- Preliminary contract (promise to purchase) : Preliminary contract (promise to purchase)
Definition : Preliminary contract (promise to purchase)
A prior-contract by which the builder of an immovable or a developer undertakes to sell to a physical person, who acquires it to occupy it himself, a residential immovable, built or to be build. It provides the price and the terms and conditions governing the sale and includes, under pain of nullity, obligatory clauses.
Question : Lors de l’achat de mon condo, suis-je en droit d’exiger de mon vendeur une copie certifiée conforme (copie authentique) de la déclaration de copropriété?
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I plan to buy an on plan apartment. As I am intolerant to second-hand smoke from other units, acquiring a condo in a co-ownership in which my neighbors could be smokers is out of the question.
Question: How can I get assurances from the developer, that smoking will be prohibited in the private portions of the building to be built?
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The signing of the preliminary contract binds the parties, (yourself, the developer or builder).
This being said, the Civil Code of Quebec provides that you have the right within a period of 10 days to unilaterally cancel this contract, which means that you can walk away from your undertaking to purchase (right of withdrawal) without any justification. This "right of withdrawal" may be exercised by any promisor who is a natural person and who intends to occupy the apartment being the object of the preliminary contract.
The preliminary contract is signed before the purchase of a new or to be built property. To be enforceable, a preliminary contract must, contain the designation of the parties, the identification of the targeted immovable and the price offered.
You have found the apartment of your dreams. At last, you will buy the property you have coveted. But before signing the offer to purchase, nagging doubts are in the back of your mind, you have many questions:
After reaching an agreement on the conditions of sale with a builder or developer, you will be asked to sign a preliminary contract.
The intervention of the notary is very important when purchasing an apartment in a divided co-ownership. A professional, member of the “Chambre des notaires du Québec” (Québec Chamber of Notaries), he is also a public officer. As such, the notary has without limitation the mission of executing deeds to which the parties wish or are required to endow with authenticity (such as a declaration of co-ownership). Even though it is preferable that he should get involved at the outset of a transaction, this legal adviser usually gets involved after the signing of the offer to purchase or of the preliminary contract.
The notary, in his capacity of public officer:
Warrants the validity of the deed of sale;
Is bound to act objectively and to give legal advice to all the parties (equally to the purchaser and the vendor);
Is bound to a duty of information to the parties, which means he should give the parties relevant advice and information in relation with the deeds signed before him.
An offer to purchase is prepared before the purchase of an already built property contrary to new or to be built condos, in which cases, you will be shown a preliminary contract. Even though it is not compulsory under the Law, the offer to purchase is a necessary step on the path leading to a transaction for the majority of buyers. Generally in writing, it is the first step which leads to a deed of purchase. Prepared generally on a standard form by the real-estate broker, the offer to purchase is in reality a preliminary contract.
Even though a verbal offer to purchase is enforceable under the Law, you should nevertheless formalize it in writing. On this point, the rules of ethics of “l’Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)”, the auto regulating body overseeing real-estate brokerage in Quebec, are clear: every real-estate broker shall document, in writing, the wishes of the parties to conclude a real-estate transaction in a transaction in which he is acting as a broker.
The offer to purchase is an important step in any real estate purchase. To be valid, it must include a number of mandatory information, on pain of nullity. Thus, it must include the names of the parties involved, the identification of the coveted building and the purchase price offered.
When the time comes to sign an offer to purchase, certain elements of the sale may be outside your control. This happens when you must sell your present residence or if you must obtain a hypothecary loan before purchasing the new property.
There are other intangibles, such as not having the information on hand to carry out a due diligence verification before the purchase.
When the time comes to sign an offer to purchase, the vendor will often ask for a deposit, known familiarly as a « down-payment», to be deducted from the sale’s price. Even though there is no legal obligation to give a deposit, this practice offers to the vendor assurances of your intention to purchase and of your apparent solvency.
It is essential to provide, in the offer to purchase, a time limit for the acceptance and its notification. This time limit is the end of the period of time during which the offer to purchase remains in force. The vendor may during this period accept or refuse it. Failing providing a time limit in an offer to purchase, the Civil Code of Quebec provides that it will become null and void at the end of a reasonable period of time.
It is a good tactic to present an offer to purchase for a lower price than the asking price. When the owner-vendor receives it, he may accept, refuse or ignore it. In the case of a refusal or an absence of response, the offer will become null and void.
The vendor has the obligation to reveal the exact superficial area of its private portion. The superficial area/price ratio is an important criteria for many buyers. It has a major influence on their decision to purchase
Off plan sale
The calculation of the superficial area of an apartment may lead to a conflict if, in an off plan sale, the gross area shown on the architectural plan is the information used for the transaction. Thus, you should insist that the developer supplies a detailed plan of the apartment to be built, along with the method used to determine the superficial areas.
Most buyers attach great importance to an apartment area/price ratio. Therefore, before signing the deed of sale, take time to carefully measure the area of your unit. Discrepancies between what is shown on the plan provided at the signing of the preliminary contract, versus the actual area shown on the cadastral plan or the certificate of location are frequent. This difference can be explained by many factors listed in the factsheet entitled The Area of the Private Portion.