December 12, 2024

The Conditional Promise to Purchase

Selling a property is a complex process that requires numerous forms to be completed correctly and in compliance with the law. Working with a real estate broker means you benefit from the expertise of a specialist in the field.

Your property is in demand

Did you receive an offer to purchase your property? Also known as a “promise to purchase,” this form must be completed by any potential buyer wishing to purchase your home. Depending on the type of residential property, the real estate broker will use one of the mandatory Promise to Purchase forms designed by the OACIQ. The promise to purchase typically includes all the essential elements for drawing up the future contract of sale, also known as the “deed of sale.” These elements include a description of the property being sold, the selling price, the various steps and deadlines involved in the sale, inclusions and exclusions, and a deadline for acceptance. Upon receiving the offer signed by the potential buyer, you have three options: accept it in full, refuse it, or make a counter-proposal.

Conditions of purchase

Once signed and accepted, a promise to purchase becomes a binding contract that both parties must respect. In most cases, the promise to purchase includes conditions making it a conditional promise to purchase. The most common conditions, which are included in the mandatory OACIQ forms, are that the purchase is conditional on inspection, financing and the verification of documents. Each of the conditions set out in the promise to purchase has a deadline by which the buyer must notify the seller that the condition has been fulfilled.

The right of first refusal clause

Another condition that may be found in a promise to purchase is that the purchase is conditional upon the sale of the buyer’s property within a certain period of time. Depending on market conditions, this condition of sale can put the buyer’s offer at a distinct disadvantage when compared to other potential offers. To address this, the buyer can include an accompanying clause, the right of first refusal clause, that gives the seller the right to continue marketing the property.

In this case, the first buyer must meet the basic conditions of the promise to purchase within the specified deadlines, and is granted additional time to fulfill the condition of selling their property. Meanwhile, if a second buyer wishes to submit a promise to purchase, it will have to be conditional on the first accepted promise to purchase being cancelled. Of course, there are a number of options, each with its own implications. This is why it is so important to be guided by a real estate professional.

An offer to purchase, with or without conditions, is a pivotal step in the real estate process. It is far more than mere formality—it legally binds the parties and can significantly influence the outcome of the transaction. Information is key, so working with qualified professionals, such as a real estate broker, is important. They know how to guide you through the process and safeguard your interests. For instance, every single clause must be carefully considered and tailored to the needs of both the buyer and seller. With this approach, the offer to purchase becomes a strategic tool that brings each party closer to its real estate goals.