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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

Budgeting

Budgeting in real estate refers to the process of forecasting and managing income and expenses associated with owning, operating, or developing a property.. more

Tenant Improvements

Tenant improvements refer to custom modifications or build-outs made to a leased space to suit the tenant’s operational needs, often negotiated as. more

Highest and Best Use

Highest and best use refers to the reasonably probable use of a property that results in the highest value, provided it is legally permissible,. more

Gross Lease

A gross lease is a commercial lease where the tenant pays a fixed rent, and the landlord covers most or all operating expenses such as property. more

Brownfield

A brownfield is a property that was previously used for industrial or commercial purposes and is now vacant or underused, often requiring. more

Record of Site Condition (RSC)

A Record of Site Condition (RSC) is a formal document filed with a provincial environmental authority certifying that a property meets required. more

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