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ALBERTA REAL ESTATE • ALBERTA TRAVEL GUIDES • TRAVEL MAPS
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INTERIM AGREEMENT OR OFFER TO PURCHASE
This is one of the most important documents you will ever sign.
The "interim agreement"
or "offer to purchase" is an offer to purchase
by the purchaser which, upon acceptance by the seller,
becomes a legal, binding contract, provided that it meets
all the requirements of a contract.
Once accepted, it is in fact an interim agreement until
either:
a) The transaction is closed and the final documents are signed; or
b) The interim agreement lapses.
The interim agreement is, in most circumstances, an
unimposing pre-printed form. Great care should
still be taken to see that it outlines the transaction
accurately. Once the contract is in writing, a
verbal explanation of what was meant, intended, or
understood cannot be added, even in a court of law.
Fixtures and Chattels
Fixtures not specifically mentioned are automatically included in the price. Chattels are not.
Chattels
Moveable Items
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Fixtures
Non-Moveable Items
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Stove
Fridge
Dishwasher
Curtains
Loose-Laid Carpets
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Built-In Stove
Built-In Fridge
Built-In Dishwasher
Curtain Rods
Attached Wall-to-Wall Carpet
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Should you as
the purchaser wish to include chattels in the purchase,
and in the purchase price, these items should be
mentioned specifically in the interim agreement as being
included. Identify these so the seller will not, for
instance, take out the nice expensive curtains you saw in
the home and replace them with some older or less
expensive curtains that may be totally unacceptable to
you!
Mortgage Term
The conditions in the mortgages may vary. Some mortgages require no payment until the time they are to be paid off; others require only interest payments, and still others require both interest and principal payments. This last type of mortgage is a standard house mortgage, called an amortized mortgage. The principal balance owing under an amortized mortgage is reduced with each payment. If it takes 25 years to pay off the mortgage, then the amortization period is said to be 25 years. The term is the length of time over which a financial institution will lend money to the borrower at a fixed rate.
Do not confuse the "term" of a mortgage with its "amortization".
Amortization refers to how long it will take the borrower to pay back the entire amount of the mortgage.
Financial institutions want to renegotiate conditions like the interest rate and payment amount under which they lend you money. When a mortgage term is up, you must go back and renew your term to continue to pay off the remaining amount of your principal.
THE DEPOSIT
The deposit serves two purposes:
- It is partial payment of the purchase price which is the consideration for the sale, and is as such, on of the legal requirements for a contract.
- It is a guarantee of performance.
If a real estate agent is involved in the sale, the deposit is generally paid to the listing agent's company and held in trust, pending completion of the transaction. After the transaction has been completed, the deposit is turned over to the seller. However, since the seller owes the realestate agent commission, the deposit is retained by the agent and applied against the commission. The seller is entitled to keep the deposit if the purchaser is at fault for not completing the transaction.
There may be a condition precedent ("subject to" clause) in the interim agreement. If there is, it is not a firm contract for purchase and sale until that condition has been fulfilled or waived by the party for whose benefit it has been inserted.
The interim agreement should provide for the date on which the purchaser will assume the payments of all taxes, water rates, electricity, heat, rentals, and all other adjustments that are to be made between the parties. This date is included in the interim agreement. It is from that date forward that all benefits and obligations are assumed by the purchaser.
The date the seller has contracted to give the purchaser possession of the home. Since the purchaser can start using the house on that date, the purchaser assumes expenses from that date. In most cases, adjustment date and possession date are the same, described as the completion date.
Completion date is a crucial date--the date when all the documentation must be signed, sealed, and delivered--and the money paid. You will find that most interim agreements contain the phrase "Time is of the essence in this agreement". This means that both the seller and the purchaser have the right to insist on completion on the scheduled date, failing which, at their option, they may cancel the agreement.
This is a complicated area of the law. Immediately seek professional guidance at the first sign of any problems. Do not jeopardize your transaction--make certain that you have done everything required by the closing date. If this is not possible, obtain an extension of the closing date, in writing.
This information was provided by RE/MAX House Calgary.
Other topics for buyers:
Guidelines to finding a home |
How your realtor works for you
When buying a home |
Before you make an offer
The purchase agreement |
The home inspection |
Glossary of terms
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