Buying or selling a home in BC comes with paper work.

A core piece of any real estate deal, whether you’re buying your first home or selling your 5th property, the Contract of Purchase and Sale (CPS) is a core document you should know.

This document is a binding contract between both the buyer and seller to help facilitate the deal, incorporate any special clauses and outline the exact specifics each party needs to know to move forward.

This guide will breakdown all the main parts of the document, specific to British Columbia, including what you need to look out for and how to navigate through it.

Disclaimer

The information contained in this content is general in nature and businesses/persons should consider whether the information is appropriate to their needs. Legal and other matters referred to in this article are based on Metro Vancouver Lifes’ interpretation of laws existing at the time and should not be relied on in place of professional legal advice. Please consult with a lawyer during the process of the Contract of Purchase and Sale document development and finalisation.

Address

The address portion of the contract is quite straightforward. It contains the address of the seller’s property that the buyer is looking to purchase.

This will also include the legal description of the property such as the plan and lot numbers that may be attached to it.

Purchase Price

The purchase price section is the amount you are offering to buy the property and real estate. It is NOT the listing price that the seller is asking for.

It’s common for the purchase price to be changed and be adjusted based on negotiations among the parties. From a buyer’s perspective, you may offer a higher or lower amount than the asking price, based on how the local real estate market is performing and willingness to win the deal.

To a seller, the purchase price is a major factor for decision making when finalising a deal. However, other aspects like time to close, purchase contingencies and other special clauses can influence the mindset of a seller when looking at the purchase price.

Deposit

The deposit is what the potential home buyer will put down as a “down payment” to show the seller they are committed and will follow through with the home purchase.

Typically, this is anywhere from 1% to 5% of the purchase price and due within 24 to 48 hours of when the subject removal takes place. Otherwise, it’s due within 24 hours of acceptance, if there is no special clause in place.

This amount is typically held in trust by the seller’s brokerage or law firm to help facilitate and secure the offer.

Beware, never to give your deposit directly to the seller as they could run-off with it or provide difficulties in backing out of the deal if certain clauses and subjects aren’t met.

If the buyer fails to follow the terms and pay the remaining balance at the closing date, then the seller has the option of keeping the deposit from the buyer.

Check out this guide to learn more about down payments for condos.

Terms and Conditions

The terms and conditions outline all the conditions that the offer is contingent upon.

Both the buyer and seller can have a condition in the deal that needs to be satisfied in order for the deal to move forward.

These are very important to follow in any home buying or selling process, as if there is a violation of a term/condition by the buyer, the seller can keep the deposit.

If the seller violates a condition, the buyer can back out of the deal and get back their full deposit.

In a sellers market, it’s typical to have very little terms and conditions so the seller has an easy offer they can accept or counter. Avoiding a drawn out sales process with other items that need to be confirmed before the offer is ready to close.

In a buyers market, terms and conditions are very typical to see in an offer as the buyer will have leverage with their offer. The seller will want to meet those conditions to satisfy the purchase price the buyer is proposing.

Common conditions from a buyer

Conditions or subjects you’ll typically see from a buyer in the CPS are the following:

  • Home inspection
  • Financing
  • Appraisal
  • Upon the final sale of the buyer’s home
  • Title
  • Property disclosure statement
  • Strata documents

Condition Components

Conditions are typically written in a very precise and clear format with many detailed wordings to the exact scenario or condition. They also outline removal dates with exact times and dates so both parties are aware of how the CPS will move forward.

Waiving Conditions

When a CPS has conditions, it’s typical for there to be a clause that specifies that a condition or subject can be waived by the buyer or seller, at any time by the party that required the condition in the first place.

Learn more about real estate clauses from the BCFSA guide.

Completion Date

The completion date, also called the “closing date”, is when the buyer assumes the title of the property at the local Land Title Office. All closing costs and remaining payments for the deal are to be paid by this date.

Learn more about everything that happens on closing day.

Possession Date

The possession date is when the new buyers will take actual possession of the property and officially be able to move-in, begin building or using the property for their intended purposes.

It’s different from the completion date, as the deal can reach its completion date but you will not be able to move in or use the property until the possession date.

In instances where there are tenants living in a part of the property, this will be outlined that the buyers will have vacant possession or if existing tenants will remain.

Learn more from the government of BC about selling a tenanted property.

Included Items

The included items section of the Contract of Purchase and Sale will include any fixtures, buildings, improvements, and anything the deal will contain. Typically, this will include “fixtures”, which is anything nailed down into the property like built-in shelves, chandeliers, ceiling fans, etc.

This could be a special inclusion like custom furniture to certain curtain rods, it can be wide-spanning or not exist at all in the deal, if there are no included items.

Adjustment Date

The adjustment date is typically the same date as the possession date to make the transition easy.

It’s usually the date that the buyer will begin assuming accountability for all other costs for the property such as utilities, rates, assessments, fixes, etc.

Agency Disclosure

When working with a real estate agent, this is the section to input the information of your chosen representative. Both the buyer and seller will fill out this section for the deal.

Offer Expiry

The buyer will outline in the offer expiry section of when the offer will expire and be taken off the table to negotiate.

This date is usually set to help drive the seller to make a decision, while also taking into account any clauses or subjects that need to be reviewed and discussed before the offer expires.

If the date is not made, another offer will need to be submitted to complete a deal, or walk away from the deal and find another property to buy.

Video Walkthroughs from BCREA

Looking to Buy or Sell?

Navigating the buying or selling process, especially when there are specific documents and processes involved can be difficult.

If you’re looking for an educated real estate team to help you with your home buying or selling experience, reach out to our team at Metro Vancouver life, your friendly local guides to Metro Vancouver.