Purchase Agreement

Learn what a purchase agreement is in Canadian real estate, what terms it includes, and why it’s crucial for protecting buyers and sellers.

Purchase Agreement

May 14, 2025


What is Purchase Agreement?

A purchase agreement, formally known as an Agreement of Purchase and Sale (APS), is a legally binding contract that outlines the terms of a real estate transaction between a buyer and seller.

Why do Purchase Agreements Matter in Real Estate?

In Canadian real estate, the purchase agreement is the core document governing a transaction. It details rights, responsibilities, and legal obligations for both parties, covering key terms like:
  • Purchase price
  • Closing date
  • Deposits and payment schedule
  • Conditions (financing, inspection, sale of buyer’s home)
  • Included chattels and excluded fixtures

Once signed by both parties, the agreement is binding and enforceable under provincial law. Any changes must be made in writing and agreed to by both parties.

Understanding the purchase agreement ensures all aspects of the sale are clearly defined, minimizing disputes and guiding the transaction to a successful closing.

Example of a Purchase Agreement in Action

A buyer and seller sign a purchase agreement with a 60-day closing, $25,000 deposit, and conditions for inspection and financing.

Key Takeaways

  • Legal contract governing the property sale.
  • Defines all key terms and timelines.
  • Becomes binding once signed.
  • Modifications require written consent.
  • Reviewed by agents and legal professionals.

Related Terms

  • Agreement of Purchase and Sale
  • Firm Offer
  • Conditional Offer
  • Deposit
  • Closing Date

Additional Terms

Encumbrance

An encumbrance is a legal claim, liability, or restriction on a property’s title that may affect its use, transfer, or value.. more

Eminent Domain

Eminent domain is the government’s legal right to expropriate private property for public use, with fair compensation to the owner.. more

Development Charges (DCs)

Development charges (DCs) are fees imposed by municipalities on new developments to help fund infrastructure and services required due to growth.. more

Deed Restriction

A deed restriction is a condition written into a property’s deed that limits or prescribes how the property can be used, binding future owners until. more

Convertible Mortgage

A convertible mortgage is a loan that starts with a short-term, often variable rate, giving the borrower the option to convert to a longer-term fixed. more

Contingency Clause

A contingency clause in real estate is a contract provision that makes the deal dependent on certain conditions being met, such as financing approval. more

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