I’ve already signed the paperwork to sell my house, but now I need to change the closing date. Can I change the Agreement of Purchase and Sale after the fact?
Some decisions are easier to change than others. As a seller, it’s easy to change your mind about what colour you should paint the living room (hint: when selling a home, neutral tones are your friend) or some details of the backyard oasis you’re hoping will lure in offers. However, once you agree to an offer that does come in, making a change to the agreement can be complicated. That’s because once an offer is accepted, you have entered into a legally binding contract in the form of an Agreement of Purchase and Sale (APS).
There are a number of reasons why a buyer or seller might want or need to change the terms of an APS. If you’re the seller, a home inspection may reveal a defect that needs to be fixed before closing; the cost may be negotiable. As a buyer, a subsequent visit to the property may have uncovered an unexpected issue that, while not souring you on the deal, is something you want the seller to address before handing over the keys.
While these two situations happen, the most common reason for someone wanting to modify the terms of an APS is to amend the closing date. This can arise when the buyer buys a new home before selling their existing one, or the seller sells before buying their next home. To buy or sell first is a dilemma all homeowners face when deciding to purchase a new home. I’ve recently covered this issue in detail, but problems can arise when it’s taking longer than expected to arrange the closing of the other transaction. Neither the buyer nor the seller wants to be stuck paying for two houses at the same time, arranging bridge financing, or being without a home and having to rent somewhere for a period of time.
On the surface, changing the closing date seems like a reasonable request, but any change to the terms of the APS means an amendment would have to be prepared and signed by both parties. It may be obvious, but it’s worth noting that there is no requirement for the other party to agree to the change. Unless both sides come to a mutual agreement, the terms of the APS will stand.
Building on this most frequent example, keep in mind that it can be difficult to change the closing date because both the buyer and the seller will have been making plans and arrangements based on that date. It’s not something that should be changed simply for convenience or preference, but only out of absolute necessity. The party requesting the change should expect to have to pay some compensation to the party agreeing to the change, especially if the other party has to incur additional expenses to make it happen. Keep in mind that the purchase price was negotiated with the closing date as an important factor. If the other party does not agree to your proposed amendment, consult with your real estate professional and a lawyer about your options.
So how can you protect yourself? Don’t rush into any decisions and read every document carefully to make sure you understand what you’re committing to. If you’re not sure what a document or clause means, don’t be afraid to ask questions.
It’s also important to plan ahead; if you’re considering buying a home before selling your existing property, run the numbers at the outset to see if you can carry both places if the sale of your old home is not completed before the purchase of the new one. Consider making your offer conditional on the sale of your existing home, but keep in mind that in a competitive market, such an offer will be less appealing than a firm offer: you may want to adjust the purchase price accordingly. Take care to include in the offer all conditions that are appropriate to your needs.
If you take these precautions, but still need to make a change to the APS, speak with your salesperson and solicitor about what you’d like to see changed and why so that an amendment can be drafted and presented to the other party’s representative as soon as possible. Seek legal advice concerning questions about contract interpretation, enforceability, potential liability and entitlement to the deposit. Your real estate professional is obligated to and will refer you to legal advice when applicable.Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.