Remember Even If It Looks Like A Form: It Is A Legal Contract To Buy A Home
Every year in Alberta, thousands of people enter into Alberta real estate purchase contracts to buy and sell homes. The process of buying a home in Alberta is exciting. Sometimes people lose site of the fact that pre-printed, sometimes electronic real estate purchase contracts are legally binding contracts. While there are different residential purchase contracts for different types of properties, the main legal points are similar. Once signed and conditions are waived, you are required to go by the terms of the contract. If you cannot or will not, you can be sued. If you have never purchased a home before, we recommend reading about the “Steps To Buying A Home In Alberta“. This will let you get familiar with the process and some of the things that you will have to do both before and after signing the contract. In order to protect yourself, here are the Top 10 legal things to know before you sign an Alberta real estate purchase contract when buying a home:
1) Look At The Restrictions On Title
There may be a number of restrictions as to what you can do with the property registered on title. These include, right of ways, easements, restrictive covenants, caveats and more. The restrictions are too numerous to mention but include, limits on where you put things on the property, what structures you can build, what activities can happen on the property and even the colour you can paint or building materials you can use on the structures on the property. These should be reviewed with your realtor or lawyer before you sign the contract. Normally, once you are in the lawyers office, the purchase contract is binding and you have no choice but to buy the home. Standard Alberta real estate purchase contracts do not limit or warranty these types of restrictions on title.
2) Look At The Real Property Report
The real property report is a survey of the property. Always ask to see it before signing any Alberta real estate purchase contracts. If the sellers do not have one, or if they have added structures to the property since the last one was completed, then you can add it as a condition to the contract. Under the contract used by real estate agents, sellers must provide them before the possession day but to know what you are buying, it is good to see one before signing. Land surveyors map out the property lines, all structures on the property and even things like rights of ways and easements. A real property report is important as among other things, it let you know:
- of where the property lines are (what you are getting);
- if there are places that you cannot build;
- if anything encroaches into or from neighbouring properties; and
- with the stamp of municipal compliance that is required on the report, if the property complies with municipal land use bylaws.
3) Do Your Due Diligence Inspections
Everyone has different concerns in life. Every property brings on its own set of concerns. There are more than enough potential due diligence inspections to do on a property to create its own Top 10 List. The most common due diligence inspections in Alberta real estate purchase contracts include a home inspection and condominium document reviews. Examples of other types of inspections include: asbestos inspections, engineering inspections, electrical inspections, title reviews, well water & septic report inspections, etc. Make sure that you look into any and all concerns either before you sign the contract, or make sure that the contract has a condition for your specific due diligence concern. Remember that “Buyer Beware” is still alive and well in Alberta.
4) Include All Conditions You Are Concerned About
As mentioned in #3, you can add a condition for any due diligence concern that you want to look into. A condition is a term in the contract that, if not waived, makes the whole contract non-binding. More specifically, the whole contract being legally binding on the buyer and seller is conditional on the specific conditions being waived. In addition to the above due diligence related items, you can or should also include conditions for getting financing (include the specific terms for financing that are acceptable to you), seeing any permits that the seller has, if you need any more information to make a decision about the home, or if you want a family member to have a chance to see the home before you are required to buy it. Every part of all Alberta real estate purchase contracts are negotiable, so do not be afraid to include a condition for anything that is important for you.
5) Take A Good Look At The Home
Buying a home is very emotional. While the decision to be a home owner can take some time,once people start looking, buying a specific property can happen very quickly. We find that clients often do not see the imperfections in a home until after they move in. It is worth taking the time to look at each room in a home and actually look for defects that may be important to you. Many of these defects may be cosmetic. Do not be afraid to roll up rugs to look at the flooring underneath. Do not be afraid to look under furniture to inspect the carpet (especially if it is furniture that seems to be in a odd place). Look at the paint and baseboards for damage. These are not items that will likely affect the value of the home very much, but can be costly to fix. It is always best to know what you are buying before you are obligated to buy it.