Your home is one of your largest investments; when it comes time to sell that investment, it’s important to understand the sale process from the very beginning.
The Agreement of Purchase and Sale
When purchasing or selling a property in Nova Scotia, a written contract, or an Agreement of Purchase and Sale, is required.
The Agreement describes your rights and obligations in the sale and must be given careful consideration. If a dispute or problem arises during the sale of your property, the Agreement is critical to the eventual outcome.
If you’re using a real estate agent, they’ll have a standard form of Agreement, which usually has a “subject to lawyer review” clause attached. That clause allows you a short period of time to have your lawyer review the Agreement with you. You should meet with an experienced real estate lawyer, either before you sign the Agreement or within the specified time frame after you sign it, to be sure you understand and agree with all of its terms before it becomes binding.
If you’re not using a real estate agent in your sale, you should consider having a lawyer work with you to prepare the Agreement.
The Agreement will set out:
- The property to be sold.
- The other items to be included in the sale (e.g., appliances).
- The sale price and deposit amount.
- The closing date.
- The date by when the purchaser and vendor much satisfy certain conditions, prior to which a party may be able to back out of the agreement.
- Any other arrangements.
Furthermore, the Agreement may make the seller responsible for the following:
- Completion of a Property Condition Disclosure Statement. Care must be taken to ensure it is completed as fully and accurately as possible, as a seller could be found liable for any misstatements made in this document.
- Providing a land survey and/or location certificate, if in the seller’s possession.
- Providing copies of heating or other utility costs.
- Ensuring that the oil tank is filled on or shortly before the closing date.
Fixtures
Unless the Agreement states otherwise, any ‘fixtures’ must remain with the property on the sale date. Fixtures include, but are not limited to, built-in shelving units, light fixtures, and built-in appliances. It’s critical you understand which items are fixtures, and therefore included in the sale, and which items are to be removed prior to the sale.
Leased Equipment
The Agreement must state whether any equipment at the property is leased. If so, the Agreement must confirm whether the buyer will assume the lease(s) on closing, or whether you, the seller, is responsible for paying them out in full on the closing date.
Title Work and Migration
If the property to be sold has not already been migrated to the Land Registration System, the Agreement will generally make it the responsibility of you, the seller, and your lawyer. Your lawyer will work with the buyer’s lawyer to ensure any title issues are addressed and resolved prior to the closing date.
Tax Consequences
Be sure to discuss with your lawyer the Income Tax and Harmonized Sales Tax implications of the sale of your property.
Closing Day
Before the deed is released to the buyer, your lawyer will ensure the correct amount of funds have been received to enable payment of your mortgage (including pre-payment penalties, which will be reviewed prior to the closing date), real estate commission, outstanding property taxes, legal fees and other related charges. After those amounts are deducted, the balance of the sale proceeds will be provided to you, the seller.
This article is for information only and is not intended to be legal advice. If you have any questions or would like further information, you should consult a lawyer.
