Definition : Preliminary contract (promise to purchase)

4 juin 2022 — Le projet de loi 96 (Loi sur la langue officielle et commune du Québec, le français) a (PL 96) été adopté le 24 mai dernier par l’Assemblée nationale du Québec (Vote : Pour 79, Contre 29, Abstention 0) et sanctionné le 1er juin 2022. Ce projet de loi modifie une vingtaine de lois et règlements, dont le Code civil du Québec. Il constitue une modification majeure à la Charte de la langue française (Loi 101) qui avait été adoptée en 1977. Le PL 96 propose ainsi diverses modifications législatives dans plusieurs secteurs d’activités, à savoir celles relatives à l’État québécois et à la société en général. Son objectif vise la protection et la valorisation de la langue française.

L'article 1068.1 du Code civil du Québec, issu du Projet de loi 16, obligera une plus grande transparence lors d'une transaction en copropriété. Le document d'attestation prévu dans cet article posera des questions pointues sur "l'état de la copropriété", afin que les acheteurs sortent du brouillard avant d'acquérir un appartement détenu en copropriété divise.

27 mai 2021 — La ministre des Affaires municipales et de l’Habitation (MAMH), Andrée Laforest, a récemment lancé une vaste consultation visant l’adoption de sept dispositions prévues dans le projet de loi 16. Celui-ci a été sanctionné en janvier 2020.

L'inspection préachat est un incontournable avant d'acheter un condo. Si on ne peut faire inspecter tout l'immeuble, ce qui coûterait trop cher, il est néanmoins possible d'avoir un aperçu du type de gouvernance qui y prévaut, que ce soit en matière d'entretien et de conservation du patrimoine bâti.

 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.

Real estate developers who are not the holders of the appropriate license for the construction of the Régie du Bâtiment du Québec may have a legal existence, be listed in the yellow pages and advertise in newspapers or on the Web. However, before signing a preliminary contract for the purchase of an apartment in a new construction, make sure that the chosen developer is accredited by Garantie de construction residentialielle (GCR) and holder of the sub-category of a license from from the Régie du bâtiment du Québec (RBQ), depending on the type of buildings (house or condo) you want to acquire.

Question:  At the time of the purchase of my condo, do I have a right to ask the seller for a certified true copy (authentic copy) of the Declaration of Co-Ownership?

  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?

The Guarantee Plan for New Residential Buildings differs from the private guarantee plans offered on the market by the nature of the guarantees offered and the mechanisms for asserting its rights. In this regard, the terms and conditions are set out in the the Regulation respecting the guarantee plan for new residential buildings, which is the responsibility of the Régie du Bâtiment du Québec (RBQ). Finally, unlike private guarantee plans, any purchaser of a building covered by this plan automatically benefits from it. As this is a system aimed at the minimum protection of consumers'rights, consumers cannot waive this mandatory guarantee, even if they sign a document to that effect.

When the sale concerns a fraction of a divided co-ownership of a residential immovable, the preliminary contract must be accompanied, at the time of its signature, by certain documents (such as forming with it an indivisible whole). This includes the information note on the essential characteristics of the project, whether it is a new co-ownership or under construction, or a building that has undergone major renovations to the point of now being considered new. In addition, the contract of guarantee will complete the preliminary contract. It concerns immovables or projects subject to the Regulation respecting the guarantee plan for new residential buildings, i.e. those with no more than 4 private portions stacked one above the other (apartments).

The signing of the preliminary contract binds the parties involved, namely you and the developer or builder. However, the law gives you a short "reflection" period, during which you can still terminate the contract unilaterally, in certain cases and in return for compensation to be paid to the promoter. 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 sale of a residential immovable intended for a natural person who acquires it to live in it, whether it is built or to be built by a builder or developer, must be preceded by a preliminary contract.  Article 1785 of the Civil Code of Quebec obliges the builder to enter into such a prior-contract with the buyer (which precedes the contract of sale itself). This contract formalizes the promise to sell and buy the property by the parties involved in a transaction. In particular, it sets the purchase price of the home, its delivery date and the date of the deed of sale, usually the day on which the buyer will be able to move in. A deposit will usually be required when he signs it.

The preliminary contract is an important step in any purchase of new or a property to be built.  At all times, the unequivocal will for the buyer to acquire the property must be registered.  Although the Civil Code of Quebec specifies the mandatory content of a preliminary contract, the statements contained therein are not exhaustive.  To be valid, the preliminary contract must include a certain number of mandatory information, under penalty of nullity. It is also possible to insert various optional clauses in this contract to deepen the conditions of this one. 

After months of searching, you have found an apartment completely renovated and decorated with great taste. Finally, you will buy the property of your dreams with training room, roof terrace, swimming pool and indoor parking. You certainly know that making the leap can be both an exciting and complex step. Only it is a divided co-ownership apartment. That is  why, at the time of submitting the offer to purchase, a doubt intrudes into your heart. All kinds of questions  intertwine in your mind:    

After reaching an agreement on the conditions of sale with a builder or developer, you will be asked to sign a preliminary contract.It is compulsory only in the case of the sale of a dwelling to be occupied by a natural person, It is not compulsory for a sale to a company. The preliminary contract precedes the purchase of any new or to be built property. Existing condos are generally the object of an offer to purchase. You must use it, irrespective of the fact that a real-estate broker is involved (or not) in the transaction. You will find, hereunder, directives concerning the undertakings, provisions, and essential terms and conditions to include (or to consider) when preparing a preliminary contract.

The notary is a jurist with the task of public officer, who ascertains the free and informed consent of the parties. The notary also has the role of legal adviser. It therefore protects consent. The intervention of the notary is very important when purchasing an apartment in a divided co-ownership. A professional, he is a member of the “Chambre des notaires du Québec” (Québec Chamber of Notaries). In this capacity, the notary's mission  is to receive, on behalf of his clients, the acts to which the parties must or want to have given the character of 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.  

An offer to purchase, also known as a promise to purchase, precedes any transaction relating to an existing property, as opposed to new or to be build condos, which are accompanied by a preliminary contract. The initiative of an offer to purchase is taken by a potential buyer, who will establish the conditions for the acquisition of a property. Although this document is not mandatory, legally speaking, it represents a mandatory passage for most buyers. Generally recorded in writing, the offer to purchase shows the willingness of the future purchaser to engage in the transaction. It is also a first step that leads to the deed of sale. 

The offer to purchase is an important step in any real estate purchase. The Civil Code of Québec does not exhaustively specify the mandatory content ofan offer topurchase. However, the unequivocal will for the buyer to acquirethe property must be registered. Tobe valid, it must include a certain number of mandatory information, under penalty of nullity. The main mentions are the  names and  contact details  of  the parties involved, the identity of the targeted building and the purchase price that the purchaser proposes and the period of validity of the offer. It is also possible to insert various optional clauses in the offer to purchase to deepen the conditions of this one. 

For the promising buyer, the offer to purchase is a way to reserve a property on conditions that he sets himself. When signing an offer to purchase, it may be that certain aspects surrounding the sale are beyond its control. This will happen, for example, if they have to sell their principal residence before buying, or if they need to get a mortgage before acquiring the new property. To this could be added another imponderable, that is to say that it may lack information to carry out a due diligence verification before the purchase. For this reason, offers to purchase generally include an obligation that is described as conditional, which is recorded as a suspensive condition.

In business as in real estate, negotiation is at the heart of any buyer's approach. Submitting an offer to purchase at a lower price than the one requested is a fair game. The promisor-buyer can thus send an offer to the seller indicating the proposed purchase price (less than the asking price) as well as suspensory conditions.  When the owner-seller receives it, he may, within the time limit set in the offer, accept it as presented or refuse it. In case of refusal or indifference, it will therefore be considered null and void.  

An obligation exists for the seller, namely that of announcing the exact size of the unit he is selling. Most buyers attach great importance to the area/price ratio of an apartment, as this is a data that will greatly influence the price offered or their decision to buy or not. Therefore, before signing the deed of sale, take the time to carefully check the area of the 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 not isolated cases. However, this problem of surface areas is a source of frequent conflicts in co-ownership. And it's not exclusive to off-plan sales. It can also occur during a resale.

Question: Am I obliged to use the services of the notary appointed by the developer when I am the one who pays for it? What are the rules that apply in this area: who chooses the notary instrumenting the sale? Is it the seller? Is it the buyer? Do we both have to agree on a name? Answer: Section 26 of the Notarial Act provides, in the absence of a specific agreement, that in the case of a sale of immovable, the choice of notary is made: To the buyer, if he pays the sale price in full (cash or with a mortgage); To the seller, if the buyer does not pay the sale price in full (leaving a balance due to the seller).