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THE ELEMENTS OF A PURCHASE CONTRACT

 

When writing an offer to purchase a property, there are many primary elements to the offer to understand and discuss with your real estate agent. These different elements can greatly affect whether or not your offer is accepted and if the transaction completes.


Purchase Price
– This is usually the first thing a potential seller will look at when receiving an offer and is the total price, including deposits, that the buyer is willing to pay for the home. This will often be the primary negotiation point when dealing with a counter-offer.


Deposit Amount
– There are two types of deposits in a typical real estate transaction; Initial Deposits and Additional Deposits.  Initial Deposits usually accompany the Offer to Purchase, or can be submitted upon the acceptance of the Offer depending on how the contract is drafted.  According to the standard AREA (Alberta Real  Estate Association) Residential Purchase Contract, the Initial Deposit needs to be deposited no later than 3 business days after final signing of the purchase contract.


Additional Deposits are funds that are due usually at particular milestones of the Purchase Contract, such as when conditions are removed. Like Initial Deposits, Additional Deposits are due at the time these milestones are achieved, or as per the terms agreed upon on the Purchase Contract.


All deposits are generally held in-trust by the listing real estate brokerage and form part of the down-payment, or is applied to the purchase price, at the time of completion.


Conditions
– A condition on a real estate contract is an act or event that affects a party’s contractual duty in regards to the sale or purchase of a property. These conditions must be waived by the specified time and date, otherwise the contract becomes null and void.


Examples of the most common conditions are Financing, Property Inspection, Condo Documentation Review and Sale of Buyers Home.


Terms
– Similar to a Condition, a term is an agreement between two or more parties to complete a particular action or task by a particular date.  Terms, however, do not affect the validity of the contract and instead carry other consequences in not completed; usually monetary.


Closing (Possession) Date
- This is the date that the ownership of the property (and the transfer of money from the buyer to the seller) takes place.

Inclusions and Exclusions – These are specific items which are to be included or excluded in the terms of the deal, such as appliances, window coverings or furniture.

 
 

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