Purchasing real estate is one of the biggest investments one can make in their lifetime, which is why it is so important to fully understand the associated legal implications. Can an offer to purchase be cancelled? What is a latent defect? A defect of consent? Interview with Martin Janson, real estate lawyer at Janson, Larente, Roy in Montréal.
Is there a difference between an offer to purchase and a promise to purchase?
The term “offer to purchase” is often used, but the correct term is actually “promise to purchase”. In this document, the buyer proposes an amount to the seller to acquire the property and sets a deadline for a response. Once the promise is signed, there is to a certain extent a contract. One party is obligated to purchase, while the other is obligated to sell. However, the buyer can stipulate conditions to the promise to purchase. The most common are obtaining the necessary financing, the sale of their current property, and a satisfactory inspection report.
Is it possible to cancel a promise to purchase?
Usually, no. There is no clause for changing one’s mind! If the buyer refuses to honour their commitment, the seller can sue for breach of contract. This is why it is imperative to be absolutely certain before signing a promise to purchase. One exception does exist: purchasing a new construction from a developer or a builder. In this case, the buyer has ten days to withdraw the promise. However, the developer can request a compensation that must not exceed 0.5% of the selling price.
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