• Option to purchase

The option to purchase from the vendor on the payment of a stipulated sum enables the potential purchaser time to determine if he/she wishes to proceed with the purchase of the property and/or determine if financing is available for the purchase. During this period of consideration, the vendor is prevented from selling the property to another party. Upon exercise of the option by the purchaser, the parties become bound to the sale and purchase of the property on the terms set out in the option agreement.

• Sale and purchase agreement

Unlike an option to purchase, the sale and purchase agreement will bind the parties to the sale and purchase of the property on the terms of the agreement upon the execution of the sale and purchase agreement.

• Other ancillary documents

This includes the assignment or novation of leases, builders’ warranties, etc.

Unless the sale and purchase agreement otherwise states, the general rule is caveat emptor. This is especially true in respect of the physical condition of the property. The seller is generally not expected to give warranties beyond the fact that he/she possesses good title to the property, and need not make any warranties as to the condition of the premises. However, the seller has a duty to disclose all latent defects in the title of the property.

The sale is legally binding once the sale and purchase agreement has been executed by the parties, or when the option to purchase has been exercised by the purchaser.

The purchaser does not obtain legal title to the land until the transaction is completed by a formal conveyance from the vendor or a registered transfer under the Land Titles Act. However, the purchaser may be said to possess an equitable title in the land if there is a valid and enforceable contract and if specific performance would be granted by the court.

The buyer usually pays for:

• Legal costs
• Due diligence in relation to the property
• Property valuation costs
• Registration fees and stamp duty
• Costs relating to buyer’s financing requirements

The seller usually pays for:

• Property agent’s fees
• Legal costs
• Stamp duty fees (certain cases)
• Costs relating to the discharge of any encumbrance