the agreement of purchase and sale
as a non-owner. If there is more than one estate trustee, obtain a signature from all estate
trustees. To verify if an individual has the authority to act as the estate trustee, ask for a
notarized copy of probate documents to ensure all the trustees have signed and have the
power to sell under the will. An estate trustee can list a property for sale prior to obtaining
probate but the title cannot be transferred until probate has been obtained. A copy of all
documentation is retained by the brokerage and is used to ensure the appropriate
individuals are identified and sign the agreement of purchase and sale.

Beneficiaries may also need to sign the agreement of purchase and sale. If unsure who is
required to sign, seek advice from the lawyer for the estate. Failure to include all trustees or
confirm the authority to sell may result in a contract that is not valid or enforceable.
The agreement of purchase and sale would indicate the seller as “The Estate of John Doe”.
The estate trustee would sign the agreement of purchase and sale, followed by the words
“Estate Trustee”.
Power of A Power of Attorney (POA) is a legal document giving authority for someone to act on behalf
of another person. A POA may involve a general power to act on behalf of another or it
Attorney
might be limited in scope and contain precise details.
As a salesperson, you may encounter a POA in the given scenarios:

 A daughter might have a POA for an elderly mother suffering from dementia
 A spouse might have a POA for their spouse who is in the military and assigned
overseas
 A seller grants their lawyer a POA to negotiate and sell a property because the seller is
out of the country
If a person (i.e. as Attorney) is claiming to have authority to sign an agreement on behalf of

another person (i.e. the Donor) as the salesperson, you must verify that authority by
obtaining an original copy of the Power of Attorney (POA) or a notarized copy of it.
Furthermore, you must verify that the POA is legally valid, gives the attorney the authority
to sign that particular type of agreement (e.g. agreement of purchase and sale), and that
the POA is still in full force and effect (e.g. has not been revoked by the Donor or has not
expired if it had an expiry date).
For example, if John Smith is the Donor and he has appointed Sally Jones, as his Attorney,
pursuant to a Power of Attorney. The signing of the agreement of purchase and sale should
look as follows:

Additional considerations:
 A POA for Personal Care also exists, so ensure you request the POA for Property
 When the person represented by the POA dies, the POA is no longer valid
In Trust An “In Trust” arrangement occurs when a person known as a trustee signs the agreement of
purchase and sale on behalf of one or more other parties, known as beneficiaries.
Arrangement
Trusts can be used by sellers or buyers. A buyer may use a trustee to make an offer to
remain anonymous or to incorporate a company. Using a trustee for a company to be
incorporated is statutorily permitted and has special rules. On the other hand, a seller may
have taken ownership of a property through a trustee in order to remain anonymous.
The proper use of trusts, and the liability of the parties (trustee, beneficiaries) is
complicated, and legal advice for the parties is strongly recommended before preparing the
agreement of purchase and sale.

Real Property
Each property must have an accurate description to distinguish it from other properties and ensure the correct
property is being transferred to the buyer. Accuracy in the property description benefits both the seller and the
buyer as in some cases where the property was not described accurately, the buyer has been allowed to terminate
the agreement.
To ensure a complete description for each property is identified, the given information would be included in an
agreement of purchase and sale items:
 Address
 Side of the road the property is fronting on
 Municipality, city, township, region
 Lot size
 Legal description including any easements

Real Property
As an example, the OREA Form 100 contains a Real Property section, which could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale, Real Property ©2019 Ontario Real Estate Association.

Address
Include the full civic address of the property. Verify the address on the listing and ensure you have the correct street
type; for example:
 Jane Road
 Jane Street
 Jane Boulevard
 Jane Crescent, etc.
For rural properties, many areas have adopted the 911 program. If the area does not have this system, include the
lot number, concession number, and township for the property’s address. In addition, the listing could indicate the

property’s address; for example, R.R. #1, Anyregion, but this is not complete enough to identify the property. Do not
use the mailing address; for example do not use a PO Box number.
Side of the Road on Which the Property Is Fronting
Include the direction (north, east, south or west) of the side of the road that the property is fronting on. To
determine the direction, stand facing the front of the house. The direction in which you are facing is the side of the
road that the property is fronting on.
Where the Property is Located
Include the municipality and the geographic area where the property is located. Municipalities can be single tier,
lower tier, or upper tier. If the property is in the lower tier, also include the upper tier.
For example:
 Single tier: City of Anycity
 Lower and upper tier: Township of Anytownship, Region of Anyregion

Lot Size
Specify the frontage and depth of the property in metric or imperial units. Verify the dimensions of the property by
using a source document such as a survey, property tax bill, or notice of assessment. For irregularly shaped lots,
include all of the lot dimensions, if known. If appropriate, attach the survey as a schedule to the agreement of
purchase and sale.
When the words “more or less” are preprinted on an agreement of purchase and sale, this allows for minor
discrepancies that both parties are willing to accept. It does not replace the need for verification of the lot size. An
Ontario land surveyor is qualified to provide accurate dimensions for a property. In some instances, a seller may be
requested to provide an up-to-date survey.
For example:

And having a frontage of 19.76 meters more or less by a depth of 32.18 meters more or less
The accuracy of the lot dimensions identified on an agreement of purchase and sale can have an impact on a
transaction as demonstrated by the given examples involving a discrepancy in the property size.
Example: More or Less – Seller Loses Claim for Damages
A buyer was interested in purchasing a specific property with the intent to subdivide the lot. When viewing the
property, the boundaries were not readily visible, as the lot line was not identified by any markings, such as a fence.
The buyer agreed to purchase the property based on a lot size provided by the seller. The agreement of purchase
and sale identified the property as having a depth of 180 feet more or less. After agreeing to purchase the property,
the buyer discovered the actual depth of the property was only 154 feet, which would not allow for the lot to be
subdivided. The buyer refused to complete the transaction. The seller later resold the property for less money and
sued the original buyer for damages. The judge ruled against the seller’s claim for damages for two reasons: 1) since
the boundaries of the lot were not apparent on inspection, the deficiency in the lot size is sufficient enough that it
did not fall within the intent of the words "more or less"; 2) the exact measurement was an important aspect of the
purchase to the buyer as the intent was to subdivide the lot.
Example: More or Less – Seller Wins Claim for Damages
A seller and a buyer negotiated an agreement of purchase and sale, however on the closing date, the buyer refused
to complete the transaction claiming the property had been misdescribed in the agreement of purchase and sale.
The lot size incorrectly stated the depth of the property as 138 feet when the actual depth was only 120 feet. The
seller resold the property to another buyer for a lower price than agreed to with the first buyer, and sued the
original buyer for the loss. The judge ruled in favour of the seller as the defendant (the original buyer) had the
opportunity to view the property and see the actual size of the property. A contributing factor to the defendant
losing was that the rear yard was bounded by a cedar hedge and so there was no deception as to the lot's true
depth.
These examples illustrate the importance of an accurate description of the lot size. For some properties, the lot size
might be uncertain, for example an irregular-shaped lot. What can happen if you specify a dimension as “to be
verified”?

Example: Lot Size – Depth “to Be Verified”
The listing salesperson checked the municipal database for the dimensions of a property, which has an irregular-
shaped lot as the seller, had no survey. The database described the property as having a frontage of 87.64 feet and
a depth of 0 feet. As a result of this information, the salesperson measured the property depth using a tape
measure and listed it as 87.64 feet by 100 feet. The listing also identified the property was an irregular corner lot
and the depth was to be verified.
A buyer, who wanted to sever the property into two lots and build a house on each of the lots, submitted an offer to
purchase the property. The offer was amended by adding the words “to be verified” by the description of the depth
of 100 feet.
The parties agreed to the sale and the buyer made a deposit of $100,000. However, the buyer later discovered the
dimensions were too small and refused to close the transaction. Not only was the depth incorrect, but the frontage
of 87.64 feet was also incorrect. The seller resold the property but refused to return the $100,000 deposit.
The seller and buyer went to court to settle the deposit dispute. The court ruled the seller could keep the $100,000
deposit stating the words “to be verified” meant the buyer had accepted responsibility to be satisfied with the
accuracy of the dimensions.
The buyer appealed the decision and in the final judgement was granted a return of the full deposit plus costs. In
the final judgement, the court ruled the words “to be verified” only meant the depth dimension of 100 feet had to be
verified, and that it did not indicate the obligation was on the buyer to verify the information (i.e., the agreement of
purchase and sale did not state “to be verified by the buyer”). The judge ruled the added wording to the agreement
of purchase and sale indicated the accuracy of the lot size was not to be taken as a representation by the seller. As
well, the “more or less” wording remained in the agreement which allows for some flexibility with the contract
regarding the lot size discrepancy.
However, it was deemed the discrepancy in this case was outside the “more or less” flexibility, thus allowing the
buyer to receive the return of his deposit.
This case could have been avoided if the dimensions had been verified with the deed, a land survey, or the plan of
subdivision

Legal Description
A legal description is used to identify a property and is required when transferring a title. As such, a legal description
for the property being sold is necessary on the agreement of purchase and sale. The legal description is separate
from the property’s address and can be obtained by reviewing primary documents such as the deed or survey. In
cases where a primary document is not available, a secondary document, such as the property tax statement or
property assessment notice could be used. As a salesperson, using a primary document is preferred. When drafting
an offer, you should always verify the lot dimensions and legal description of a property. This practice will enable
you to provide accurate information and prevent any problems.
The legal description will also indicate any easements affecting the property. The property could be the dominant
tenement (i.e., the property which is benefiting from the easement) or the servient tenement (i.e., the property that

is subject to the easement). This would be indicated in the legal description along with the statement T/W (i.e.,
together with) for the dominant tenement, or S/T (i.e., subject to) for the servient tenement. In a residential
transaction, most easements relate to utility and municipal services, or a right-of-way providing access. You learned
about easements earlier.
A legal description will contain one or more of these words and abbreviations along with an identifying number and
the geographic location of the property:
 BLK – Block
 CON – Concession
 LT – Lot
 PCL – Parcel
 PL – Plan
 PT(S) – Part(s)
 SEC – Section
You learned about land descriptions earlier.

Legal Description Examples
Examples of legal descriptions include:

Example 1:
Lot 12, Plan 99M-5683, City of Anycity, Region of Anyregion
In this example, the property is described as lot 12, the Land Registry Office is identified by the number 99, and the
letter M identifies the plan of subdivision is registered under Land Titles. Plans are registered in sequential order,
and this plan is registered as number 5683.
Example 2:
Part of Lot 15, Concession IV, Township of Anytownship, Region of Anyregion
In this example, the property is located where there is no plan of subdivision registered. As a lot was typically 200
acres in size, this property is identified as being part of the lot which indicates it is less than 200 acres in size. In
some instances, this legal description could identify a reference plan affecting the property which has been
deposited at the Land Registry Office. If so, the legal description would be expanded to include that information.
This legal description would be amended to read:
Part of Lot 15, Concession IV, shown as Part 1 on 99R-8976, Township of Anytownship, Region of Anyregion
In this example, the part identifies which part on the reference plan the property is identified as. This could include
more than one part, or the reference plan could apply to more than one parcel of land. The Land Registry Office is
identified by the number 99 and the letter R identifies this as a reference plan. Reference plans are deposited at the
Land Registry Office in sequential order, and this reference plan is identified as number 8967.

Obtaining a Legal Description from a Survey
In this sample survey, the legal description for the property is located in the top left-hand corner: Lot 30, Plan 434 –
Township of Silver, County of Gold.

Obtaining a Legal Description from a Reference Plan
In this sample reference plan, the legal description for the property is located in the middle right-hand side: Part of
Lot 2, Concession 1, shown as Part 3 on 99R-1033.

How would you specify this property on the agreement of purchase and sale?
1 Fronting on the North side of Wilson Street

2 Fronting on the East side of Wilson Street
3 Fronting on the South side of Wilson Street
4 Fronting on the West side of Wilson Street

Purchase Price
The purchase price is how much the buyer is paying for the property on the completion date. When the transaction
is completed, the amount of money required by the buyer, and the amount of funds ultimately received by the
seller, will be adjusted. Details regarding the adjustments made when a transaction is completed are detailed in an
upcoming module.
When assisting a buyer with an offer to purchase, provide market research to help the buyer establish the purchase
price. Of course, the buyer always has the final decision on what the offered price will be.
For example:
Purchase Price: Dollars (CDN$) 250,000.00

Two hundred and fifty thousand Dollars
Ensure the words and numbers for the purchase price match.

Purchase Price
As an example, the given line from OREA Form 100 captures the purchase price in both words and numbers:
From OREA Form 100: Agreement of Purchase and Sale, Purchase Price ©2019 Ontario Real Estate Association.

Purchase Price for Acreage/Frontage
For some properties like a lot or farm, the purchase price could be based on other criteria.
Example 1:
A larger property being sold where the overall acreage is not verified, the purchase price could be identified based
on the estimated size. The agreement of purchase and sale would be required to contain a clause identifying the
purchase price is based on a specified price per acre (e.g., $7,000 per acre) and will be adjusted when a new survey
has been completed. In this example, if the property was estimated at 50 acres, the agreement of purchase and sale
would identify the purchase price as $350,000. Once a survey has been completed, the lawyers for the seller and the
buyer will adjust the purchase price based on the terms agreed to of $7,000 per acre.
Example 2:

A lot that is yet to be severed and the exact size is not determined could be identified based on a price per front
foot, or on a price per square foot. The purchase price would be identified based on the estimated size. The
agreement of purchase and sale would be required to contain a clause saying the purchase price is based on a
specified price (e.g., $1,000 per front foot) and will be adjusted once the severance has been approved. In this
example, if the lot was estimated at 52.35 feet frontage, the agreement of purchase and sale would identify the
purchase price as $52,350. The lawyers for the seller and the buyer will adjust the purchase price based on the
terms agreed to of $1,000 per front foot.
In addition to the purchase price on the agreement of purchase and sale, the buyer’s deposit is detailed.

Deposit
The deposit is an amount of money the buyer will pay prior to the transaction closing and is typically held in trust by
the listing brokerage. The amount of the deposit is an indication of the buyer acting in good faith as a larger deposit
shows a stronger commitment to completing the transaction. The deposit amount can vary based on market
conditions, the purchase price of the property, the location of the property, and the amount a seller is willing to
accept. As a salesperson, seek guidance from your brokerage for any concerns relating to a buyer’s deposit.
The initial deposit is identified on page one of the agreement of purchase and sale with any deposit(s) detailed on a
schedule. The agreement will identify that the deposit is paid by negotiable cheque, which means the cheque must
be capable of being deposited and the funds are available. Buyers will typically provide this deposit by way of a
cheque, money order, or bank draft. In some instances, a certified cheque could be required. The agreement of
purchase and sale will also indicate when the buyer will submit the deposit. The given three options are provided:

 Herewith – the buyer must submit the deposit at the same time as the offer
 Upon Acceptance – the buyer must submit the deposit when the offer is accepted (an agreement of purchase
and sale typically states that upon acceptance means within 24 hours of the offer being accepted)
 As otherwise described in this Agreement – the buyer must submit the deposit according to a clause
included on a schedule attached to the agreement
Specify the amount in the same format as the purchase price using words and numbers.
For example:
Deposit: Buyer submits upon acceptance
Ten thousand Dollars (CDN $) 10,000.00
A deposit should not be confused with the buyer’s down payment. A deposit is any money paid by the buyer toward
the purchase price prior to the transaction being completed. The buyer’s down payment is the equity invested into
the purchase of the property, and includes any money paid as a deposit. For example, a buyer is purchasing a
property for $250,000 and submits a $10,000 deposit upon acceptance of the offer. The buyer is obtaining a new
mortgage for $175,000 and has sufficient funds to pay the balance of the purchase price. The buyer’s down payment
is $75,000. The deposit of $10,000 is taken from the buyer’s down payment, not in addition to the down payment.
On completion of the transaction, the balance of the purchase price is comprised of the new mortgage and the
buyer’s remaining down payment of $65,000.

Deposit
As an example, the given statement could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale, Deposit ©2019 Ontario Real Estate Association.

Deposit Clauses Added to a Schedule
When a buyer’s deposit is to be submitted “as otherwise described in this Agreement”, a clause is added to identify
when the deposit will be submitted. Use a definite number of days, for example fourteen (14) days from the
confirmation of acceptance date or a specific date, for example 6:00 p.m. on the 24th of March 2019.
Example 1: Specific Number of Days
The buyer wants to submit a deposit a specific number of days after the offer is accepted. The agreement specifies
“As otherwise described in this Agreement” and a clause is included on the Schedule A.
Given is an example of a clause which addresses this requirement:

The Seller and Buyer agree that the deposit will be submitted in the form of a bank draft or certified cheque to the
Listing Brokerage within fourteen (14) days from the date of the Confirmation of Acceptance of this Agreement.
Example 2: Deposit By Electronic Funds Transfer
The buyer wants to make a deposit using an electronic funds transfer rather than by a bank draft or certified
cheque. The agreement of purchase and sale requires a clause to be included on the Schedule A.
Given is an example of a clause which addresses this requirement:
In addition to any other provision in this Agreement or any Schedule thereto the parties agree that any deposit to be
delivered by the Buyer to the Deposit Holder may be delivered by Electronic Funds Transfer (EFT) to an account
designated by the Deposit Holder. Provided further that the buyer making the EFT shall, with respect to the said EFT,
provide such information to the Deposit Holder as required by the Deposit Holder to comply with the requirements
of the Real Estate and Business Brokers Act, 2002, as amended from time to time and or to comply with other relevant
statutory requirements.

Deposit Questions and Answers
You will need to explain the requirements related to the buyer’s deposit while explaining the agreement of purchase
and sale. Here are six questions and answers to help you prepare for that discussion.
The following six tabs contain the answer to each question. You must review all the tabs before moving forward.
How Can the The buyer can provide a cheque, bank draft, money order, or submit a deposit using an
Electronic Funds Transfer (EFT).
Buyer Pay the
Deposit? In some instances, a buyer may be required to submit a deposit by certified cheque. In this
case, consider the timing of the deposit and whether the bank will be open for the buyer to
obtain a certified cheque. For example, if the deposit is identified as “upon acceptance” the
buyer is required to provide the certified cheque to the deposit holder within 24 hours of
the offer’s acceptance.
Who Holds the In a typical transaction, the buyer makes the deposit cheque payable to the listing
brokerage; for example, ABC Real Estate Inc. The listing brokerage holds the deposit in trust
Deposit?
pending completion or other termination of the agreement. Deposits held by a brokerage
in the statutory trust account are covered under the RECO insurance program.
Some circumstances may vary from the listing brokerage being the deposit holder. For
example, the buyer might request their brokerage or lawyer hold the deposit. In those
situations, seek guidance from your broker of record or manager.
When Are the The Real Estate and Business Brokers Act (REBBA) requires that monies received by a
brokerage be deposited into the brokerage’s statutory trust account within five business
Funds
days of receipt. Receipt of the deposit by anyone employed by the brokerage is deemed to
Deposited? be receipt of the deposit. This includes a salesperson or any non-registered employee of
the brokerage, such as an administrative person. Business days exclude Saturday, Sunday,
and statutory holidays. The time limit of five business days is the maximum number of

days. A salesperson who receives a deposit on behalf of the buyer should ensure the
deposit is submitted to the deposit holder according to the terms of the agreement and at
the earliest opportunity.
Ensure buyers are aware a cheque must be negotiable (i.e., the funds must be available)
when the deposit is made.
Does the Most agreements of purchase and sale stipulate that no interest shall be earned, received,
or paid on the deposit. If the buyer makes another arrangement concerning interest, insert
Deposit Earn
an appropriate clause on Schedule A.
Interest?
A brokerage is permitted to have an interest bearing trust account. If the buyer’s deposit is
to be placed into an interest bearing trust account, a brokerage is required to disclose in
writing the interest rate that the brokerage receives on the money. If there is a difference
between the interest generated by the account and the interest paid by the brokerage to
the individual, the brokerage must obtain consent. A clause can be included on a schedule
to the agreement of purchase and sale that obtains the consent of the seller and buyer
regarding any deposit interest.
How Can a Once a deposit has been placed in the brokerage’s real estate trust account, there are
regulations regarding the disbursement of the deposit.
Brokerage
Return a For example, if a deposit is identified as “herewith” and the deposit was placed into the
Deposit? brokerage’s trust account, but the offer was never accepted, the brokerage can refund the
deposit to the buyer without any documentation signed by the seller and buyer. In this
instance, a brokerage would retain a copy of the unaccepted offer to show why the funds
were deposited and disbursed.
For example, if an accepted agreement of purchase and sale contains a condition for the
benefit of the seller or buyer, and the condition cannot be fulfilled or waived, this results in
the offer becoming null and void. The brokerage must receive written, signed direction
from the seller and buyer relating to the return of the deposit, prior to disbursing the
deposit from the trust account.

Additional information relating to the return of a buyer’s deposit and the required
documentation is detailed in a later module.
How Must A brokerage has various obligations when documenting the receipt of a buyer’s deposit. A
listing brokerage will typically provide a receipt to a co-operating brokerage when the
Receipt of a
deposit has been received. The receipt of the deposit will be documented in the trust ledger
Deposit be when placed into the brokerage’s statutory trust account.
Documented?
A brokerage also has obligations under the Federal Proceeds of Crime (Money Laundering)
and Terrorist Financing Act relating to a buyer’s deposit. Information regarding the
requirements under FINTRAC are detailed in a later module.

A salesperson needs to explain the requirements and conditions of a deposit when

reviewing the agreement of purchase and sale with a seller or buyer.
Which of the following statements are true with respect to deposits?
There are five options. There are multiple correct answers.
1 A minimum deposit of 5-10% of a property’s purchase price is required.

A buyer can make a deposit using an electronic funds transfer provided a clause allowing for electronic
2
funds transfer is added to the Schedule A of an agreement of purchase and sale.
REBBA requires that deposit monies received by a brokerage be deposited into the brokerage’s statutory trust
3
account within three business days of receipt.
Typically an agreement of purchase and sale will give a buyer a choice as to when the deposit needs to be
4
submitted.
5 The buyer typically makes the deposit payable to the listing brokerage.

Buyer Agrees to Pay the Balance
An agreement will identify the purchase price and deposit, and will contain a clause stating the buyer agrees to pay
the balance set out on a schedule attached to the agreement. You will learn more about the details relating to the
balance due by the buyer later.
A schedule will be required for all agreements of purchase and sale and is used to identify the terms agreed to by
the parties. There are various schedules that can be attached, such as those required for complex legal descriptions,
detailed lists, and additional clauses.
When including additional schedules, make sure of the given points:

 Identify schedules sequentially; for example, A, B, C, D, etc.
 Ensure all parties to the agreement have initialled each schedule
 Attach all schedules in the same sequential order as listed; for example, A, B, C, D, etc.
 Ensure each schedule has enough information to be able to connect it to the correct agreement of purchase
and sale

Congratulations, you have completed the lesson!
There are six tabs on this page with a summary of the key topics that were covered in this lesson.
Date of Offer The date identified on an agreement of purchase and sale as the offer date is when the
offer is drafted and usually when the party making the original offer first signs. The date
would not change as the offer is addressed by the other party.
The date of the offer will also be referred to on any attached schedule or additional trade-
related documents.
Legal Sellers Use the full legal names of the seller and buyer.
and Buyers Verify ownership and the names of the parties using the appropriate documentation.
Names Other considerations for seller and buyer names include:
 Corporation
 Partnership
 Estate Trustee
 Power of Attorney
Ensure proper documentation is obtained for each.

Real Property To ensure the correct property is being transferred, the given information is included in an
offer:
 Municipal address
 Side of the road the property fronts on
 Municipality
 Lot size
 Legal description including easements
Ensure the property description is accurate.

Make sure you verify details using source documents.
Purchase Price The purchase price is the total money the seller is to receive in return for transferring the
title on the completion date. When indicating this on the offer, ensure the numbers and
words for the purchase price match.
Deposit A deposit is any money paid by the buyer prior to the transaction closing. The amount is
identified in both words and numbers. The deposit can be paid:
 Upon acceptance of the offer
 Herewith the offer
 As otherwise described in the offer
The amount of the deposit can vary according to jurisdictions and there is no minimum
amount. However, a deposit is often deemed to be a sign of good faith indicating the
buyer’s intent to complete the transaction.
Payment of The offer will specify how the balance of the purchase price will be paid by the buyer.
Ensure that the balance due is accurate based on the purchase price, any deposits and the
Balance
type of financing, if any.

Lesson 2: Clauses Typically Included in a Residential Agreement

of Purchase and Sale – Part 1
This lesson describes the given clauses: irrevocability, completion date, chattels included, fixtures excluded, rental
items, Harmonized Sales Tax (HST), title search, future use, and title.

This lesson continues to explore a residential agreement of purchase and sale. This is the first of two lessons which
detail the pre-set clauses typically included in an agreement. Understanding these clauses, and explaining their
intent and ramifications to a seller or a buyer, is an important role you, as a salesperson, will have. Once signed, the
seller or the buyer is bound to the terms of the agreement of purchase and sale. Your obligations under REBBA are
to ensure your party understands the agreement prior to signing.
Upon completion of this lesson, you will be able to identify and explain the clauses typically included in an

Irrevocability
An agreement of purchase and sale must identify the time limit for acceptance by the other party. This is known as
the irrevocability of the offer and there is no minimum irrevocable required, but the time should be reasonable. The
party making the offer should be advised the agreement is being signed under seal which results in the individual
being bound to the offer until the stated time and date. If the offer is not accepted within the time period, the offer
becomes null and void and any deposit submitted by the buyer is returned.
The irrevocability must address three items:

 Party making the offer
 Time limit
 Consequences of failure to achieve an accepted offer

Many aspects of the irrevocable clause are based on contract law. For example, an essential element of a contract
requires both offer and acceptance. Two of the requirements for acceptance is the offer must be open for
acceptance for a reasonable period of time and the acceptance must be communicated to the person making the
offer within the time required. Contract law was detailed in an earlier module.
The person making the offer has the right to specify the length of the irrevocable time. The irrevocable period can
be an integral part of any negotiations. For example, a reduced amount of time for the seller to consider a buyer’s
offer can limit the seller’s ability to obtain another competing offer. As a salesperson, ensure the party making the
offer fully understands their obligations associated with the irrevocable period. Negotiate a reasonable time period
based on current market conditions, and the specifics of the offer and the parties, to allow for informed decisions to
be made within the required time period. If a dispute arises regarding the offer or acceptance, advise the parties to
refer the matter to their respective lawyers.

Irrevocability Clause
As an example, the given clause could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale, Clause 1: Irrevocability ©2019 Ontario Real Estate
Association. All rights reserved. Used under license.

Specifying Irrevocability
The irrevocability of the offer identifies the time and date the party making the offer is bound to the offer. A specific
time and date must be identified, which is known as the irrevocable period.
The following three tabs contain information on the three items you will specify in the Irrevocability clause. You
must review all the tabs before moving forward.
Party Making This identifies who the offer is being made by, rather than who the offer is being made to.
Select either the seller or the buyer as the party making the offer.
the Offer
For example: A buyer submits an offer and the purchase price is $250,000. The Irrevocable
clause identifies the offer is being made by the buyer. The seller does not want to accept
the offer, but is willing to sell the property for $255,000. In this case the seller is making an
offer to the buyer. This would require changes to the offer, including the irrevocability;
strike out the word buyer and insert seller in the Irrevocability clause.
Time Limit The time limit is the specific time and date the party making the offer is bound to the offer.
The other party has only until this time to accept the offer and communicate that
acceptance back to the other party. For example, until 8:00 p.m. on the 22nd day of June
2019.
After this time, the offer may no longer be accepted. The offer has expired and the party
making the offer is free to transact with another party.
Consequences The irrevocability identifies the status of the offer if it is not accepted. The words “after
which time, if not accepted, this Offer shall be null and void and the deposit shall be
of Failure to
returned to the Buyer in full without interest” would identify what the parties agree to.
Achieve an
What this wording means is if the offer is not accepted, the offer automatically expires and
Acceptance is considered rejected by the other party.

The consequences of the expired or rejected offer are the same:
 The offer becomes null and void
 The deposit returns to the buyer in full without interest

Completion Date
The completion date, also known as the closing date, is the date set for the transfer of title from the seller to the
buyer. The date selected is important for a seller and a buyer as this could become part of the negotiations. The
date selected also impacts their respective lawyers as there are tasks and due diligence to be completed in advance
of this date.
Although transactions are completed electronically, the completion date cannot be a day that the Land Registry
Office is closed (Saturday, Sunday or a statutory holiday). When a transaction is completed, the buyer is provided
vacant possession of the property unless otherwise agreed to in the agreement of purchase and sale. The actual
transfer of title could occur at any time during the day, and no later than 6 p.m.
Additional information regarding the closing of a transaction is detailed in a later module.

Completion Date Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 2: Completion Date ©2019 Ontario Real Estate

Completion Date – Tenanted Property
The wording of the Completion Date clause specifies that vacant possession will be given to the buyer unless
otherwise provided for in the agreement. In the case of a tenanted property being sold, as a salesperson, you will
need to consider the impact of the completion date clause when selecting the date.
If the buyer is not occupying the property, a clause is required to address the fact that vacant possession will not be
provided and the buyer agrees to assume the tenancy. If the buyer requires vacant possession, the completion date
must not conflict with the requirements for notice under the Residential Tenancies Act (RTA). If the tenancy is month
to month, a tenant must receive a 60-day written notice to vacate. A 60-day notice means at least 60 days from the

date on which the rent is paid. If the tenancy is within the term of a lease, the notice to vacate cannot be effective
any earlier than the end of the term.
Example – Month-to-Month Tenancy
A tenant is on a month-to-month tenancy and rent is paid on the first day of the month. An offer to purchase the
property indicates a completion date of June 30 and the buyer requires vacant possession. The tenant must receive
written notice prior to May 1 and must vacate the property no later than end of day on June 30. A problem providing
vacant possession would occur if the seller accepted an offer on May 10 with a completion date of June 30. The
tenant has the right to stay until July 31 based on the timing of the notice. If the buyer agrees to delay their
occupancy of the property until the tenant later vacates, but still requires the completion date of June 30, then this
should be clearly indicated on the agreement of purchase and sale.
Example – Annual Lease
A tenant has a lease which expires on November 30. An offer to purchase the property indicates a completion date
of June 30. The buyer cannot be provided vacant possession as the tenant has the right to occupy the unit until the
end of the lease term. On the agreement of purchase and sale, the buyer must agree to assume the tenancy. The
buyer would then provide the notice to the tenant no later than September 30 to vacate and to obtain occupancy of
the unit at the end of the lease term. The agreement of purchase and sale would require a clause added to the
schedule stating the buyer agrees to assume the tenancy and vacant possession will not be provided. Should the
clause not include the statement that vacant possession will not be provided, the added clause identifying the buyer
will assume the tenancy will override the pre-set wording of the Completion Date clause. This will be further detailed
in Lesson 3 when the clause “Agreement in Writing” is explained.
As a salesperson, you will need to be familiar with the requirements of the Residential Tenancies Act as this could
impact the decisions of a seller or a buyer, or how an agreement of purchase and sale is completed. Additional
information regarding the sale of a property that is tenanted is detailed in a later module.

The completion date for a sale is stated as Saturday, December 14, 2019.
Which of the following statements is false?
The completion date would cause a problem, as the transaction must be completed on a day when the
1
Land Registry Office is open.
The completion date describes the date when the seller signs the agreement of purchase and sale to sell
2
the property to the buyer.
3 The completion date is often used as part of the negotiations.
The date selected impacts the lawyers of both seller and buyer as there are tasks and due diligence to be
4
completed in advance of this date.

Notices
At various times throughout a transaction, notices related to an offer may need to be given or received by the seller
or the buyer. Notices can include any documentation connected to the transaction. Under a seller and a buyer
representation agreement, the brokerage is typically provided the authority to give and receive notices on behalf of
the seller or the buyer. On the agreement of purchase and sale, the authority granted to the brokerage is
referenced and allows information to be included to identify a facsimile number or email address where a notice
may be sent. Once the notice has been sent electronically to the facsimile number or email address, it is deemed the
seller or the buyer has also received the notice, and any signature on the document is deemed to be original.
If a notice is not faxed or emailed, the notice is deemed received once it has been delivered personally or hand-
delivered to the seller’s or the buyer’s address for service provided in the agreement of purchase and sale. Under
multiple representation, or a customer service agreement, a brokerage is not authorized to act on behalf of the
seller and the buyer for the purpose of giving and receiving any notice. In these instances, the notice is not deemed
received until the seller or the buyer receives the notice. This could be done by inserting the seller’s or the buyer’s

information in the facsimile or email address portion of the clause, or by delivering the notice to the party’s address
for service.
IMPORTANT: When sending a notice by fax, print a confirmation that the transmission was sent. This would include
the time and date, the facsimile number sent to, and the number of pages sent. This will confirm the notice was sent
and received. If sending a notice by email, ensure you are using the correct email address. If delivering a document
that must be received within a required time period, verify the recipient has received the document. In many
instances, the salespersons involved in the transaction will have verbal communications throughout this time
period. However, it is always preferred to have written confirmation that the notice was received.

Notices Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 3: Notices ©2019 Ontario Real Estate Association.

A notice clause legally appoints brokerages for the seller and buyer to be able to give or
receive notices relating to the agreement on their behalf.
Which of the following statements are true related to the notice clause? You may assume the
OREA form 100 is being used.
The clause allows a brokerage representing both the seller and buyer to send and receive notices on
1
their behalf by fax or email.
The clause indicates that a notice could be delivered by fax and/or by email providing a fax or email is
2
provided in the agreement.
3 The clause specifically states that a notice cannot be delivered in person to a brokerage, seller or buyer.
A notice can be hand delivered to the address for service provided for in the agreement of purchase and
4
sale.
5 A good practice is to always verify delivery of a notice however sent.

Chattels, Fixtures, and Rental Items
When buyers are purchasing a property, they may note some items owned by the seller which they would like to
have included in the purchase price; for example, a refrigerator, stove, hanging mirrors not permanently attached,
patio furniture, etc. These items are known as chattels and a buyer must request these in the agreement of
purchase and sale, otherwise no chattels remain when the transaction is completed. Other items such as lighting
fixtures, or any built-in appliance or furniture, are known as fixtures and are to remain with the property unless
excluded in the agreement of purchase and sale. A last category to understand and be aware of is any rental items
on the property, such as a hot water tank.
The following three tabs contain information on chattels included, fixtures excluded, and rental items. You must
review all the tabs before moving forward.
Chattels Included
A chattel is a personal possession that is a moveable

object that can be removed from the property without
damage. In a residential transaction, common chattels
a buyer may ask to be included in the offer are various
pieces of furniture, appliances, rugs, hanging mirrors
not permanently attached, yard equipment, garage
door remotes, etc.
Chattels are excluded from the purchase price unless

they are specifically noted in the agreement of
purchase and sale. When listing an item to be included
in the agreement, be as specific as possible by listing a
detailed description.

For example:
Easywash Cyclone Washer–Model 300A Serial Number

XXXXX and Dryer–Model 300B Serial Number YYYYY
When in doubt if an item is considered a chattel or a

fixture, include the item in the clause identifying
chattels included to ensure the parties understand the
item is to remain. If there is a lengthy list of chattels,
attach a schedule to the agreement.
Fixtures Excluded
A fixture is an object that is to some degree,

permanently attached to the property. Fixtures are
included in the purchase price unless the agreement of
purchase and sale specifically excludes the item. When
listing a property for sale, a discussion with the seller
identifying items that will be included or excluded will
help prevent problems when an offer is received.
Problems arise more from confusion and incomplete
documentation than from wrongful intent of the seller.
As a salesperson, encourage sellers to remove or
replace any fixture to be excluded prior to the property
being shown to prospective buyers. Never make
assumptions. Clearly identify items that are included
and excluded from the sale.
In a residential transaction, common fixtures a seller

may ask to be excluded from the sale are ceiling or
wall lighting fixtures (e.g., an imported chandelier) any

item that has sentimental value, (e.g., a light fixture
that is a family heirloom), ceiling fans, specialized
equipment installed in the home, etc.
Rental Items
A rental item may potentially require a buyer to

assume the rental or lease, or require a seller to
terminate the contract if it cannot be assumed by the
buyer. Traditionally, rental items included hot water
tanks, water purification equipment, propane tanks,
satellite receivers, and alarm systems. However, in
more recent years, furnaces and air conditioning units
have become more common as a rental item, or on a
lease-to-own contract.
Check with the seller regarding assumability of any

rental equipment and be able to explain the
implications of such with the buyer.
The agreement of purchase and sale must describe

any item where the buyer is agreeing to assume the
rental contract. If the buyer cannot assume the rental
contract, the seller must take one of the given actions:
 Remove such equipment
 Perform requirements set out in the rental
agreement, such as the required buyout prior
to the end of the lease term
 Prior to listing the property, ensure the seller
understands any obligations to pay out a
contract. In some instances, this contract must

be paid prior to the transaction being
completed
 Carefully detail rental arrangements wherever
possible and provide details in the agreement
of purchase and sale to identify the estimated
costs associated with the rental item
Example:
Rental hot water tank, Union Energy, currently $36.40

monthly rental.
Descriptions may be more complex depending on

circumstances such as rent-to-own contracts and
shared rental/ownership plans. Failure to accurately
identify items not owned could result in the item not
remaining when the transaction has closed, or the
buyer being responsible for a lease/rental payment
they were unaware of. As a salesperson, ensure the
agreement of purchase and sale is properly completed
and all sellers and buyers understand any obligations.

A buyer wants to make an offer on a property that had a dining room containing a
beautiful chandelier and a very attractive dining room table and chairs. The buyer would
like the chandelier and dining room furniture included in the purchase price.
What does the salesperson need to do to ensure the dining room furniture and chandelier
remain with the property?
1 Nothing–they are all included as fixtures.

2 Ensure the chandelier is listed in the Fixtures Excluded section of the agreement of purchase and sale.
Nothing–anything that the buyer sees on the property during the showing is deemed included in the
3
purchase price.
List all the furniture wanted in the Chattels Included section of the agreement of purchase and sale and
4
ensure the chandelier is not listed in the Fixtures Excluded section.

HST
The Canada Revenue Agency collects Harmonized Sales Tax (HST) on new home purchases. Typically the HST does
not apply to resale residential properties where the home has been used only for residential purposes. If the home
was used partially for commercial purposes, HST would apply on the percentage of the property used for the
commercial purposes. However, if a resale home has been substantially renovated, or a home was rebuilt that was
destroyed by fire, it may be treated as a new home for the purposes of charging HST on the sale. A portion of the
HST paid is eligible for an HST rebate.
The HST clause allows for a salesperson to insert one of two phrases which identifies who will pay in the event the
transaction is subject to HST.

Included In
Inserting “included in” places the risk on the seller should the property be subject to HST. In a residential resale
transaction, the clause will typically be completed by inserting “included in”. If the property is not subject to HST, the
seller must certify this before the transaction is completed. This would be done by the seller and their lawyer. As a
salesperson, you would ensure the seller is aware of any obligations to pay HST if the words “included in” are used
on the agreement of purchase and sale.
In Addition To
Inserting “in addition to” places the HST onus on the buyer. This indicates that any HST owed on the sale of the
property must be paid by the buyer in addition to the purchase price. This is seldom used in a residential agreement
of purchase and sale for a resale home, however it is the pre-set wording used for a commercial agreement of
purchase and sale.
You need to be aware of basic procedures, while appreciating that HST rules are complex. Advise sellers and buyers
to seek expert advice regarding HST, such as with their lawyer and accountant. An appropriate condition may be
required to override the pre-set clause, if HST issues arise during negotiations.
Example: HST Applicable on a Resale Residential Property
A seller operating a day care business from the residential home lists their property for sale with the brokerage. The
salesperson advises the seller that the business being operated from the home would likely cause HST to be
applicable on a portion of the sale price. The salesperson advises the seller to seek expert advice. Before the seller is
able to meet with their lawyer and accountant, an offer is received from a buyer who is being represented by a co-
operating brokerage. The offer indicates HST is “in included in” the purchase price. The listing salesperson advises
the seller of the implications of the clause and recommends the offer be amended to allow the seller an opportunity
to obtain independent advice prior to a binding agreement. The listing salesperson adds a clause to the agreement
of purchase and sale allowing the seller three days from acceptance of the offer to confirm their obligations to pay
HST.

HST Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 7: HST ©2019 Ontario Real Estate Association.

Harmonized Sales Tax (HST) typically doesn’t apply to the resale of residential homes.
The HST clause allows a salesperson to insert one of two phrases to identify who will pay
HST if the transaction is subject to HST.
Which of the following statements are true about applying HST?
There are six options. There are multiple correct answers.
When HST applies, inserting the phrase “included in” in the HST clause places the cost of paying any HST
1
on the seller.
2 HST applies only to new home purchases.
3 Salespersons should determine whether HST applies.
When HST applies, inserting the phrase “in addition to” in the HST clause places the cost of paying any
4
HST on the buyer.
If the home was used partially for commercial purposes, HST would apply on the percentage of the
5
property used for the commercial purposes.
If a resale home has been substantially renovated, or a home was rebuilt that was destroyed by fire, it
6
may be treated as a new home for the purposes of charging HST on the sale.

Scenario
A residential property has a tenant on a month-to-month lease. A buyer has agreed to

purchase the property and requires vacant possession as they plan to live in the
property.
Which clause on the agreement of purchase and sale should you review to avoid a conflict
with the requirements of the Residential Tenancies Act (RTA)?
1 HST clause
2 Notices clause
3 No clauses are impacted
4 Completion date clause

Title Search
A title search is completed by the buyer’s lawyer within a specified time period prior to the completion of the
transaction. The lawyer will examine title to the property to ensure the seller’s interest in the property can be
transferred, identify any easements affecting the property, and search for any mortgages or other encumbrances,
such as a lien for property taxes not paid. A title search will also confirm the property’s legal description and the
name(s) of the registered owner(s).
As a salesperson, the agreement of purchase and sale will require you to insert a date for completion of the title
search. This date is referred to as the Requisition Date and should not be a Saturday, Sunday or statutory holiday.

The time limit should extend beyond any conditions inserted in the agreement so the buyer does not incur any
expenses should the offer become null and void due to conditions not being met.
The buyer’s lawyer does a title search at the Registry Office, which could uncover two types of title objections:
1) Root of title objection – this relates to fundamental title issues; for example, an old mortgage still registered
against the property. The seller’s lawyer would be required to ensure the lender is paid in full, or if already
paid, have a discharge of the mortgage registered on title.
2) Matters of title objection – this involves title issues that the seller does not have the right or authority to
remove. For example, a right-of-way is granted to another party and is registered on the title.
If found, the buyer’s lawyer must report these title objections to the seller’s lawyer prior to the Requisition Date.
Resolution of these issues requires the involvement of both lawyers. To help ensure the closing date does not need
to be delayed so any objections can be dealt with, the Requisition Date should be a reasonable time period after any
conditions in the offer are completed and generally no later than two weeks before the scheduled completion date.
In addition to searching the title, the buyer’s lawyer will also complete non-title searches. The agreement of
purchase and sale will provide for a second date for matters such as outstanding work orders, deficiency notices,
confirmation that the present use of the property is permitted under the zoning bylaw, and whether fire insurance
on the principal building can be obtained.
The clause stipulates two options for determining this second date, the earliest of which applies:
1. Thirty days from the Requisition Date or the date on which the offer conditions are fulfilled or waived,
whichever is the later date, or
2. Five days before closing

Scenario – Identifying the Date for Non-title Searches
An offer has been prepared which indicates a closing date of August 30. Today is June 1 and conditions in the
agreement of purchase and sale are to be fulfilled or waived by June 10. The offer specifies a Requisition Date of
August 15, about two weeks before closing.
Question: Until what date does the buyer’s lawyer have to do the non-title searches?
Recap
The date required for the non-title searches is the earlier of 1 or 2:

1. Thirty days from whichever one of these two dates is later:
 Requisition Date, or
 Date conditions are fulfilled/waived
2. Five days before closing
For this scenario which is the earliest date between 1 and 2?

1. Thirty days from whichever one of these two dates is later:

 Requisition date: August 15 + 30 days = September 14
 Date conditions are fulfilled/waived: June 10 + 30 days = July 10
The later date for this option is September 14
2. Five days before closing: August 30 – 5 days = August 25
Answer: The non-title searches must be complete by August 25.
In this scenario, the buyer would have five days before closing for any problems to be corrected and still complete
the transaction on August 30. As a salesperson, ensuring the Requisition Date is a reasonable time prior to the
completion date will allow for sufficient time prior to completing the transaction to discover and correct any title or
non-title issues. Additional information on title searches and the role of a lawyer to complete a transaction are
detailed in a later module.

Title Search – Identifying the Present Use
The buyer’s lawyer, when completing the non-title searches, will confirm the zoning for the property. This will allow
the lawyer to assess whether the present use may be lawfully continued by the buyer. To assist the lawyer in
completing this due diligence, the agreement of purchase and sale allows for the present use of the property to be
identified. For example, a resale residential property could state “single-family residential” as a description of the
present use.
At all times, insert the present use of the property, not the zoning designation (For e.g., do not insert R1 Residential).
The zoning designation may conflict with the present use of the property, which could impact the buyer’s ability to
lawfully continue the use. Although the present use of the property is not legally required to be inserted into the
agreement of purchase and sale, a leading practice is to complete the field to ensure the lawyer can fully complete
their investigation into the legality of the use. Should the present use not be identified, the wording allows for the
buyer to ensure the present use currently being carried on by the seller is legal. If it is not legal, the buyer may be
able to use the present use as an objection to completing the transaction.
Example:
A property is presently being used as a two-family dwelling and the buyer wishes to continue the use once
ownership is taken. The title search clause in the agreement of purchase and sale has not been completed with a
description of the present use. The buyer’s lawyer, when completing a zoning search, verifies the allowable use
under the zoning designation is restricted to a single family dwelling. In this instance, because the present use has
not been identified, the lawyer would be required to confirm with the buyer or the salesperson what the present
use of the property is. If the lawyer were not to confirm this, but rather was to assume the present use was a single
family dwelling, then the buyer’s interests would not be protected. After the transaction closes, the buyer will
discover that he will not be able to legally continue the use. Had the agreement of purchase and sale identified the
present use as “two-family dwelling”, the lawyer would be provided the required information needed to assess the
buyer’s ability to lawfully continue the use.

Title Search Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 8: Title Search ©2019 Ontario Real Estate Association.

Future Use
There are times when a buyer will purchase a property with the intent of changing the existing use. Approval to
make a change will be impacted by the present zoning for the property. An agreement of purchase and sale will take
this potential change to the future use of the property into consideration by including an acknowledgement that the
seller and buyer understand there is no representation or warranty of any kind that the future intended use of the
property by the buyer is or will be lawful.
If the buyer intends to use the property for a purpose other than continuation of the present use, a condition
should be inserted into the agreement of purchase and sale allowing the buyer the opportunity to investigate the
potential for a re-zoning, or confirm the present zoning would allow for the intended use.
Example:
A buyer is seeking to purchase an investment property and is shown a large, older, single family dwelling which has
the potential to be redeveloped into two or more self-contained rental units. The salesperson is aware of the buyer’s
intent to change the use, and inserts a condition into the agreement of purchase and sale allowing the buyer a
specified amount of time to confirm the future intended use is allowed under the present zoning. Should it not be
allowed and a rezoning of the property is required, the buyer may elect not to purchase the property. By including
the condition, the buyer is allowed time to complete the required due diligence as the agreement of purchase and
sale does not provide any representation or warranty that the future intended use is lawful.

Future Use Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 9: Future Use ©2019 Ontario Real Estate Association.

A buyer is seeking to purchase an investment property and is shown a large single family
home with the potential to be redeveloped into two self-contained rental units. The
buyer asks the salesperson to draft an offer for the property. The salesperson is aware of
the buyer’s intent to change the use, and inserts a condition into the agreement of
purchase and sale to protect the buyer.
What is the purpose of the future use clause?
1 To provide a warranty as to what future uses of the property are legal or illegal
To allow the buyer a specified amount of time to investigate the future potential for a re-zoning, or
2
confirm the present zoning would allow for the intended future use
To allow the buyer to warrant that the intended future use of the property will be legal at the time of
3
closing
It is an acknowledgement that there is no representation or warranty by the seller that the intended
4
future use of the property by the buyer is or will be lawful

Title Search Clauses - Potential Items Discovered During a Title Search
The buyer’s lawyer, while completing a title search for the property, is advised by the wording of the title clause that
the title being provided to the buyer will be good and free from restrictions, charges, liens and encumbrances
except for the given potential matters.
The following four tabs contain information on potential matters related to title. You must review all the tabs
before moving forward.
Specific Items in Items specifically set out in the agreement, such as an existing mortgage being assumed.
the Agreement The mortgage will not be discharged and title will show this registered mortgage when
ownership is transferred as the buyer is assuming the seller’s mortgage.
Registered Registered restrictions or covenants which are complied with.
Restrictions or This statement identifies the buyer is obligated to accept title to the property with these
Covenants restrictions or covenants, regardless of whether the buyer has been informed of these, if
the seller is currently complying with the restriction or covenant. Examples include
restrictions to parking recreational vehicles in the driveway, limitations to house size or
exterior finish, permitted use of the property (e.g., a restriction to the use the property for a
business activity, even though the zoning bylaw permits the use), erecting of a fence, etc.
Should the buyer wish to use the property in any manner different from the seller’s current
use, the agreement of purchase and sale should contain an appropriate condition allowing
the buyer time to have the matter investigated. For example, the buyer wants to erect a
fence in the back yard that is currently not fenced, but surrounded by a cedar hedge. The
salesperson includes a condition in the buyer’s offer allowing for time to complete the

required due diligence and gain approval regarding the fence. Should a fence not be
permitted, the buyer would not be obligated to continue with the purchase of the property
as a condition had been included in the agreement. If no condition is included, the lawyer
will identify the restriction when completing the title search, but the buyer would not be
allowed to terminate the agreement because of this.
Minor Minor easements for the supply of utilities and telecommunication services for the property
or adjoining properties.
Easements
As many properties can contain these easements, the wording is intended to avoid
frivolous title objections regarding usual utilities servicing residential properties.
Easements That Easements such as drainage, sewer, utility lines, etc. that do not materially affect the
property, meaning that the easement does not impact the use of the property. For
Do Not Impact
example, the easement could include a drainage culvert underneath the driveway. This
Property Use would not be an allowable objection to title as the assumption is the easement will not
impact the buyer’s ability to enjoy the property. The size and location of the easement
would be criteria used to determine whether the easement is minor, or if it materially
affects the use of the property.
Should the easement materially affect the use of the property, the buyer can use this as an
objection to title. If the property is subject to an easement for any reason other than
drainage, sewer, utilities and telecommunication (i.e., those reasons specified in the pre-set
clause), the buyer must be made aware of that easement and accept the easement.
Otherwise, when the easement is discovered during the title search, the buyer can use that
as an objection to title. For example, during the title search, the buyer’s lawyer discovers the
property is subject to a right-of-way to provide another property owner access to the lake.
As this was not disclosed to the buyer, the buyer could use this as an objection to title and
terminate the agreement.
As a salesperson, any easement affecting the property, whether minor in nature or one that
could materially affect the use of the property, should be disclosed to the buyer prior to
submitting an offer, and then an acknowledgement accepting the easement should be
included in the agreement of purchase and sale.

Title
The buyer is deemed to accept the title unless a valid objection has been provided by written notice to the seller.
This would occur by the buyer’s lawyer providing a written notice to the seller’s lawyer. If the objection cannot be
remedied or removed (i.e., an easement providing a right-of-way cannot be terminated), or if the seller is unwilling
to resolve the objection (e.g., high cost to remedy), the agreement is at an end and the buyer’s deposit is returned.
The seller, brokerage(s) and salesperson(s) are not normally liable for any costs or damages. In some instances, title
insurance can be obtained to remove, remedy, or satisfy an objection. Additional information on title insurance is

Title Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 10: Title ©2019 Ontario Real Estate Association.

Documentation Review Related to Title
While the lawyers are retained to investigate and address any title issues, as a salesperson, you can review certain
documents to help ensure the seller and the buyer are aware of any potential conflicts that could impact a
transaction.
The following three tabs contain information on different documents related to title. You must review all the tabs
before moving forward.
Source While a salesperson is not responsible for title issues, they can assist by reviewing the deed
and asking the seller specific questions at the point of listing the property. This will help
Documents
identify any significant issues that may affect the property, such as a large drainage
easement, a right-of-way such as a shared driveway, or any restrictions or covenants
registered on title. Any easements, restrictions or covenants should be fully disclosed on a
listing and a buyer should be advised of these prior to submitting an offer. An appropriate
clause documenting the buyer’s acknowledgement of the disclosure should be included in
any offer.
Property If completed by the seller, a property disclosure form can be useful in identifying any title
related issues. If title problems or concerns arise, it is important to direct both sellers and
Disclosure Form
buyers to seek advice from their lawyer.
The Code of Ethics requires a salesperson to disclose to every interested buyer, the
existence of any property disclosure form completed by a seller intended for a buyer’s use.
Upon request, the buyer is to be provided a copy at the earliest opportunity. A salesperson
representing a seller, would identify the existence of the disclosure form on a listing. A
buyer’s salesperson would then be advised of its existence, and should request a copy prior
to showing the property so the document could be referenced during the viewing.

Buyer If a buyer plans to make a change to the property; for example, construct an addition on
the home which will increase the overall square footage, it is important for the salesperson
Plans/Uses
to exercise caution. The property renovation could result in the size exceeding the
restrictions in the zoning bylaw.
The pre-set wording provides that the buyer must accept title if registered restrictions are
complied with. The existing home complies, however the renovated one will not. In such
instances, an appropriate condition is required to allow the buyer time to seek legal advice
on the matter.

A buyer is shown a property that has a frontage of 100 feet and a depth of 200 feet. The
house on the property is currently used as a single family residence. The seller provides
no disclosure regarding any easements or restrictions. The buyer places an offer, which
is accepted. The offer does not acknowledge any easement or restrictions. During the
title search, the lawyer finds two easements, a restriction and an encumbrance.
The buyer must accept an easement in favour of Bell Canada along the rear of the property
line that is 10 feet in depth.
Identify if the statement is true.

There are two options. There is only one correct answer.
True False

The buyer must accept an easement for a sewer line along the west lot line that is 5 feet in
width.

True False

The buyer must accept a mortgage registered on title which was paid in full but never
discharged.

True False

The buyer must accept a restriction on the property preventing it from containing anything
other than a single family home.

True False

The buyer must accept an easement providing a right-of-way to the adjoining property
owners to walk over a 10 foot wide portion of the property along the east lot line.

True False

There are five tabs on this page with a summary of the key topics that were covered in this lesson.
Irrevocability The Irrevocability is the time limit for acceptance of an offer. If not accepted, or
communication of the acceptance is not completed during the irrevocable period, the offer
expires and becomes null and void.
Completion The completion date is the date the transfer of title occurs. The pre-set clause provides for
vacant possession, unless an alternative arrangement is stated in the agreement. The
Date
completion date cannot be on a Saturday, Sunday, or statutory holiday.
Notices An agreement of purchase and sale identifies the various ways in which notices necessary
to the agreement may be given and received. A brokerage is typically authorized to give and
receive a notice on behalf of a client. However, under multiple representation, the
brokerage is not authorized. Notices can be provided by facsimile, email, or personally
delivered to the seller’s or the buyer’s address for service as identified in the agreement of
purchase and sale.
Chattels The agreement of purchase of sale must identify any chattels to be included, such as
furniture or appliances, otherwise, no chattels are included in the purchase. Clarity and
Included
specific details are required to avoid any confusion or mistakes on the chattels which are to
remain.
Fixtures The agreement of purchase and sale must identify any fixtures to be excluded from the
sale, such as a specific light fixtures or permanently attached mirror. If no fixture is
Excluded
identified as excluded, all fixtures are to remain with the property when it is sold. As with
chattels, a precise, specific description should be given for every fixture excluded.
Whenever possible, any fixture not remaining should be replaced prior to the property
being viewed.

There are five tabs on this page with a summary of the key topics that were covered in this lesson.
Rental Items The buyer is provided information on any rental item they will assume when the
transaction is completed. These are items not owned by the seller and might include an
alarm system, hot water tank, furnace and air conditioner, etc. In some instances, a seller
may be required to pay out the cost associated with the item; for example, a furnace that is
on a rent-to-own contract.
HST If the sale of the property is subject to HST, the offer will describe who is responsible to pay
the applicable amount. In resale residential offers, typically “included in” the purchase price
is identified. This would place the responsibility to submit any HST on the seller.
Title Search The buyer’s lawyer must complete a title search within the time period identified as the
Requisition Date. The buyer’s lawyer must submit any concerns to the seller’s lawyer which
are to be addressed. The clause also allows for the buyer’s lawyer to investigate non-title
aspects of the property such as outstanding work orders, deficiency notices, zoning
compliance, and the obtaining of insurance. When completing the clause, insert the present
use of the property; for example, single family residential.
Future Use An agreement of purchase and sale provides an acknowledgement from the seller and the
buyer that unless otherwise provided for in the agreement, there is no representation or
warranty that the intended future use of the property will be lawful.
Title When title is transferred to the buyer, the seller warrants the title is good and free from
restrictions, charges, liens, easements, and encumbrances with the exception of certain
specified matters. This includes any existing mortgage that is being assumed, registered
restrictions or covenants which are complied with by the seller, minor utility easements,
and other specified easements that do not materially affect the use of the property. A
salesperson should review any available documentation and enquire with the seller, to
determine any factors which could impact the sale of the property. Any information in this
regard should be included on a listing, provided to a buyer, and acknowledged in an
agreement of purchase and sale. If a title search results in objections to title that the seller
is unwilling or unable to resolve, the agreement is terminated and the buyer’s deposit
returned.

Lesson 3: Clauses Typically Included in a Residential Agreement

of Purchase and Sale – Part 2
This lesson describes the given clauses: closing arrangements, documents and discharge, inspection, insurance,
Planning Act, document preparation, residency, adjustments, property assessment, time limits, tender, Family Law
Act, legal, accounting and environmental advice, consumer reports, agreement in writing, time and date, and
successors and assigns.

This lesson continues to explore a residential agreement of purchase and sale. This is the second of two lessons
which detail the pre-set clauses typically included in an agreement. Understanding these clauses, and explaining
their intent and ramifications to a seller or a buyer, is an important role you, as a salesperson, will have. Once
signed, the seller or the buyer is bound to the terms of the agreement of purchase and sale. Your obligations under
REBBA are to ensure the party understands the agreement prior to signing.
Upon completion of this lesson, you will be able to identify and explain the information typically required to detail
key aspects of the parties, property and purchase price in an agreement of purchase and sale.

Closing Arrangements
A seller and a buyer will each retain a lawyer to complete the transaction. The agreement of purchase and sale will
set out details regarding the closing procedures for the transaction to be completed by electronic registration (e-
registration).
The seller’s lawyer will prepare the transfer/deed of land for electronic registration, and the buyer’s lawyer will
electronically register the transfer/deed and any other documents (e.g., a charge/mortgage). In Ontario, virtually all
transfers/deeds of land are registered electronically. Only lawyers that have been approved for registering
transfers/deeds can do so. Non-lawyers can electronically search properties, but they cannot register transfers.

Other documents which are not registered (e.g., undertakings, directions, declarations, survey), closing funds, keys,
garage door remotes, key fobs, etc. are exchanged between the lawyers, but this exchange will not occur at the
same time as the registration of the transfer/deed. Additional information regarding the closing procedures is

Closing Arrangements Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 11: Closing Arrangement ©2019 Ontario Real Estate

Documents and Discharge
The agreement of purchase and sale identifies the obligations of the seller to provide certain documents related to
the property to the buyer. The seller is obligated to provide any title deed, abstract, survey or other evidence of title
only if the document is in the seller’s possession or control. If a buyer requests a copy of any sketch or survey of the
property within the seller’s control, the seller is obligated to provide this as soon as possible and prior to the
Requisition Date. The seller is not obligated to provide the buyer with a new survey if the existing one is not up to
date, unless agreed to specifically within the agreement.
As a salesperson, you must be cautious of surveys supplied by sellers with regards to completeness and accuracy.
Older surveys may contain limited or inaccurate information concerning boundaries and building locations as the
requirements for surveys have changed. Also, changes may have been made to the property since the date of the

survey, which are not reflected. For example, a previous owner may have erected a fence in the back yard which is
not wholly located on the seller’s property. This fence would not be identified on the older survey and a buyer may
experience legal consequences and expenses if the incorrect fence location is later identified. If the seller furnishes
a survey, you should make it readily available to the buyer, but caution the buyer to seek legal advice. The buyer has
several options regarding surveys:
 Accept the existing survey, understanding its historical nature and limitations
 Ask the seller to provide a new survey. The offer would need to contain an appropriate clause for this
request
 Order a new survey at the buyer’s expense
 Purchase the property without a survey
 Obtain Title Insurance. A new survey may not be required depending on the insurer
In situations where a seller’s mortgage is to be discharged from title, the parties should understand how registration
of the discharge of the charge/mortgage could occur, as such mortgages are not typically discharged for several
days following the completion of the sale. In many instances, the seller will not have available funds to discharge the
mortgage prior to closing; the seller intends to use the sale proceeds to repay the amount owed to the lender.
However, the agreement of purchase and sale also indicates the buyer is to be provided title that is free and clear of
all encumbrances. To avoid this conflict, the agreement states the buyer will agree to accept the seller’s lawyer’s
personal undertaking (a promise) to register the discharge on title within a reasonable time after closing, using
funds received at closing. This means until the mortgage is discharged, the buyer owns the property with the seller’s
mortgage still registered.

Documents and Discharge Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 12: Documents and Discharge ©2019 Ontario Real
Estate Association. All rights reserved. Used under license.

Inspection
Before placing an offer on a property, the buyer will have been provided the opportunity to inspect the property.
The seller has provided nothing more than the opportunity for the buyer to view the property and identify any
patent (visible) defects. As such, in a residential transaction, many buyers will also obtain a property inspection
report prepared by a qualified property inspector which is used to assess the condition of the structure and the
mechanical components. The buyer should understand that once an offer has been accepted, it is a binding
agreement unless the buyer includes a requirement to obtain a property inspection report. If there is no additional
clause inserted into the buyer’s offer, the buyer acknowledges that none will be obtained.

Inspection Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 13: Inspection ©2019 Ontario Real Estate

Considerations for a Buyer
In many instances, a buyer has viewed several properties prior to selecting which property to submit an offer on.
As a salesperson, you may consider advising the buyer to visit the property once again prior to offer submission.
Depending on market conditions, this may not be possible due to time requirements related to submitting an offer.
A buyer should understand the pre-set clause on the agreement of purchase and sale states they have been
provided an opportunity to inspect the property. In instances where a return visit is not possible, ensure adequate
notes are taken during the initial visit.

Once an offer has been accepted, there could be weeks or months that pass before the transaction is completed. A
buyer may wish to revisit the property during this time period for several reasons. The pre-set clause on the
agreement of purchase and sale does not provide this right to the buyer. As such, the buyer has no right to a pre-
closing viewing of the property unless:
 The seller, at the seller’s discretion, grants such permission
 The buyer’s salesperson inserts an appropriate clause in the agreement to provide access to the property one
or more times following acceptance of the offer
 Substantial damage occurs between signing the agreement and closing which requires the buyer to attend the
property. See page 10 of this lesson for information related to substantial damage occurring prior to closing
A pre-closing viewing of the property is advisable to avoid potential problems should a buyer discover discrepancies
between what was purchased and what is to be delivered on closing. The clause must be added to the agreement of
purchase and sale as the pre-set clause does not grant the buyer this right.

The Inspection clause provides the buyer with an opportunity to see the property and to
have a home inspection.
Based on the inspection clause, which of the following statements are true?
The clause automatically requires the buyer to obtain a property inspection, and if not satisfied with any
1
report, can declare the offer null and void.
This clause acknowledges that the seller has a right to remove any clause in the agreement that calls for
2
an offer to be conditional on a property inspection report.
The clause identifies the buyer has had the opportunity to inspect the property prior to submitting an
3
offer.
The clause requires the seller to provide any copy of an existing property inspection report they have for
4
the buyer’s review.
The clause acknowledges that the buyer had an opportunity to put a requirement in the agreement for a
5
property inspection report.

Insurance
The seller is responsible for the property until closing and must maintain any insurance policies until completion. If
substantial damage should occur to the property prior to closing, the agreement of purchase and sale identifies the
options available to the buyer:
 Terminate the agreement
 Complete the transaction and collect any insurance proceeds provided by the seller’s insurance policy
Insurance coverage is not transferred at closing. The seller will terminate the existing coverage on the property, and
the buyer will be required to purchase a new policy. Situations do occur when a buyer may encounter difficulty
securing insurance for a property; for example, a property with outdated wiring or an underground oil tank. In most

cases, insurance coverage will be granted subject to the buyer completing appropriate modifications. However,
insurance refusals can occur. If the age or condition of the structure might impact the ability to obtain insurance,
recommended practice is to insert an appropriate condition in the offer.
If a seller take back mortgage is involved, the buyer agrees to provide proof of adequate insurance to the seller or to
the mortgagee with a mortgage assumption.

Insurance Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 14: Insurance ©2019 Ontario Real Estate

The salesperson represents a buyer in the purchase of a property, and the sale is to be
completed in a week’s time. The buyer has just called the salesperson and is upset. While
driving by the property, the buyer observed fire trucks in the driveway and flames in the
back portion of the house.
Based on the Insurance clause, which of the following statements are correct?
There are four options. There are multiple correct answers.
1 The seller is required to maintain any insurance policies on the property until completion.
If there is substantial damage to the property as a result of the fire, the buyer has the option of
2
terminating the agreement.
If there is substantial damage to the property, the seller’s insurance policy is transferred to the buyer
3
when the sale closes so that the buyer can make a claim.
If there is substantial damage to the property, the buyer can take the proceeds of the seller’s insurance
4
policy and complete the purchase.

Planning Act
An agreement must comply with the Planning Act, for the transaction to be completed. The Planning Act governs
activities such as a consent for severance. Compliance is not required when listing the property for sale or accepting
an offer, however for the property to be transferred to the buyer, it must comply. The agreement of purchase and
sale will identify this requirement. In instances where the property does not comply with the Planning Act, one of
three considerations will impact the agreement:
 Invalid if Not Compliant – the agreement is deemed invalid if by completion, any necessary consents are not
obtained
 Required Prior to Completion – the seller must comply with the provisions under the Planning Act by
completion
 Seller Involvement – if a condition in the offer requires the seller to obtain the necessary consent, the seller
must proceed diligently at their expense to obtain such consent. Be aware that a consent can take three to
six months, but much longer periods may be necessary if difficulties arise. An earlier module detailed the
requirements for obtaining a consent to sever
Example:
A seller owns a 25 acre parcel of land and would like to sever the parcel into two lots and sell each one individually.
A salesperson lists the two properties for sale and indicates on the listing that the properties are subject to a
consent for severance being approved. The seller immediately applies for the severance and while awaiting
approval, receives an offer on one of the properties. The salesperson adds a clause to the agreement of purchase
and sale making the offer conditional upon obtaining approval for the severance. The closing date for the
agreement is in six months with an option to extend if more time is needed. The salesperson ensures the buyer
understands the seller must have both the approval for the severance and the severed property registered in
compliance with the Planning Act for the transaction to be completed.

Planning Act Clause
As an example, the Planning Act clause could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale, Clause 15: Planning Act ©2019 Ontario Real Estate
The Documentation Preparation clause assigns responsibility for covering costs to prepare certain documents in a
real estate transaction.

A seller and buyer have agreed to the sale of a piece of land that has yet to be severed.
The written agreement of purchase and sale accepted by the seller includes a Planning
Act clause.
Based on the Planning Act clause, which of the following statements are true?
The seller should have had the severance approved and the new property registered prior to accepting
1
an offer on the property.
2 If the severance is not approved, the agreement is deemed invalid and therefore null and void.
3 The seller is responsible for any costs to obtain the necessary consent for severance.
4 The buyer is responsible for any costs to ensure the agreement complies with the Planning Act.

Document Preparation
An agreement of purchase and sale will identify who is responsible for paying costs to prepare specific documents
involved in the transaction. The seller will pay for the transfer/deed. The buyer is responsible for the cost of
preparing any mortgage document where the seller is providing financing to the buyer, and the Land Transfer Tax
Affidavit.
To ensure compliance with the Planning Act, the Transfer/Deed of Land used to transfer title to the buyer will
contain a compliance statement. As well, the seller’s lawyer will provide a statement outlining that they have
reviewed it and made appropriate inquiries to confirm the sale does not contravene the Planning Act. The buyer’s
lawyer will also confirm no contravention was identified through research.

Document Preparation Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 16: Document Preparation ©2019 Ontario Real

You will need to review the various clauses on the agreement of purchase and sale with
a seller or buyer. This exercise will help you check your understanding of clauses covered
in this lesson.
Which of the following statements belong to Closing Arrangement clause?
There are seven options. There are multiple correct answers.
1 Stipulates the deed/transfer will be registered electronically.

The lawyers are bound by a document registration agreement which deals with such items as exchange
2
of closing funds, non-registrable documents, keys and fobs.
3 Entitles the buyer to a survey the seller possesses.
May require the seller’s lawyer to withhold funds from the seller on closing to pay off the mortgage and
4
register a discharge on title within a reasonable time after closing.
5 Helps ensure compliance with the Planning Act.
Requires the buyer to cover the cost of preparing any mortgage documents where the seller is providing
6
financing to the buyer and the cost of Land Transfer Tax Affidavit.
A seller and buyer have agreed to sell/buy a piece of land that requires a consent for severance.
7
Requires the seller to obtain any necessary consents for severance by completion of the agreement.

Residency
Sellers and buyers of property may not be residents of Canada. The agreement of purchase and sale must address
the sale of property by a non-resident as the Income Tax Act imposes obligations on the buyer when the seller does
not reside in Canada.
The sale of a property owned by a non-resident seller may be subject to capital gains tax. The tax calculation is
based on any capital gain realized. For example, a property is purchased for $200,000 and is later sold by a non-
resident seller for $550,000. Certain deductions are permitted from the gain of $350,000, such as legal fees,
commission, and any capital improvements, however the capital gain realized once the deductions are applied is
subject to capital gains tax.
The Income Tax Act places the obligations on the buyer to ensure the tax payable by the seller is remitted to the
Minister of National Revenue. An agreement of purchase and sale must provide for a method of ensuring the

obligations of the buyer are not impacted by the actions of the seller. The given information is required in the
agreement:
 The seller will provide a Statutory Declaration to the buyer that they are not, and will not on completion, be a
non-resident of Canada. If received, the buyer has no liability under the Income Tax Act
 If the seller is a non-resident, the seller can provide a certificate showing that the seller has filed the necessary
documents and paid the required taxes
 If the seller is a non-resident and the certificate has not been provided, the buyer may claim a credit towards
the purchase price with the amount necessary to pay to the Minister of National Revenue in respect of the tax
payable by the seller
This issue may be particularly relevant in areas that are common to vacation and leisure properties such as
cottages.

Residency Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 17: Residency ©2019 Ontario Real Estate

Adjustments
When a transaction closes, certain costs and expenses will be apportioned between the seller and the buyer, such as
property taxes and heating fuel. In the case of a property that is tenanted, the rent may need to be apportioned.
These adjustments are based on the number of days the seller and the buyer own the property, with the day of
closing apportioned to the buyer.
Example:
A property is sold and the transaction closes on October 15. The seller has paid the property taxes for the entire
year. In this case, the seller will receive a credit for the amount of property taxes the buyer would owe from October
15 to December 31 on a pro-rated basis.

A seller rents out the home and the buyer agrees to assume the tenancy. The tenant has paid $1,000 in rent and has
provided a last month’s rent deposit in the amount of $1,000. As these are not part of the purchase price, the buyer
will receive a credit for the pro-rated amount of rent for the month based on the completion date, as well as the
buyer’s last month’s rent deposit, including any accrued interest.
As a salesperson, you should be able to discuss these adjustments in general terms, however the specific details and
actual calculations are done by the lawyers. Additional information regarding the adjustments made on closing a
transaction are detailed in a later module.

Adjustments Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 18: Adjustments ©2019 Ontario Real Estate

Property Assessment
All properties are assessed by the Municipal Property Assessment Corporation (MPAC), which is used as the basis
for calculating the property taxes. The seller and buyer are required to acknowledge that properties may be re-
assessed on an annual basis. If property taxes change as a result of a re-assessment, neither the seller nor the
buyer can make a claim against each other or the brokerage and salesperson except to make a claim for property
taxes that accrued prior to the completion of a transaction.
It is important for all sellers and buyers to understand the impact of a property re-assessment on the property taxes
owed. It is especially significant when a newer property is being resold prior to the assessment being done based on
the buildings being completed. In this situation, the property taxes will be based on the vacant land only with the
final taxes not yet established. As a salesperson, a clause can be included in the agreement of purchase and sale
allowing the seller’s lawyer to hold back a specified amount for the payment of property taxes for the period prior to
the transaction closing.

Property Assessment Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 19: Property Assessment ©2019 Ontario Real Estate

Time Limits
Any term or condition set out in an agreement of purchase and sale that includes a specific time limit must be
strictly adhered to. To change a time limit, both the seller and the buyer must agree to the change in writing; for
example, an amendment to the agreement of purchase and sale can be signed. In some instances, the seller’s or
the buyer’s lawyer may be authorized to alter any time limit.

Agreements of purchase and sale are driven by exact time limits which must be complete, accurate and sequentially
correct (i.e., dates flow logically through all agreements, amendments, etc.). Missing a time limit can result in
nullifying the agreement. The completion date is one of many dates on an accepted agreement. Sellers and buyers
are expected to be ready, willing and able to close the transaction on the completion date. Failure by one party can
result in default action taken by the other party. Additional information regarding the failure to complete a
transaction is detailed on the next screen.
Example:
A seller and buyer have negotiated an offer which includes a condition for the buyer to obtain financing for the
purchase. The clause requires the buyer to provide notice to the seller regarding this condition prior to the
expiration of the time specified in the clause, failing which the offer becomes null and void. One day prior to the
time period expiring, the buyer receives notice from the lender that the approval for financing requires an appraisal
to be completed. The appraisal will not be received for three days. To avoid the offer becoming null and void, the
time period for the buyer to obtain the necessary financing will need to be extended. The salesperson prepares an
amendment to the agreement which is then agreed to and signed by all parties. The amendment is signed prior to
the time period expiring, which allows the original time period identified in the agreement to be altered.

Time Limits Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 20: Time Limits ©2019 Ontario Real Estate

Tender
Tendering means an unconditional offer to perform their part of a contract. Tendering involves one of the contract
parties showing the intent to perform as agreed upon, even if the other party will not close on the sale. In a real
estate transaction, this would mean the required documents (i.e., the transfer/deed) would be provided by the
seller, or the required funds (i.e., the balance of the purchase price), are provided by the buyer. Tendering confirms
their readiness, willingness, and ability to complete the transaction.
Should either the seller or the buyer refuse to complete the transaction for unjustified reasons, the party tendering
is then in a position to seek remedies under breach of contract. To seek remedies, the party is required to show they
were ready, willing, and able to complete the transaction. The remedies for a seller or buyer might include the given:
 Recision – ask that the contract be cancelled
 Damages – ask for financial compensation
 Specific performance – ask that the contract be completed
Example:
An agreement is set to be completed on June 15. The week before closing, the buyer’s lender withdraws their
approval for financing due to a critical change to the buyer’s credit. The buyer’s lawyer contacts the seller’s lawyer to
request an extension to the completion date to July 10. The extension is agreed to so the buyer can attempt to
obtain the financing required to complete the transaction. On July 10, the seller tenders the required documents,
however the buyer is unable to provide the necessary funds. The transaction does not complete and the buyer is
now in breach of the contract. The seller and their lawyer will discuss what recourse the seller has as the seller was
able to show a readiness, willingness, and ability to complete the transaction.

Tender Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 21: Tender ©2019 Ontario Real Estate Association.

Family Law Act
When listing a property for sale, as a salesperson, you will discuss the ownership of the property and when required,
obtain consent from a non-titled spouse for the listing of the matrimonial home. Consent is obtained as the non-
titled spouse has rights under the Family Law Act which must be considered when the property is sold. The
agreement of purchase and sale also provides for the non-titled spouse to consent to the sale.
An agreement of purchase and sale requires a seller to warrant that no spousal consent is necessary unless the
spouse has signed a consent in the area set aside for that signature. Information on the Family Law Act was detailed
in an earlier module.

Family Law Act Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 22: Family Law Act ©2019 Ontario Real Estate

This exercise will help you check your understanding of the Residency and Adjustments
clauses.
Which of the following statements belong to Adjustments clause?
If the seller is a non-resident, funds may be withheld by the buyer on completion of the sale to comply
1
with the Income Tax Act.
2 The buyer is responsible to ensure the tax owed by a non-resident seller is paid.
If the seller is a resident, any tax owed because of the sale would be addressed by the seller when
3
completing their annual tax return.
4 Apportions certain costs and expenses between the seller and the buyer.
5 Typically includes apportionment of rental income, property taxes, and heating fuel.
6 The buyer assumes any costs on the day of closing.

This exercise will help you check your understanding of the Residency and Adjustments
clauses.
Which of the following statements belong to Property Assessment clause?
Acknowledgment from both parties that property re-assessment by the Province of Ontario may occur
1
annually.
The seller or buyer cannot make a claim against each other or any brokerage, broker or salesperson for
2
a reassessment that results in any changes in property taxes.
3 The Buyer must provide the balance of the purchase price to the seller on the date set for closing.
4 The Seller must provide the transfer/deed to the buyer on the date set for completion.
5 A non-titled spouse is required to consent to the sale of the property.
6 Relates to a property involving a matrimonial home.

Urea Formaldehyde Foam Insulation (UFFI)
As you learned earlier, Urea Formaldehyde Foam Insulation (UFFI) is a type of insulation used in the 1970’s. UFFI is a
low density foam and was injected into walls and other areas of an older home to increase energy efficiency. In
1980, there was a product ban due to potential health concerns. Although the general consensus now minimizes
UFFI as a health concern, disclosure regarding a property containing, or previously containing UFFI is included on an
The seller will provide a representation and warranty to the buyer regarding the status of the property relating to
UFFI as the presence of UFFI is not readily visible to the buyer. The seller’s disclosure includes:

 The seller has not insulated any building with material containing urea formaldehyde
 To the best of the seller’s knowledge and belief, no building now, or in the past, has been insulated with
material containing UFFI
These representations and warranties will survive closing, meaning the buyer can make a claim after taking
ownership of the property should they discover the seller misrepresented the status of UFFI in any building. In
instances where the property does contain, or ever did contain UFFI, or the seller is unaware of the possibility of any
building containing UFFI (for example, when the property is being sold by the estate or under Power of Sale), an
additional clause relating to the particular circumstance is required in the agreement of purchase and sale.
Otherwise, the seller is providing an inaccurate representation and warranty.

UFFI Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 23: UFFI ©2019 Ontario Real Estate Association.

Given that Urea Formaldehyde Foam Insulation (UFFI) is not readily visible to the buyer,
a UFFI clause provides an appropriate disclosure.
Based on the Urea Formaldehyde Foam Insulation (UFFI) clause, which of the following
statements are true?
1 The seller is warranting they have not insulated any building on the property with UFFI.
2 The seller is stating to the best of their knowledge, no building on the property has ever contained UFFI.
3 The seller is warranting the statements regarding UFFI apply to all buildings in a multi-unit building.
The seller is representing that if the buyer discovers UFFI in the building following completion, the seller’s
4
warranty can no longer be relied upon.

Legal, Accounting and Environmental Advice
As a salesperson, you will have knowledge, skills and experience a seller or buyer will rely on. However, the extent
of the advice provided by you and the brokerage should be clearly understood by a seller and a buyer. Whenever
required, a seller and a buyer should be advised to seek third-party professional assistance. Specifically, the
agreement of purchase and sale requires the seller and buyer to acknowledge there has been no advice provided
that is of a legal, tax, or environmental nature.

Legal, Accounting and Environmental Advice Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 24: Legal, Accounting and Environmental Advice
©2019 Ontario Real Estate Association. All rights reserved. Used under license.

Consumer Reports
Obtaining financing for a purchase occurs in most transactions. When arranging for any financing, there will be
reliance on a report containing credit and/or personal information. The agreement of purchase and sale must
provide this disclosure to the buyer to comply with the Consumer Reporting Act. If the transaction involves a seller
take back mortgage, the seller will want to access a credit report to determine the credit worthiness of the buyer.

Consumer Reports Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 25: Consumer Reports ©2019 Ontario Real Estate

Agreement in Writing
Various aspects associated with the agreement of purchase and sale need to be defined within the agreement. As
an agreement of purchase and sale is a document that contains pre-set clauses, the agreement cannot reflect the
unique aspects of every trade. As such, the agreement of purchase and sale must provide the parameters around
which the parties agree to, as given.
 Any information inserted into the agreement takes precedence over the pre-set text should there be a conflict
or discrepancy. For example, in a previous screen the clause regarding UFFI was provided. Should an
additional clause be inserted into the agreement stating there was UFFI installed in a building, but that the
UFFI has been removed, this statement would now conflict with the pre-set clause. To avoid any conflict, the
parties will acknowledge that the information added to the agreement supercedes the pre-set clause.

 All representations, warranties, collateral agreements, or conditions affecting the agreement must be included
in the agreement. The parties are agreeing that nothing has been said or done, other than specifically stated in
the agreement, to bring them to a mutual agreement. For example, should the buyer state the purchase would
only be made if the seller were to warrant the condition of the property (e.g., a warranty that there has been no
water seepage in the basement during their time of ownership), this warranty must be contained in the
 Real estate terminology can vary across Canada and many statutes continue to use original British references.
The parties acknowledge that seller and vendor have the same meaning, as do buyer and purchaser. For
example, the Vendors and Purchasers Act is applicable even though Ontario may reference the parties as a seller
and a buyer.
 Most contracts will provide that any wording related to gender and number are to be read and understood
with any change required for the wording to accurately apply to the reference. For example, the agreement of
purchase and sale states: “In Witness whereof I have hereunto set my hand and seal” can legally be read as, “In
Witness whereof we have hereunto set our hands and seals” when two or more sellers or buyers are signing.

Agreement in Writing Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 26: Agreement in Writing ©2019 Ontario Real Estate

Agreement in Writing Clause: Example
The property being sold contained UFFI, which was removed from the buildings many years ago. The salesperson
for the seller has added a statement to the agreement of purchase and sale disclosing this fact. The pre-printed
clause on the agreement, however, states the property has never contained UFFI.
According to the Agreement in Writing clause, any provisions added on behalf of the seller or buyer take precedence
over any provisions in the pre-printed portion of the agreement of purchase and sale in the event of a conflict. So in
this scenario, the statement the seller’s salesperson added disclosing the fact the UFFI was removed would override
the UFFI clause.
If the buyer signed the offer in this scenario, then the buyer would have acknowledged the disclosure of the UFFI
removal and therefore would not be able to make any claim against the seller.

Time and Date
In Ontario, most of the province falls within the Eastern Time Zone, while areas in the northwest fall within the
Central Time Zone. As well, there are some communities in Ontario which remain in Eastern Standard Time all year,
rather than changing to Daylight Saving Time. As such, the agreement of purchase and sale must define any
reference to time and date. Any times and dates referred to in the agreement of purchase and sale are based on the
location of the property being sold should there be a discrepancy between the location of the property and where
the seller or buyer is when entering into the agreement.

Time and Date Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 27: Time and Date ©2019 Ontario Real Estate

Successors and Assigns
In the event a seller or a buyer dies prior to completing the transaction, the agreement of purchase and sale must
provide for how that event would impact the agreement. In such an event, the parties are advised the heirs,
executors, administrators, successors, and assigns of the seller, and the buyer, are bound by the agreement.
As a salesperson, should this event occur, advise all parties affected to seek legal advice.

Successors and Assigns Clause
From OREA Form 100: Agreement of Purchase and Sale, Clause 28: Successors and Assigns ©2019 Ontario Real

You will need to be aware of the implications of the Successor and Assigns, Consumer
Reports, Time and Date, Legal, Accounting, and Environmental, and the Time Limits
clauses.
Which of the following statements are true related to these clauses?
An owner of a property accepts an offer on the sale of his home. Prior to closing, the owner passes
1
away. The owner's nephew, who is the sole heir of the estate, must complete the transaction
agreed upon by the owner.
The consumer reports clause provides the buyer with required notification with respect to the seller
2
obtaining a consumer report on the buyer.
3 The time and date referred to in any agreement is the time where the individual (seller or buyer) lives.
The Legal, Accounting and Environmental clause allows a salesperson to advise a seller or buyer on legal,
4
accounting, and environmental matters related to the property.
A change in any time or date associated with the agreement must be agreed to in writing by the seller
5
and buyer.

There are nine tabs on this page with a summary of the key topics that were covered in this lesson.
Closing The parties are informed of the procedure to complete the transaction, including when the
transaction is being completed electronically. This includes details regarding documents
Arrangements
that are not registered and the payment of closing funds.
Documents and The seller is to deliver to the buyer those documents in the seller’s possession respecting
the property, such as copies of surveys and deeds. A seller is not required to provide an up-
Discharge
to-date survey, unless specifically provided for in the agreement. For any mortgage
registered on the title which must be discharged, the buyer agrees to the discharge
occurring after the transaction is completed by accepting the seller’s laywer’s personal
undertaking to do so.
Inspection The buyer acknowledges they have had the opportunity to personally inspect the property
prior to submitting an offer. The buyer also states that they have been provided the
opportunity to obtain a property inspection report. If the agreement does not contain this
provision, the buyer has declined the opportunity. A buyer wishing to revisit the property
prior to completion, must obtain the seller’s permission as the pre-set clause does not
provide this right to the buyer.
Insurance The seller is responsible for maintaining insurance on the property until closing. In the
event the property suffers substantial damage prior to closing, the buyer can terminate the
agreement, or can accept the proceeds paid by the seller’s insurance and complete the
transaction.
Planning Act The agreement is subject to compliance with the Planning Act, which governs activities such
as a consent for severance. If the property does not comply with the provisions of the
Planning Act, the agreement is void. The property must comply for the transaction to close,
however it does not have to comply when the property is listed for sale or an offer is

accepted. Appropriate disclosures and clauses must be included in any listing agreement or
agreement of purchase and sale to this effect.
Document The transfer/deed is prepared at the expense of the seller. Should the seller be providing
financing to the buyer, the charge/mortgage document is prepared at the expense of the
Preparation
buyer. The Land Transfer Tax affidavit is also prepared at the expense of the buyer.
Residency The agreement must address the buyer’s obligations regarding any income tax payable by
the seller who is a non-resident of Canada. Stipulations are included to ensure the seller,
when required, has submitted the documents and paid the required taxes due under the
non-residency provisions of the Income Tax Act, or a credit will be provided to the buyer for
the tax obligations of the non-resident seller. This event is most common in areas where
recreational properties are being sold.
Adjustments The seller and the buyer acknowledge that any items to be adjusted when the transaction is
completed, will be adjusted based on the day of closing being apportioned to the buyer.
These adjustments are made to the purchase price for items such as property taxes, tenant
rent, and heating fuel.
Property The parties acknowledge that the property may be re-assessed on an annual basis and they
may not make a claim against any brokerage, salesperson, or the other party should a
Assessment
reassessment take place. Of particular importance is when a newer property is being resold
prior to the assessment being finalized for the property including the structures. A
salesperson can address this situation by adding a clause to the agreement of purchase
and sale to identify how the seller’s portion of the property taxes owed will be addressed
once the final assessment has been completed.

There are nine tabs on this page with a summary of the key topics that were covered in this lesson.
Time Limits All agreements of purchase and sale will refer to time limits, and all parties must strictly
adhere to meeting the obligations of such limits. Only the parties to the contract, or their
authorized agent (e.g., their lawyer) can alter the time limits by mutual agreement.
Tender Each party must be able to demonstrate they are ready, willing, and able to complete the
transaction. In the case of one party not being able to complete the transaction, the other
party would show the intent to fulfill their obligations. For the buyer, they must be able to
provide the closing funds, and for the seller, to produce the Transfer/Deed.
Family Law Act Pursuant to the Family Law Act, the seller is warranting that no spousal consent is required
unless the spouse has signed a consent in the area set aside for that signature. Spousal
consent is required when the property is a matrimonial home and one spouse only is on
title. The non-titled spouse is asked to provide their consent to the sale.
UFFI The agreement of purchase and sale provides a representation and warranty by the seller
that any building located on the property does not contain, nor has ever contained urea
formaldehyde foam insulation. If this is not the case, or the seller is not able to provide that
representation and warranty, an additional clause should be added to the agreement of
purchase and sale.
Legal, The sellers and the buyers acknowledge the brokerage and salesperson are not providing
legal, tax or environmental advice. In these instances, the party should be advised to seek
Accounting and
independent professional advice.
Environmental
Advice
Consumer To comply with the requirements of the Consumer Reporting Act, the buyer is being advised
that a report containing credit and/or personal information may be referred to for the
Reports
transaction.

Agreement in There are several aspects of the agreement that must be defined in the agreement. If there
is a conflict or discrepancy between any of the pre-set (pre-printed) clauses and anything
Writing
that has been added to the agreement, the information added takes precedence over any
pre-set clause. The parties also agree that nothing has been said or done to bring them to a
mutual agreement, other than specifically provided for in the agreement. The terms seller
and vendor have the same meaning, as do buyer and purchaser, and any legislation that
refers to vendor and purchaser would be applicable, even though alternate terms have
been used. Finally, any reference to gender or number is to be read and understood
according to the context of the content.
Time and Date Any time and date referred to in the agreement of purchase and sale is the time and date
of the property location and not the time or location of the party signing the agreement.
This is important as areas in Ontario are located in different time zones, and some areas do
not revert to Daylight Saving Time.
Successors and In the event the seller or the buyer dies before the transaction is completed, their heirs,
executors, administrators, successors and assigns are bound by the agreement.
Assigns

Lesson 4: The Signing Process and Attaching Schedules
This lesson introduces signing and initialling procedures, and the requirements when attaching a schedule to an

This lesson details the signing and initialling requirements of a seller or a buyer and spousal consent, as well as the
requirements of a salesperson. The lesson also details the requirements when attaching a schedule to the
Upon completion of this lesson, you will be able to identify and explain:
 Signing and initialling procedures and additional information required in an agreement of purchase and sale
 Requirements when attaching a schedule to an agreement of purchase and sale

Seller and Buyer Signing Guidelines
Signing the agreement of purchase and sale signifies the party understands and agrees to the terms and conditions
contained in the agreement. Sellers and buyers should sign using their usual signature in lieu of the full legal name
identified earlier in the agreement. As a salesperson, ask the individual to sign as they would sign any government
document (e.g., a driver’s license) or a cheque. If more than two sellers or buyers are involved, add additional lines
for signing as required. This would be added to a schedule attached to the agreement of purchase and sale.
You must inform all parties they are signing under seal. You will learn more about signing under seal in this lesson.
Additional information was also provided in an earlier module.
An irrevocable instruction from the seller precedes the seller’s signature. The statement instructs the seller’s lawyer
to pay the brokerage any commission agreed to, plus HST, from the proceeds of the sale prior to the seller
receiving any payment.

Seller and Buyer Signatures, Date, and Witness
As you learned in Lesson 1, sellers and buyers might represent a corporation, an estate or estate trustee, a person
with a power of attorney, or someone acting in trust. Some parties’ signature requires a specific notation.
The following four tabs contain information on the requirements for signatures, signature date, and witness. You
must review all the tabs before moving forward.
Buyer Signatures
Buyers should sign using their usual signature in lieu of

the full legal name identified earlier in the agreement.
In Trust Arrangement
In some instances, a buyer may be purchasing a

property in trust for someone else. Typically, this is
where a buyer will be forming a corporation and the
property will be owned by that corporation on
completion.
Example:
William P. Smith, In Trust for a Corporation Yet to be

Formed.
The signature would be William P. Smith’s usual

signature.

Seller Signatures
Sellers should sign using their usual signature in lieu of

the full legal name identified earlier in the agreement.
Corporations
If the seller or the buyer is a corporation, the complete

legal corporate name will be inserted on page one and
any schedule.
When obtaining a signature on behalf of the

corporation, ensure the person signing has the
authority to do so and indicate their position in the
corporation.
In addition to the signature, you will require a

corporate seal or the words: “I/we have the authority
to bind the corporation,” written underneath the
signature.
Estates and Estate Trustees
If the property is being sold by an estate, the person

signing must have the authority to sign. The authority
is provided to an estate trustee.
Include the name of the estate as the seller; for

example, “The Estate of John Doe”.

The signing is by the estate trustee; for example, John’s
daughter Mary. Include Mary’s status as estate trustee
after her signature (e.g., Mary Doe, Estate Trustee).
Power of Attorney
If the seller or the buyer has provided authority to

someone else to act on their behalf, ensure the
individual has the appropriate power of attorney. A
power of attorney can be very general or precisely
describe the limited scope of authority.
When signing, the individual will use their usual

signature and include the words “Power of Attorney”
underneath the signature.
Signature Date
REBBA requires a salesperson to make all reasonable

efforts to ensure that a person signing an agreement in
respect of a trade in real estate sets out the date upon
which the signature was affixed. As such, the
agreement will allow for the date to be inserted by the
party signing.
Although numbers only can be used (e.g., 05/12/19),

this can cause confusion as this could be interpreted as
May 12 or December 5. Numbers and words are
preferred to avoid any confusion. The date inserted is

the date the party signs the agreement, and not
necessarily the date an agreement is accepted.
Witness
Every signature should be witnessed. A witness does not

need to date their signature, and any competent
individual can witness a signature. A witness should be
someone other than a party to the agreement. For
example, there are two buyers named on the agreement;
one buyer should not witness the other buyer’s signature,
and vice versa.
Encourage the party to obtain an independent witness

and ask that the information regarding the identity of the
witness be provided to the brokerage. A witness helps
protect against forgery and they can be called upon to
testify should a dispute arise. The witness may be asked
to testify that the individual signed the document in their
presence.
As a salesperson, you are best to witness the signature

for the seller or the buyer whenever possible.
If you are not witnessing their signature, DO NOT sign

your name as a witness.

The salesperson has faxed an offer that has just been drafted to the buyers who are on
vacation in California.
Which one of the given statements would be correct with respect to the signing of the offer
by the buyer?
The salesperson should ask the buyers to sign the offer and can have one buyer witness the signature of
1
the other buyer.
The salesperson will have to witness the signatures when the buyers fax the offer back to the
2
salesperson.
The salesperson should ask the buyers to sign and date their signatures and have someone at the
3
buyer’s location witness their signatures.
The salesperson should inform the buyers that they will need two separate witnesses for each of the
4
buyers’ signatures and the witnesses must date their witnessing.

Signing Under Seal
One of the essential elements of a valid contract is “consideration”. Consideration is an exchange of something of
value between the parties. In a typical agreement of purchase and sale the parties exchange promises. For example,
the seller promises to sell the property in exchange for the buyer’s promise to pay the purchase price.
In a real estate transaction, the seller and the buyer are typically signing the agreement of purchase and sale at
different times. For example, a buyer will make an offer to purchase the seller’s property and allow the seller a
specified time period (i.e., Irrevocability clause) to accept. However, it is important to note that the seller has not
provided anything to the buyer in exchange for the buyer’s promise to leave their offer open for acceptance for that
specified time. Since there is no consideration (i.e., no exchange), the buyer is not contractually bound to the
Irrevocability clause thereby allowing the buyer to revoke their offer at any time prior to the seller’s acceptance.

To make the buyer’s Irrevocability clause contractually binding, the offer must be signed by the buyer under seal. A
seal is a mark that is put on a document to indicate the party’s intention to be bound even though the other party
has not given consideration. So, if the buyer’s offer is signed under seal, the buyer cannot revoke the offer during
the irrevocability period.
As a salesperson, it is important to explain to a party the significance and legal implications of signing an offer under
seal, and to ensure that they intend to do so.

Seal Example
As an example, the given lines could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale ©2019 Ontario Real Estate Association. All rights reserved.
Used under license.

Initials
On any page of the agreement of purchase and sale where a signature is not obtained, the initials of the seller(s)
and the buyer(s) are placed. These initials are provided when the party first signs the agreement of purchase and
sale to ensure any page of the agreement is not substituted. Initialling signifies the given:
 The person is indicating they have read and understand the contents of that particular page
 The person is indicating they agree with the contents of the page being initialled
The party initialling should only do so after they are confident in their understanding and agreement of both the
pre-set clauses and inserted information on that page. The seller or the buyer should only initial once they have had
the opportunity to review, ask any questions, and obtain explanations or clarifications.

Initials Example
For example, the agreement of purchase and sale provides a marked space for the seller(s) and buyer(s) to initial.
Used under license.

Spousal Consent
The Spousal Consent clause on an agreement of purchase and sale applies only to the seller. Consent is obtained
from the non-titled spouse when the matrimonial home is being sold because under the Family Law Act, the spouse
has possessory rights. The non-titled spouse’s signature indicates they agree the property may be sold. No consent
is required from the non-titled spouse for the terms of any offer, although keeping the non-titled spouse apprised
can help to avoid any problems when completing the sale. Any initialling requirements of a seller for the agreement
of purchase and sale would not apply to the non-titled spouse. As the non-titled spouse is not a party to the
agreement, there is no requirement under REBBA to provide a copy of the accepted offer to the non-titled spouse.
If no spousal consent is required, either because both spouses are on title, there is no spouse, or the property being
sold is not a matrimonial home, this section is not completed.

A non-titled spouse will not sign as a seller. They will sign the spousal consent section. Signature requirements are
consistent with the procedures and requirements for a seller or a buyer. Signing by the non-titled spouse should be
completed at the first opportunity. Preference would be to obtain the signature at the same time the seller is signing
the agreement of purchase and sale. The non-titled spouse should sign no later than once an agreement has been
reached between the seller and the buyer.

Spousal Consent Clause
Used under license.

The Murphys are reviewing an offer concerning the sale of their home. Frank Murphy is
named on the title for the property. Frank’s wife, Julia, paid for half of the home when
they bought it 5 years ago, and they have both lived in it with their children ever since it
was purchased. They have been married for twenty years.
Which one of the given statements is true given this scenario?
There are three options. There is only one correct answer.
Frank Murphy and Julia Murphy should appear as sellers of the property on the agreement of purchase
1
and sale. They both paid for it
Julia Murphy should not be involved in the agreement of purchase and sale as she has no ownership
2
rights given she is not on title.
3 Julia Murphy should sign the Spousal Consent line on the agreement of purchase and sale.

Confirmation of Acceptance
Negotiations between a seller and a buyer can at times, be lengthy and complex. A key aspect of the negotiations is
the requirement that the offer be accepted and communicated to the other party within the irrevocable time period,
otherwise, the offer becomes null and void. The agreement of purchase and sale provides for the party who accepts
the offer, to sign and identify the time and date of acceptance. The last person signing or initialling has the
responsibility to accurately complete the confirmation of acceptance.
The time and date stated is key when establishing time limits for certain types of conditions (e.g., a buyer is allowed
five days from acceptance of the offer to fulfill a condition) and to obtain a buyer’s deposit (e.g., the buyer submits
the deposit “upon acceptance”).

Confirmation of Acceptance Clause
Used under license.

The buyer signs an agreement on August 28, 2019, at noon with an irrevocable date of
September 1. The agreement is subsequently accepted verbally on a conference call by
both of the sellers, on August 29 at 4 p.m. Seller 1 signs the agreement accepting the
offer an hour later on August 29. Seller 2 is away on business and out of the country, but
is able to sign the agreement accepting the offer at 3 p.m. on August 30. Acceptance of
the offer is finally communicated to the buyer at 4 p.m. on August 30.
How should a salesperson complete the Confirmation of Acceptance portion of the
agreement of purchase and sale based on the above scenario?
CONFIRMATION OF ACCEPTANCE: Notwithstanding anything contained herein to the contrary, I

confirm this Agreement with all changes both typed and written was finally accepted by all parties at 3
1
p.m. this 30th day of August, 2019 Seller 2
(Signature of Seller or Buyer)
2
p.m. this 29th day of August, 2019 Seller 1
3
p.m. this 28th day of August, 2019 The buyer
4
p.m. this 30th day of August, 2019 The buyer

Information on Brokerage(s)
The agreement of purchase and sale is between the seller and the buyer, however a brokerage is an integral part of
facilitating the agreement. The agreement provides for the brokerage’s information to be included so others, such
as a lawyer acting on behalf of the seller or the buyer, is aware of their involvement. For each brokerage involved in
the transaction, the brokerage name, phone number, and name of the individual representing the brokerage for the
transaction is identified.
In instances where the listing brokerage is representing the seller and is also representing or providing customer
service to a buyer, only the listing brokerage’s information is identified. In instances where there is no listing
brokerage and a brokerage is representing or providing customer service to a buyer (i.e., for a transaction where the
seller is offering their property for sale privately), only the co-operating/buyer brokerage information is identified.

Information on Brokerage(s) Example
As an example, the given section could be used for this purpose:
Used under license.

Acknowledgment
The Code of Ethics requires a salesperson to use their best efforts to ensure a copy of the agreement of purchase
and sale is provided to every seller or buyer at the earliest opportunity. The agreement of purchase and sale
provides for the seller(s) and buyer(s) to sign an acknowledgment stating they have received a copy of the accepted
agreement of purchase and sale. This signature is obtained only once the offer has been accepted.
The seller’s and the buyer’s address for service is indicated. As detailed in Lesson 2, if a facsimile number or email
address is not provided relating to the giving and receiving of notices, a notice must be delivered to the address for
service indicated in the agreement. The address inserted here is the address a notice would be delivered to when
required.

The brokerage will also need authorization to forward a copy of the accepted agreement of purchase and sale to the
lawyer who will be closing the transaction on behalf of the seller or the buyer. To facilitate this, when working with a
seller or buyer, ask if a lawyer has been retained. If so, the information should be included in this section as each
lawyer will need to know who is representing the other party. If a seller or a buyer does not yet have a lawyer
retained, this information can be obtained at a later date, however the information should be provided as soon as
possible.

Acknowledgment Clause
Used under license.

Commission Trust Agreement
In a real estate transaction, the listing brokerage typically receives the gross commission paid for the trade. When an
offer is accepted, and the transaction involves a co-operating brokerage, the agreement of purchase and sale
provides for a trust agreement to be signed by the brokerages. The trust agreement indicates the funds will be held
in trust by the listing brokerage. Signing is completed by each brokerage after acceptance of the offer, and not when
the offer is first submitted to a seller or a buyer for signing. It is important to ensure the signing is done at the
appropriate time as you must first have an accepted offer to base the trust agreement on. As a salesperson, you are
authorized to sign this on behalf of the brokerage.
A brokerage may operate an account used specifically for the receipt and disbursement of commission. This is
referred to as a commission trust account, and it could be a requirement for a brokerage to maintain one if they are
a member of a local real estate board. REBBA does not require a brokerage to maintain a commission trust account,
however as part of the professional liability insurance program administered by RECO, the insurer encourages the

use of one to help protect your commission. Under the insurance program, coverage may be provided for loss of
commissions if a brokerage becomes insolvent, or if there is theft, fraud, or misappropriation of funds. A
commission trust account is in addition to the statutory trust account maintained by all brokerages for the receipt
and disbursement of a buyer’s deposit. Information regarding the insurance program is detailed in a later module.

Commission Trust Agreement Clause
Used under license.

Once the seller or buyer signs to accept the purchase and sale of a property, a
salesperson will need to complete the Acknowledgment, Information on Brokerage(s),
and Commission Trust Agreement section of the agreement.
Which of the following statements belong to Commission Trust Agreement section of the
agreement?
There are nine options. There are multiple correct answers.
1 Lists the address for service for the seller and buyer.
2 Signed by the seller and buyer after the Confirmation of Acceptance has been completed.
3 Provides proof the seller and buyer have received signed copies of the agreement.
4 Gives the salesperson authority to forward a copy of the contract to the lawyers for the seller and buyer.
5 Lists the salesperson or broker’s name.
6 Lists the telephone number for the brokerage.
7 Only lists the listing brokerage information in a multiple representation situation.
8 Only required if a co-operating brokerage is involved.
9 Declares all commission will be held by the listing brokerage in a commission trust account.

Electronic Signatures
As an alternative to hand written signatures, Ontario’s Electronic Commerce Act permits the use of electronic
signatures for an agreement of purchase and sale.
Using electronic signatures requires the method be:
 Authenticated, that is, the ability to confirm the signature is from the person it is supposed to be
 Protected from unauthorized use, by being permanent and tamper-proof which prevents fraudulent use of the
signature
To use electronic signatures, all parties must consent. While consent can be implied, it is recommended the consent
be in writing to avoid future disputes. This can be achieved by including a clause in the agreement of purchase and
sale.
If any party to the agreement insists on using written signatures, the agreement must be signed by all parties this
way.
Information on the Electronic Commerce Act and the use of electronic signatures was detailed in an earlier module.

Electronic Signatures Clause
As an example, the given clause could be added to Schedule A for this purpose:
OREA ELEC–1 Clause ©2019 Ontario Real Estate Association. All rights reserved. Used under license.

Initialling and signing the agreement of purchase and sale is important.

Which of the following statements are true related to signatures and initials?
1 Signing under seal means an offer cannot be revoked during the irrevocable time period.
Ontario’s Electronic Commerce Act does not permit a seller or buyer to use electronic signatures on the
2
Initials on the agreement indicate the buyer (or seller) has read, understands and agrees to the contents
3
on the page.
To use electronic signatures, a salesperson will need to add a consent to electronic signatures clause to
4
Schedule A of the agreement.
5 The salesperson must witness the seller or buyer’s signature.
6 On a pre-printed agreement of purchase and sale, a seal may be indicated by a symbol.

Schedules
A schedule is used to insert additional terms, conditions, warranties, etc. which the seller and the buyer agree to.
Any number of additional schedules can be attached to the agreement and are identified in sequential order, for
example, Schedule A, Schedule B, Schedule C, etc. As explained in Lesson 1, these schedules are also identified on
the first page of the agreement of purchase and sale to ensure all schedules are retained with the negotiated offer.
All schedules must be initialled by the parties to the transaction.
Schedules can be required for many reasons. Throughout the previous lessons, there have been many examples of
a clause being required for an agreement. In a later module, information on the types of clauses and conditions
contained in an agreement of purchase and sale are detailed. Additionally, schedules may be required for complex
legal descriptions, detailed lists, a survey, rent roll, lengthy chattels/fixtures list, etc.

Ensure the contents of any schedule is fully understood by the parties as the terms on any schedule form a part of
the agreement. Pay particular attention to wording that impact the pre-set clauses on the agreement of purchase
and sale. When a conflict or discrepancy exists between the pre-set text and the information inserted on the
agreement or a schedule, remember the inserted text supercedes the pre-set text.

Reference the Schedule to the Agreement of Purchase and Sale
Any schedule must be fully cross-referenced to the agreement of purchase and sale to avoid any possible confusion
should the schedule become detached from the balance of the agreement. To do this, ensure all schedules to the
agreement include the given information:
 Buyer(s) name(s)
 Seller(s) name(s)
 Address of the property
 Date of the offer
This information must match the information on the first page of the agreement.

Schedule Example
As an example, the given lines could be used for this purpose:
From OREA Form 100: Agreement of Purchase and Sale, Schedule A ©2019 Ontario Real Estate Association. All rights
reserved. Used under license.

Buyer Agrees to Pay the Balance As Follows
An agreement of purchase and sale contains the given statement: “Buyer agrees to pay the balance as more
particularly set out in Schedule A attached”. The schedule will now include the specifics associated with this
statement. All agreements of purchase and sale must include a clause relating to the buyer’s obligations to pay the
balance.
The appropriate clause should contain these six key elements to describe the amount due to the seller on
completion of the transaction:
1. By whom
2. The amount

3. Adjustments
4. To whom
5. When it will be paid
6. How it will be paid
A well-written clause will contain all six elements, including the method of payment (i.e., by certified cheque or bank
draft), and “subject to adjustments”. You do not need to include the name of the seller or the closing date in the
clause.
The amount due on completion can be calculated using the given format:
Purchase price less:

 Any seller take back mortgage
 Any mortgage being assumed
 Any and all deposit(s)
This can be easily recalled by using the given:
Purchase price less:

 S (Seller take back mortgage)
 A (Assumed mortgage)
 D (Deposit(s))

Buyer Agrees to Pay the Balance Examples
Example 1: A buyer is offering $500,000 for a property. The buyer has $200,000 to use as a down payment out of
which, he will submit a $50,000 deposit upon acceptance. The buyer will be arranging a new first mortgage for the
required funds of $300,000. The seller is not willing to take back mortgage and there is no mortgage assumption.
The calculation of the amount due on completion would be done in the given manner:
Purchase price $500,000

Less Seller take back - 0
Less Assumed mortgage - 0
Less Deposit(s) - 50,000
Balance due $450,000

In this scenario, the buyer will pay the balance due by using the remaining funds set aside for the down payment
(i.e., $150,000), plus the monies received from the new first mortgage (i.e., $300,000).
which, he will submit a $50,000 deposit upon acceptance. The buyer will assume the seller’s existing first mortgage
with a current balance of approximately $300,000. The calculation of the amount due on completion would be done
in the given manner:

Less Seller take back - 0
Less Assumed mortgage - 300,000
(i.e., $150,000). As the buyer is assuming the seller’s mortgage, the buyer would not provide these funds to the seller
on completion.
which, he will submit a $50,000 deposit upon acceptance. The seller agrees to hold a new first mortgage for
$300,000. The calculation of the amount due on completion would be done in the given manner:

Less Seller take back - 300,000
Less Assumed mortgage - 0
(i.e., $150,000). As the seller is agreeing to provide financing to the buyer, the buyer would not provide these funds
to the seller on completion; rather the buyer would make mortgage payments to the seller as agreed to in the offer.
Information regarding clauses and conditions included in an agreement of purchase and sale are detailed in later
modules.
If the buyer is arranging a new mortgage from an outside source, these monies are included in the balance due to
the seller. The next few screen provides additional information related to the balance due clause.

Payment of Balance Clause Examples
There are two options when identifying the buyer’s obligation to pay the balance due on completion. If an offer
contains a seller take back mortgage (i.e., the seller is providing financing for the buyer’s purchase), or the buyer is
assuming the seller’s existing mortgage, the offer must use a clause which identifies the amount owed. Otherwise, a
clause which states “the balance of the purchase price” can be used which does not require the calculation of the
amount due.
A Further Sum of

The Buyer agrees to pay a further sum of ____________________ ($ __________), subject to adjustments, to the Seller on
completion of this transaction, with funds drawn on a lawyer’s trust account in the form of a bank draft, certified
cheque or wire transfer using the Large Value Transfer System.
OREA DEP/PAY-1 Clause ©2019 Ontario Real Estate Association. All rights reserved. Used under license.
Balance of Purchase Price
The Buyer agrees to pay the balance of the purchase price, subject to adjustments, to the Seller on completion of
this transaction, with funds drawn on a lawyer's trust account in the form of a bank draft, certified cheque or wire
transfer using the Large Value Transfer System.
OREA DEP/PAY-2 Clause ©2019 Ontario Real Estate Association. All rights reserved. Used under license.
If using this clause, you, as a salesperson, must ensure that the buyer understands how much the balance due
amount is.

A buyer is offering $600,000 for a property. The buyer has $180,000 to use as a down
payment out of which, he will submit a $60,000 deposit upon acceptance. The buyer will
assume the seller’s existing first mortgage with a current balance of $420,000.
What will be the amount due from the buyer on completion?
1 $120,000
2 $140,000
3 $165,000

A buyer would like to make an offer on a property but is out of town on business.
Because the buyer does not have access to a printer, the buyer would like to sign the
offer drafted by the brokerage using the brokerage’s online software. The buyer wishes
to make two separate deposits. The first deposit will be delivered to the listing
brokerage 72 hours following the acceptance of the agreement and the second deposit
within 24 hours following the delivery of the first deposit.
Based on this scenario, the electronic signatures clause would be added to Schedule A.

True False

Based on this scenario, the buyer’s initial would be added to Schedule A.

True False

Based on this scenario, the deposit clause would not be added to Schedule A.

True False

Based on this scenario, the payment of balance clause would be added to Schedule A.

True False

Based on this scenario, the closing date would be added to Schedule A.

True False

Based on this scenario, the address of the property being sold would be added to Schedule A.

True False

There are eight tabs on this page with a summary of the key topics that were covered in this lesson.
Seller and Buyer Sellers and buyers are asked to sign and date the agreement when the agreement is first
addressed by the party. A seller and buyer will sign using their usual signature.
Signatures and
Corporations, estates, powers of attorney, and in trust sellers or buyers require specific
Date notations with their signatures.
Witness Any party signing the agreement should have a witness to their signing, ideally the
salesperson. The role of the witness can become important in the event of any disputes. If
a witness is someone other than the salesperson, obtain the witness’s identity and contact
information for the brokerage. A salesperson should never sign as a witness if they did not
actually see the person sign the document.
Signing Under In a real estate transaction, the seller and the buyer are advised they are signing the
agreement of purchase and sale under seal which binds the party to their offer. Signing
Seal
under seal prohibits the party making the offer from cancelling it once received by the
other party. If the offer is not signed under seal, the party would be allowed to cancel their
offer at any time prior to the other party’s acceptance. The party signing must be aware of
the legal effect a seal has on the contract. Therefore, as a salesperson, it is important to
ensure a seller and a buyer are fully informed prior to signing.
Initials For all pages where a signature is not obtained, the parties to the agreement will be asked
to initial that page. This signifies the party initialling has read, understands, and agrees to
the contents of both the pre-set and the inserted text on that page.
Spousal Consent Spousal consent is obtained from the non-titled spouse when the agreement of purchase
and sale is for a matrimonial home. If no spousal consent is required, this area of the
agreement is left blank.

Confirmation of The agreement of purchase and sale must identify the exact time and date the offer was
accepted by the seller or the buyer. The last person signing or initialling has the
Acceptance
responsibility to accurately complete the information. The agreement must be accepted
and communication of the acceptance made to the other party within the irrevocable date
and time period. The time and date can be key when establishing time limits for certain
types of conditions and obtaining a deposit from a buyer.
Information on The information for the listing brokerage and the co-operating/buyer brokerage is
provided, including brokerage name, phone number, and name of the individual
Brokerages
representing the brokerage. In some instances, only the information for the listing
brokerage or the buyer’s brokerage is included.
Acknowledgment An acknowledgment is signed by the seller and the buyer when they receive their copy of
the accepted agreement of purchase and sale. The acknowledgment includes the parties’
address for service and the contact details for their respective lawyers. The
acknowledgment provides proof the seller and the buyer have received signed copies of
the accepted agreement of purchase and sale, which is required under the Code of Ethics.
It also provides authority to forward a copy of the agreement to the lawyers.

There are four tabs on this page with a summary of the key topics that were covered in this lesson.
Commission A commission trust agreement can be entered into when there is both a listing brokerage
and a co-operating brokerage involved in the sale. It is a declaration by the listing brokerage
Trust
that all commission for the sale will be held in a commission trust account. in the event the
Agreement listing brokerage becomes insolvent or bankrupt, the Commission Trust Agreement
provides protection for the co-operating brokerage. A salesperson is authorized to sign this
section on behalf of the brokerage.
Electronic To use electronic signatures, a salesperson must add a clause to the agreement as consent
from all parties must be obtained. Specific guidelines are in place when using electronic
Signatures
signatures.
Schedules Schedule A is standard part of the agreement and is used to insert offer terms, conditions,
and other miscellaneous clauses. Identify schedules as A, B, C, D, etc. and attach in the
same order. Ensure all parties understand what each schedule says and review to assess
whether terms added to a schedule would conflict with any pre-set clause.
Cross-reference all schedules to the agreement of purchase and sale by inserting the given
information: Buyer(s) name(s), Seller(s) name(s), Address of the property, Date of the offer.
This information appears at the top of the schedule and must match the information on the
first page of the agreement.
Balance Due on All agreements must include a clause that addresses the balance due on closing. Options
exist for an appropriate clause to be inserted, however if the agreement contains an
Closing
assumed mortgage or a seller take back mortgage, a specific clause is to be used.

Lesson 5: Summary Practice Activities
This lesson provides a series of activities that will test your knowledge on the entire module.

This lesson reviews content covering the standard clauses provided on an agreement of purchase and sale. You will
answer a series of questions designed to check your knowledge of the concepts covered throughout this module.

Each property must have an accurate description that distinguishes it from other
properties. Accuracy in the Real Property description benefits both the seller and buyer.
Which of the following statements are correct with respect to the Real Property description
in an agreement of purchase and sale?
A survey can be attached as a schedule to an agreement of purchase and sale only if a proper legal
1
description is not available.
The wording “more or less” in the property description protects the seller from any discrepancy in the lot
2
size.
The legal description LT 27, PL 3836, S/T EB133749 indicates an easement or right of way on the
3
property.
A salesperson should verify a property’s lot size using a primary document such as one prepared by a
4
certified Ontario land surveyor.
A property facing north would be described in an agreement of purchase and sale as fronting on the
5
north side of a street.

In addition to the purchase price, a salesperson should discuss with the buyer the
deposit requirements as per the seller's direction, should the buyers wish to make an
offer on a property.
Which of the following statements are true related to deposits?
1 A deposit is a sign of good faith in purchasing a property. There is no minimum deposit requirement.
2 The buyer typically makes the deposit payable to the co-operating brokerage.
3 A buyer who chooses to make a deposit “upon acceptance” has 72 hours to submit the deposit.
Once the irrevocable time and date pass and the offer is not accepted, the buyer is entitled to receive a
4
full refund of any deposit that was submitted with the offer.
The deposit amount varies based on such considerations as the conditions within the local market, and
5
where the property is situated.

The Irrevocability clause relates to the time limit given by one party for the other party to
accept an offer.
Which of the following statements are true related to the Irrevocability clause?
1 An offer expires if it is not accepted by the date and time specified in the Irrevocability clause.
If an offer is not accepted within the time limit set by the Irrevocability clause, the buyer will receive a full
2
refund of any deposit submitted with the offer. The refund will be without any interest.
3 The Irrevocability clause only applies to the buyer making an offer.
4 A seller is free to accept other offers once the seller's irrevocable time limit has passed.

The completion date, also known as the closing date, is an important part of the
Which of the following statements are true related to the Completion Date clause?
1 A buyer receives the transfer of title from the seller for a property on the closing date.
2 The land registry office influences the completion date.
3 A tenanted property would not impact the completion date.
If vacant possession cannot be given because a property is tenanted, a seller can add a clause to a
4
schedule stating the buyer agrees to assume the tenancy until the end of the lease period.

When completing the agreement of purchase and sale, leaving a clause incomplete can
have significance.
Which of the following statements are true if the clause is not completed?
If the present use in the Title Search clause is not identified, this means the seller is not representing that
1
the present use is legal.
If there are no rental items identified, this means the seller is representing any hot water tank, and
2
furnace present in the property is owned and included in the purchase price.
3 Only a brokerage’s email or fax number can be entered into the Notices clause.
If no fixtures are identified as excluded, this means the seller is agreeing to include all appliances in the
4
property such as the stove, refrigerator, microwave oven, washer and dryer.
The requisition date in the agreement of purchase and sale sets a deadline for the opportunity to
5
examine title, including matters that go to the root of that title.

Some clauses on the agreement of purchase and sale assign responsibility to the buyer
or provide the buyer with certain rights.
Which of the following statements are true?
The time limit expressed in the Title Search clause should extend beyond the time limits expressed in
1
any conditions in the agreement of purchase and sale.
2 The deed in a real estate transaction is typically prepared at the buyer’s cost.
3 The Inspection clause does not give the buyer a right to re-inspect the property prior to closing.
If substantial damage occurs to a house prior to the completion date, the agreement will be
4
automatically terminated.

Some clauses are required to deal with certain legislative statutes such as the Family Law
Act and the Planning Act.
Which of the following statements about clauses referencing statutes are true?
The seller is required by an agreement of purchase and sale to provide an up-to-date survey to the
1
buyer.
If the sale of a property requires a consent to severance for the transaction to be completed, the
2
agreement is deemed invalid if the necessary consent is not obtained.
The seller of a property in Ontario who lives in the U.S. could have funds withheld upon closing to ensure
3
any Canadian taxes owing are paid.
4 An untitled spouse does not need to sign the agreement of purchase and sale of the matrimonial home.


Mr. and Mrs. Metzger are the buyer, and Michael Sandhu is the seller of 238 Main Street in Anycity. An initial offer by
the Metzgers was finally accepted by Michael after much thought. The irrevocable date on this offer was September
23, 2019.
Possible errors that can occur on page 5 of the Agreement of Purchase and Sale are as follows:
SIGNED, SEALED, AND DELIVERED:

 Only one witness signature, but two buyers’ signatures.
 One of the buyers does not date the signature.
 The seller’s signature is beyond the irrevocable date.
 The seller’s signature is not witnessed.
CONFIRMATION OF ACCEPTANCE:
 The Confirmation of Acceptance is signed the day before the seller actually accepted the offer, and one day
after the irrevocable time period had expired.
 The wrong person is signing the Confirmation of Acceptance. If Sandhu accepted the initial Metzger offer, then
the seller should execute the confirmation of acceptance.
ACKNOWLEDGMENT:
 Only one buyer signed the acknowledgment.
 All the acknowledgement show a signature date two days after the irrevocable time period had expired.
COMMISSION TRUST AGREEMENT:

 The Commission Trust section is not signed.

A salesperson needs to ensure all the information and signatures required for page 5 of
the agreement of purchase and sale (OREA Form 100) are fully and correctly completed.
An incorrectly completed agreement of purchase and sale can have significant legal
ramifications and costs.
Which of the following statements related to the brokerage information, acknowledgment,
and commission trust are true?
If the buyer (or seller) doesn’t yet have a lawyer when they sign the offer of acceptance, they can leave
1
the lawyer information in the Acknowledgment section blank.
2 The signing of the Commission Trust Agreement is completed before an offer is submitted to the seller.
The seller and buyer signature in the Acknowledgment section allows the salesperson to forward a copy
3
of the contract to their lawyer.
In a multiple representation situation, only include information on the co-operating brokerage under the
4
Information on Brokerages.
Contact information for the lawyers involved in the purchase and sale is added to the Acknowledgment
5
section of the agreement.
The Acknowledgment provides proof the seller and buyer have received a copy of the agreement of
6
purchase and sale.

George Patrick McRowe and Sophie Elise McRowe are buying their first home with the
help of their salesperson, Kristina Petwig. The home they are buying is 116 Church
Street, Anytown, A0A 0A0. The sellers, Pietro Emilio Francesco and Maria Anna Francesco
are working with their salesperson, Abdul Kapul. The sellers and buyers have come to
agreement and have all signed an agreement of purchase and sale. The sale of the
property completes on October 3, 2019, with a purchase price of $465,000.
Which of the following statements is true?
1 The offer date in the agreement is October 3, 2019.

The Francescos and the McRowes need only include their last names in the Seller and Buyer lines on the
2
agreement.
The full property address—116 Church Street, Anytown, A0A 0A0—forms a complete description of the
3
property for the Real Property section of the purchase agreement.
4 Each salesperson should independently verify the identities of their clients.

George Patrick McRowe and Sophie Elise McRowe are buying their first home with the help of their salesperson,
Kristina Petwig. The home they are buying is 116 Church Street, Anytown, A0A 0A0. The sellers, Pietro Emilio
Francesco and Maria Anna Francesco are working with their salesperson, Abdul Kapul. The sellers and buyers have
come to agreement and have all signed an agreement of purchase and sale. The sale of the property completes on
October 3, 2019, with a purchase price of $465,000.
The legal description for the property is LT 17, PL 23M-1642, S/T EB132958.
The entire legal description means lot 17 under registered plan number 23M-1642 with an easement number
132958, where:
 LT—Lot number
 17—The lot number assigned to the property is lot 17
 PL—Plan information
 23—The Land Registry Office is identified by the number 23
 M—Indicates the plan of subdivision is registered under Land Titles
 1642—This plan is registered as number 1642
 S/T—Indicates an easement or right of way on the property
 EB132958—Indicates an easement number 132958 registered on the property

The McRowes have $70,000 available for a down payment and have been approved for a
mortgage for $395,000. They paid a $10,000 deposit upon acceptance of the offer.
How much of their down payment will the McRowes need to use upon completion?
1 $60,000
2 $40,000
3 $50,500

The McRowes have $70,000 available for a down payment and have been approved for a
mortgage for $395,000. They paid a $10,000 deposit upon acceptance of the offer.
How much will the McRowes need to provide on completion of the transaction?
1 $455,000
2 $445,000
3 $460,000

help of their salesperson, Kristina Petwig. The home that the buyers wish to purchase is
in 116 Church Street, Anytown, AOA OAO and they have submitted an agreement of
purchase and sale with a three-day irrevocable period.
If the McRowes had found another property that they preferred during the irrevocable
period, what should their salesperson, Kristina Petwig, advise them?
1 Make an offer on the second property immediately, as the sellers may reject the offer.
2 Withdraw the offer and communicate that withdrawal.
Wait until after the irrevocable period has expired or the sellers submit a counter offer before submitting
3
an offer on the second property.
Submit an offer on the second property, as the irrevocable clause is not valid as consideration for the
4
offer, and irrevocable time period has not been given.

The purchase includes all kitchen appliances. It excludes the dining room chandelier,
which the Francescos received as a wedding gift from Maria’s parents 27 years ago. The
only item on the property being leased is a hot water tank. The McRowes would like to
continue with the lease. The house has never been substantially renovated. The property
has been sold once before, since it was built 20 years ago.
Which of the following statements are true?
There are five options. There are multiple correct answers..
1 Harmonized Sales Tax (HST) will be payable by the buyers, the McRowes.
2 The kitchen appliances should be listed in detail in the Chattels Included clause.
3 Since the chandelier is a chattel, there is no need to mention it in the agreement of purchase and sale.
4 Harmonized Sales Tax (HST) will be payable by the sellers, the Francescos.
5 The hot water heater should be included in the Rental Items clause.

agreement and have all signed an agreement of purchase and sale. The completion date
is October 3, 2019 and the purchase price is $465,000.
The agreement of purchase and sale includes clauses on title search, future use, and
title.
Which of the following statements are true with respect to the given clauses?
There are six options. There are multiple correct answers..
In the future, the McRowes may wish to convert the home to a small bed and breakfast. The Future Use
1
clause guarantees they would be able to do so.
In the agreement of purchase and sale, the chosen date for the title search clause should be October 4
2
or later.
3 The title search date should be a date after conditions are fulfilled or waived.
4 If the McRowes’ lawyer uncovers any title objections, the lawyer can cancel the contract immediately.
5 Part of the role of the McRowes’ lawyer is to confirm the zoning for the property.
If a title objection cannot be remedied or removed, or if the seller is unwilling to resolve the objection,
6
the agreement ends and the buyer’s deposit is returned.

Which of the following is true with respect to the Inspection and Insurance clauses in the
agreement of purchase and sale?
The Inspection clause in the agreement of purchase and sale provides for a home inspection to be
1
completed for the buyer.
If the McRowes want a pre-closing viewing of the property, the agreement should include an additional
2
clause allowing them to revisit the property before closing.
Once an offer is accepted, the property must be insured by the buyers as they now have a legal interest
3
in the property.
4 If the buildings on the property are destroyed by fire, the buyers can elect to still complete the purchase.

The McRowes wanted assurances that the building does not contain or has ever
contained Urea Formaldehyde Foam Insulation (UFFI).
Which of the following is true regarding the Urea Formaldehyde Foam Insulation (UFFI)
clause?
The warranties and representations in the Urea Formaldehyde Foam Insulation (UFFI) clause still apply
1
even after closing.
The Urea Formaldehyde Foam Insulation (UFFI) clause warrants that the seller cannot confirm whether
2
the property has ever been insulated with UFFI.
3 The Urea Formaldehyde Foam Insulation (UFFI) clause only applies to a property built after the 1980s.
The Urea Formaldehyde Foam Insulation (UFFI) clause acknowledges that the seller is not providing any
4
representations and warranties with respect to the presence or absence of UFFI.

The McRowes offer was finally accepted by the Francescos on July 25, 2019.
Which of the following statements about the agreement of purchase and sale are correct?
1 Because the sellers are both Pietro and Maria, the Spousal Consent clause is left blank.
2 The Confirmation of Acceptance would be completed by either Maria or Pietro Francesco.
There is no co-operating brokerage in this transaction and so the Information on Brokerages section
3
should be left blank.
4 Only the salespersons involved in the transaction can witness the signatures of the sellers and buyers.


Module Summary | Page 1 of 3
Module Summary
This lesson contains a summary of the entire module and a list of helpful resources available in the Knowledge
Management System.

Congratulations, you have completed this module!
This lesson will present a summary of Learning Objectives and a list of helpful resources that you can search for in
the Knowledge Management System.

There are four tabs on this page with a summary of the key topics that were covered in this lesson.
The Parties, As a salesperson, you will need to complete the agreement of purchase and sale accurately.
Property This lesson detailed how to properly complete the date of offer, seller and buyer names,
the property description, purchase price, deposit and deposit holder, and any schedule
Description,
attached to the agreement.
Purchase Price,
When completing seller and buyer names, use their full legal names. Verify ownership and
and Deposit the names of the parties using the appropriate documentation. Other considerations for
seller and buyer names include: corporation, partnership, estate trustee, and power of
attorney.
To describe a property, you require five pieces of information: municipal address, side of
the road the property fronts on, municipality, lot size, and legal description including
easements. Ensure the property description is accurate and make sure you verify details
using source documents.
The purchase price is the total money the seller is to receive in return for transferring title
on the completion date. When indicating this on the offer, ensure the numbers and words
for the purchase price match.
A deposit is any money paid by the buyer prior to the transaction closing. The amount is
identified in both words and numbers. The deposit can be paid upon acceptance of the
offer, herewith the offer, or as otherwise described in the offer. The amount of the deposit
can vary according to jurisdictions and there is no minimum amount. However, a deposit is
often deemed to be a sign of good faith indicating the buyer’s intent to complete the
transaction.
The details of how the buyer will pay the balance of the purchase price are set out in a
clause to be inserted on Schedule A.

Completion of this lesson has enabled you to identify and explain the information typically
required to detail key aspects of the parties, property description, purchase price, and
deposit provisions in an agreement of purchase and sale.
Clauses The OREA Agreement of Purchase and Sale (Form 100) commonly used in residential
transactions contains pre-set clauses. You will need to complete and explain these clauses
Typically
when you work with sellers and buyers:
Included in a
The Irrevocability clause specifies the time limit for acceptance of an offer. If not accepted,
Residential or communication of the acceptance is not completed during the irrevocable period, the
Agreement of offer expires and becomes null and void.
Purchase and The completion date clause specifies the date the transfer of title occurs. The pre-set clause
Sale – Part 1 provides for vacant possession, unless an alternative arrangement is stated in the
agreement. The completion date cannot be on a Saturday, Sunday, or statutory holiday.
The Notices clause identifies the various ways in which notices necessary to the agreement
may be given and received.
The Chattels Included clause identifies any chattels to be included, such as furniture or
appliances.
The Fixtures Excluded clause identifies any fixtures to be excluded from the sale, such as a
specific light fixtures or mirror. If no fixture is identified as excluded, all fixtures are to
remain with the property when it is sold.
The Rental Items clause provides information on any rental item buyers will assume when
the transaction is completed. These are items not owned by the seller and might include an
alarm system, hot water tank, furnace and air conditioner, etc.
The HST clause specifies whether the sale of the property is subject to Harmonized Sales
Tax (HST) and describes who is responsible to pay the applicable amount.
Title Search clause specifies the time period, known as the Requisition Date, the buyer’s
lawyer has to complete a title search on the property. The clause also allows for the buyer’s
lawyer to investigate non-title aspects of the property such as outstanding work orders,
deficiency notices, zoning compliance, and the obtaining of fire insurance.

The Future Use clause provides an acknowledgement from the seller and the buyer that
unless otherwise provided for in the agreement, there is no representation or warranty that
the intended future use of the property will be lawful.
The Title clause warrants to the buyer the title is good and free from restrictions, charges,
liens, easements, and encumbrances with the exception of certain specified matters.
Completion of this lesson has enabled you to identify and explain the clauses typically
included in an agreement of purchase and sale.
Clauses You will need to understand and explain these clauses when you work with sellers and
buyers:
Typically
The Closing Arrangements clause informs the parties of the procedure to complete the
Included in a
transaction, including when the transaction is being completed electronically.
Residential
The Documents and Discharge clause requires the seller to deliver to the buyer those
Agreement of documents in the seller’s possession respecting the property, such as copies of surveys and
Purchase and deeds.
Sale – Part 2 The Inspection clause acknowledges the buyer has had the opportunity to personally
inspect the property prior to submitting an offer.
The Insurance clause specifies the seller is responsible for maintaining insurance on the
property until closing.
The Planning Act clause requires compliance with the Planning Act, which governs activities
such as a consent for severance.
The Document Preparation clause requires the seller prepare and pay for the
transfer/deed.
The Residency clause addresses the buyer’s obligations regarding any income tax payable
by the seller who is a non-resident of Canada.
The Adjustments clause requires the seller and the buyer acknowledge that any items to be
adjusted on when the transaction is completed, will be adjusted based on the day of closing
being apportioned to the buyer.

The Property Assessment clause requires the parties acknowledge that the property may
be re-assessed on an annual basis and they may not make a claim against any brokerage,
salesperson, or the other party should a reassessment take place.
The Time Limits clause refers to time limits, and all parties must strictly adhere to meeting
the obligations of such limits.
The Tender clause specifies that each party must be able to demonstrate they are ready,
willing, and able to complete the transaction on the date set for closing.
In the Family Law Act clause, the seller warrants that no spousal consent is required unless
the spouse has signed a consent in the area set aside for that signature.
The UFFI clause provides a representation and warranty by the seller that any building
located on the property does not contain, nor has ever contained, urea formaldehyde foam
insulation.
The Legal, Accounting and Environmental Advice clause provides acknowledgement by the
sellers and the buyers that the brokerage and salesperson are not providing legal, tax or
environmental advice.
The Consumer Reports clause advises the buyer that a report containing credit and/or
personal information may be referred to for the transaction.
The Agreement in Writing clause establishes that information added to the agreement of
purchase and sale takes precedence over any pre-set clause and that the written
agreement constitutes the entire agreement between the parties.
The Time and Date clause specifies that any time and date referred to in the agreement of
purchase and sale is the time and date at the property location and not where the party
signing the agreement may be located.
The Successor and Assigns clause establishes that in the event the seller or the buyer dies
before the transaction is completed, their heirs, executors, administrators, successors and
assigns are bound by the agreement.
Completion of this lesson has enabled you to identify and explain the clauses typically
included in an agreement of purchase and sale.

The Signing When the parties agree to the terms of the agreement, as a salesperson, you will need to
obtain their signatures and include specific information to complete the contract.
Process and
Sellers and buyers will sign and date the agreement and have a witness to their signing. You
Attaching
will need to explain that by signing under seal, the seller or buyers are bound to their offer.
Schedules For all pages where a signature is not obtained, you will need ask the parties to the
agreement initial those pages.
For a seller of a matrimonial home who has a non-titled spouse, you will need to have the
non-titled spouse sign the Spousal Consent portion of the agreement of purchase and sale.
The Confirmation of Acceptance portion of the agreement of purchase and sale identifies
the exact time and date the offer was accepted by the seller or the buyer. The last person
signing or initialling has the responsibility to accurately complete the information.
The Information on Brokerages portion of the agreement of purchase and sale identifies
information for the listing brokerage and the co-operating/buyer.
An acknowledgment is signed by the seller and the buyer when they receive their copy of
the accepted agreement of purchase and sale. The acknowledgment includes the parties’
address for service and the contact details for their respective lawyers. The
acknowledgment provides proof the seller and the buyer have received signed copies of the
accepted agreement of purchase and sale, which is required under the Code of Ethics. It
also provides authority to forward a copy of the agreement to the lawyers.
The Commission Trust Agreement portion of the agreement of purchase and sale applies to
a trust agreement between a listing brokerage and a co-operating brokerage involved in the
sale.
To use electronic signatures, as a salesperson you must add a clause to the agreement as
consent from all parties must be obtained. Specific guidelines are in place when using
electronic signatures.
Schedule A is standard part of the agreement and is used to insert offer terms, conditions,
and other miscellaneous clauses. You will need to cross-reference all schedules to the
agreement of purchase and sale by inserting the specific information at the top of the
schedule to match the information on the first page of the agreement.
All agreements must include a clause that addresses the balance due on closing.

Completion of this lesson has enabled you to:
 Identify and explain signing and initialling procedures and additional information
required in an agreement of purchase and sale
 Identify and explain requirements when attaching a schedule to an agreement of
purchase and sale

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Module 15: Introducing a Residential Agreement of Purchase and Sale

©2019 Real Estate Council of Ontario

You will also need to understand how to do the given:

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Number of Lessons 6 Lessons

Lesson Number Lesson Name

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Lesson 1: The Parties, Property Description, Purchase Price, and Deposit

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©2019 Real Estate Council of Ontario

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1 The date of the offer is August 14, 2019

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Legal Seller and Buyer Names

For example, John William Smith and Mary Jane Smith.

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Spouses as Sellers and Buyers

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Implications of Missing or Incorrect Seller and Buyer Names

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Example 3: A Buyer is Not Named in the Agreement

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Legal Seller and Buyer Names

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Additional Considerations When Identifying a Seller or Buyer

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©2019 Real Estate Council of Ontario

As a salesperson, you may encounter a POA in the given scenarios:

If a person (i.e. as Attorney) is claiming to have authority to sign an agreement on behalf of

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©2019 Real Estate Council of Ontario

©2019 Real Estate Council of Ontario

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Side of the Road on Which the Property Is Fronting

Where the Property is Located

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©2019 Real Estate Council of Ontario

Example: More or Less – Seller Loses Claim for Damages

Example: More or Less – Seller Wins Claim for Damages

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Example: Lot Size – Depth “to Be Verified”

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You learned about land descriptions earlier.

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Legal Description Examples

Examples of legal descriptions include:

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Obtaining a Legal Description from a Survey

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Obtaining a Legal Description from a Reference Plan

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1 Fronting on the North side of Wilson Street

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Purchase Price: Dollars (CDN$) 250,000.00

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Purchase Price for Acreage/Frontage

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