What is an Agreement of purchase and sale?

The Agreement of Purchase and Sale is the primary legal document that governs real estate transactions in Ontario. Once signed by both the buyer and seller, it becomes a binding contract that outlines all material terms of the purchase, including the sale price, legal description of the property, chattels included or excluded, and the scheduled closing date.

Key components of the agreement include:

• Purchase price and deposit amount held by the real estate brokerage
• Conditions precedent, such as financing approval, property inspection, or sale of the buyer's current home
• Title and survey information the seller must provide
• Representations and warranties from both parties regarding the property's condition
• Default provisions and remedies if either party fails to perform
• Closing adjustments for property taxes, utilities, and other proportional expenses

In London, Ontario, most residential sales use a standardized form developed by the Ontario Real Estate Association (OREA), though the specific terms can be negotiated between parties. The agreement serves as protection for both buyer and seller by clearly defining expectations and obligations. Once both parties have initialed and signed the document, it is legally enforceable, and failure to close on the agreed closing date can result in breach of contract claims.