Purchase Agreement - S. 2
Purchase Price and Completion Day
s. 2.1 The Purchase Price is $_____________________________________
The previous version of the Purchase Contract used to include a breakdown of the purchase price. So the reader of such contract would see which portion is the 1st or 2nd deposit, which portion is financed, etc. As a result, if there was ever any confusion regarding the total Purchase Price (e.g. if the handwriting of the number was not legible), one would be able to add up all the numbers and verify.
Such detailed information is missing in the current version and so our recommendation is to put both the numerical value as well as the descriptive wording of the purchase price (e.g. $210,000 (Two Hundred and Ten Thousand Dollars)) in the blank space in this subsection.
s. 2.2 The Purchase Price includes any applicable Goods and Services Tax (GST)
This subsection is self-explanatory but unfortunately missed/forgotten in practice. If you are a builder or for any other reason have to remit GST on the sale of your property, make sure you cross out the word “includes” and replace it with “does not include”.
s. 2.3 This contract will be completed, the Purchase Price fully paid and vacant possession given to the buyer at 12 noon on _______________________________________, 20___ (Completion Day).
This subsection sets the closing/completion date. The time of completion is 12 pm on the completion day. Please note that closing/completion day could be the different from the possession day (we will address taking possession on tenancy when we’re studying s. 10.9 and 10.10).
s. 2.4 The seller represents and warrants that on Completion Day, the Property will be in substantially the same condition as when this contract was accepted and the attached and unattached goods will be in normal working order.
This wording of this subsection is of paramount importance specially when dealing with “walkthrough” problems (a subject covered at a later post). The section reads that the property has to be in “substantially the same condition…” not “exactly the same” on the completion day. It is clearly understood that normal wear and tear or minor damages to the property are to be expected. However, any “substantial” damage by the seller before moving out would entitle the buyer to rescind the offer or at the very minimum, it brings parties back to the table to negotiate some reimbursement to the buyer for the new damages.
The second part also states that any goods (whether attached or unattached) have to be in normal working order. Aside from the question of what is a “normal working order” rather than simply “working order”, the wording begs the question of what if an item at the time of the offer was NOT in working condition. Can the seller leave the item/good as it was at the time of offer? Because after all, the property is still in “substantially the same condition.” Or, they’d have to repair the item so that it will be in “normal working order” at the completion/closing day? We like to argue that due to the specific wording of this subsection, the seller would have the obligation to have the item/good repaired and bring it to normal working order. However, in practice we see the “substantially the same condition” argument being made more often by the lawyers representing sellers.
In order to avoid any closing day confusion or complication, we recommend adding an express term to s. 9.2 (Other terms) regarding any non-working item that you would like the seller to have prepared/fixed. An adequate hold-back amount should be added for such repair to provide an incentive to the seller to fulfill their obligation.