You are two steps away from getting a house that you like a lot, but suddenly you start to doubt your decision. But, is there a way to back down?
“People think they are just making a simple offer, but they need to be careful since those offers have legal impacts,” explains Ms. Sabrina Strathmeier, notary and legal advisor. Once an offer is made to the seller and the latter takes it into consideration and responds in a timely manner, the “offer” becomes a contract promise for the buyer. This offer can be accepted, declined, or subjected to a counteroffer.
The notary underlines that there are circumstances where the purchase offer can be cancelled without complications. “In fact, it all depends of the conditions included in the purchase offer,” she explains. For example, some people can indicate that their offer is contingent on getting a mortgage loan or selling their house beforehand. “If the buyer can prove that any of these conditions have not been met, then the offer no longer stands,” says Ms. Strathmeier.
The purchase offer can also be withdrawn after an inspection if a hidden defect is found and the seller declines to either fix it or reduce the price. “It is unwise to make a purchase offer that contains no condition regarding a satisfying inspection or a new legal description reflecting the actual state of the location,” says the notary. When one purchases a condo, it is also possible to make a purchase offer conditional to a verification notably of the contingency fund.
Also, if the future buyer dies, falls under the protection of a social security program or files for bankruptcy before the seller accepts the offer, this also causes the lapse of the bid
But what if the buyer changes his mind without a valid reason? If one is quick enough, it is still possible to get out of the deal unscathed: the buyer can indeed withdraw his offer during a short period of time between the signature and the moment the seller receives it.
Furthermore, if the buyer withdraws his offer without justification once it has been accepted by the seller, he risks being sued by the latter for damages since the seller has probably rejected other offers and lost a lot of time in thinking that his property was already sold. Something to keep in mind!
In the case of a brand-new home
For brand-new houses, the preliminary contract determines the sell and cancellation conditions.
This contract provides for a delay of 10 days to cancel. Besides, it is a mandatory clause that cannot be removed or denied and it is there to protect the buyer. Warning: the preliminary contract can still provide for an indemnity in case of cancellation, but it cannot exceed more than 0.5 % of the selling price.
If you buy a brand-new condo, if it is in a building of at least 10 units or a residency in a complex of 10 or more residencies that have common areas, the preliminary contract must be accompanied by a mandatory information note. This note details notably the names of the engineers, architects and all the other professionals implicated in the construction of the housing project and that allows the buyer to make an informed decision. It also gives an idea of the extent of the common-costs fees.
In short, purchase offers are not to be taken lightly!