Understanding the Agreement of Purchase and Sale in Plain Language

If you are buying or selling property in Ontario, you will likely come across a crucial document called the Agreement of Purchase and Sale—or APS for short. While it may seem like a stack of legalese, understanding what this agreement includes is essential to protecting your rights and ensuring a smooth transaction.

What is an Agreement of Purchase and Sale?

An Agreement of Purchase and Sale (APS) is a formal legal contract between a buyer and a seller that outlines the terms of a real estate transaction. This document sets out the buyer’s intention to purchase the property for a specified price, provided that certain conditions are met.

Once both the buyer and seller sign the APS, the agreement becomes legally binding—meaning neither party can simply back out without facing potential legal consequences.

What is Included in the Agreement of Purchase and Sale?

The Agreement of Purchase and Sale (APS) outlines the full terms of the real estate transaction in writing. It is designed to clearly define the expectations and responsibilities of both the buyer and the seller, minimizing misunderstandings and protecting both parties in case of a dispute.

Here are the key components typically included in an APS:

Purchase Price

This is the amount the buyer agrees to pay for the property. It may include a deposit (or multiple deposits) payable at different stages, which demonstrates the buyer’s commitment to the deal. The price is usually negotiated between the parties before the APS is finalized.

Closing Date

Also known as the “completion date,” this is the day the transaction is officially completed. On this date, the property changes ownership, and the buyer takes possession. It’s essential that both parties are ready for closing—financially, legally, and logistically.

Conditions (or “Contingencies”)

These are specific requirements that must be satisfied before the agreement becomes fully enforceable. Common conditions include:

• Financing: The buyer must secure a mortgage or other funding.

• Home Inspection: The buyer can inspect the property and withdraw or renegotiate if issues are found.

• Sale of Existing Property: The buyer may need to sell their current home first.

• Lawyer Review: Either party may want the agreement reviewed by legal counsel before proceeding.

If conditions are not met within the specified timelines, the deal may fall through without penalty.

Inclusions and Exclusions

The APS should specify which chattels (movable items such as appliances or window coverings) are included in the sale, and which are not. For example:

• Included: Fridge, stove, washer, dryer, light fixtures

• Excluded: Heirloom chandelier, curtains

This prevents confusion on closing day and ensures both sides agree on what stays with the home.

Legal Descriptions and Property Details

The APS must accurately describe the property being sold—this includes the municipal address, lot number, legal description from the title, and any relevant zoning or use information. Accuracy is crucial to avoid legal issues or title disputes later on.

Signatures and Dates

The agreement becomes legally binding only once it is signed and dated by both parties. These details confirm the timeline for when obligations must begin to be fulfilled and also help determine when any conditions must be waived or fulfilled.

Additional Clauses or Schedules

Depending on the transaction, the APS may include custom clauses or attached schedules. These might cover:

• Repairs or upgrades before closing
• Tenants occupying the property (if it’s a rental)
• Rights to visit or inspect the property before closing
• Title insurance requirements

These additions can be negotiated and tailored to suit unique circumstances, which is why legal advice is so important before signing.

Why the Agreement of Purchase and Sale Matters

The Agreement of Purchase and Sale is one of the most important documents in any real estate transaction. Once signed, it sets the wheels in motion for closing and legally obligates each party to fulfill their responsibilities.

Because of its legal weight, both buyers and sellers are highly recommended to have their real estate lawyer review the APS before signing. A lawyer can explain the fine print, suggest changes, and ensure your interests are protected.

How Nihang Law Can Help

Real estate deals can be complex, but your legal documents don’t have to be confusing. At Nihang Law, we help buyers and sellers understand exactly what they’re signing—so there are no surprises later on.

Thinking of buying or selling a home? Contact us today to review your Agreement of Purchase and Sale and ensure your transaction is secure from start to finish.