The Documents Involved When Buying Real Estate
WORKING WITH A REAL ESTATE AGENT
Buyers and sellers will be presented with this brochure at the earliest contact with a real estate agent. Industry regulations have now made it mandatory for agents to explain at the beginning of the client relationship the options of agency representation you have, and to disclose the capacity in which the agent will be working with you: i.e. as a buyer's agent, a seller's agent, as a subagent to the seller, or as a dual agent. The agent will then ask you to sign a statement acknowledging that this disclosure of agency representation has taken place. He or she will then tear off and keep the signed statement and give you the brochure for future reference.
Signing the disclosure statement in the Working with a Real Estate Agent brochure does not bind you to any obligation to that real estate agent. It merely confirms that you have discussed your agency representation options with the agent. You will have a contractual arrangement with your agent when you sign the listing agreement (as a seller) or the exclusive buyers' agency agreement (as a buyer).
PROPERTY DISCLOSURE STATEMENT (PDS)
The seller is legally responsible for the accuracy of the information which appears on the PDS. The seller indicates his or her knowledge of various aspects of the property, defects of which he or she is aware, and any upcoming expenses (as in special assessments in strata-titled properties).
Not only must the answers be correct, but they must be complete. The buyer will rely on this information when the buyer contracts to purchase the premises. Even if the PDS is not incorporated into the Contract of Purchase and Sale, the seller will still be responsible for the accuracy of the information on the PDS if it caused the buyer to agree to buy the property. The REALTOR® is not permitted to fill out the PDS on behalf of the seller. The buyer receives a copy of the PDS after signing and dating it. The PDS does not cover every aspect of the property. The buyer must still make the buyer’s own inquiries after receiving the PDS. The buyer can hire an independent, licensed inspector.
EXCLUSIVE BUYER'S AGENCY CONTRACT
Many listing contracts for properties listed for sale on the Multiple Listing Service® stipulate the compensation offered to the agent who obtains a buyer for the property. However, some listing contracts do not provide for the remuneration for the buyer's agent. To ensure that they will be adequately compensated for their service to you, some REALTORS® may request that you as buyer enter into a written agreement with them. The remuneration to the buyer's agent will still come from the transaction and will be able to be financed as part of your mortgage. REALTORS® who use buyer's agency contracts feel that this commitment on the part of both REALTOR® and client enables them to provide better service and offer the buyer a wider selection of property from which to choose.
The Exclusive Buyer's Agency Contract outlines the services you will receive from the REALTOR®, and the obligations of both you as buyer and the REALTOR® in the buying transaction.
LIMITED DUAL AGENCY AGREEMENT
This form is used when the agent represents both the buyer and the seller in a single transaction. It is used when the situation involves either one salesperson who represents both the buyer and the seller, or when two salespersons from the same company are involved.
This agreement modifies the prior Listing Contract and the Buyer's Agency Contract (or verbal buyer's agency agreement) and gives the agent the authorization to represent both parties in a limited capacity. It authorizes the agent to maintain both parties' confidences regarding motivation, negotiating positions and personal information (unless either party gives the agent written permission to disclose such information).
CONTRACT OF PURCHASE AND SALE
The Contract of Purchase and Sale standard form is the basic contract signed by the parties (the sellers and the buyers). It outlines every aspect of the transaction, including the price, the terms and conditions, the dates, the inclusions and exclusions, the handling of existing tenancies, the deposit and increase (where applicable) and other legal matters as described in the preprinted contract and added as clauses.
ADDENDUM (WITH PRINTED CLAUSES)
The basic contract will be accompanied by a special addendum form with preprinted clauses where there is either financing to be cleared from the title before the seller can provide clear title, or where there is financing to be put into place after the title is registered in the buyer's name.
ADDENDUM (WITHOUT PRINTED CLAUSES)
The basic blank addendum for is used to write additional clauses on the contract when there is not adequate space to do so on the contract itself. When that has been done, the buyer signs this form indicating that this clause is being removed.
AMENDMENT TO CONTRACT OF PURCHASE AND SALE
This form is used to remove conditions (subject removal) when they have been satisfied, as in the situation where a buyer has to find financing by a certain date.
Usually leases are used more in commercial transactions than in residential ones, but you may be a landlord or a tenant who prefers to use a lease for a specified time period for any number of reasons, including stability of tenure. A commercial lease is very involved and should be drawn up by a specialist in the commercial field and reviewed by a lawyer for each party. A residential lease is less complex and normally involves little more than a standard rental agreement with an outline of the rules and regulations of the building or complex, or expectations of the owner and tenant above and beyond what the Residential Tenancy Act sets out. If you have any doubts about how to draw a lease or how to interpret specific clauses, consult a lawyer or a REALTOR®.
Mortgages come in a wide variety of formats, depending on the lending institution. Now, many institutions use a simplified form and make reference to the larger form where any deviations from clauses in their standard form may occur. The buyer should check that the document matches the commitment letter they have signed outlining the terms, including the interest rate, the term, the amortization period, the prepayment privilege ("penalty"), the options (if any) for increasing the number of payments or making lump sum payments, the assumability of the mortgage if the property is sold, and the portability of the mortgage if the seller wishes to use it on another property.
If you are a seller who is carrying financing for a buyer of your property, make sure that your lawyer reviews the documents before you sign them. If you are a buyer who is asking a seller to carry financing, make sure your own lawyer reviews the documents as well. Many serious issues may arise where the parties are unfamiliar with the law concerning mortgage financing.
Note: The Above Information Has Been Distributed To The Public By The FVREB. For More Information Please Visit www.fvreb.bc.ca