Do real estate contracts have a cooling off period?
In Ontario, consumer protection legislation provides a “cooling off” period for certain types of contracts, during which the consumer can change their mind and cancel the contract without penalty. An important example of this is the contract to purchase a newly-built condo from the builder.
In that case, you can cancel the purchase within 10 calendar days of receiving the fully signed purchase agreement and disclosure statement from the condo corporation.
Because of the short timeline and steps required in the process, a buyer that wants to take advantage of the cooling off period should work with their lawyer to get the wheels in motion well in advance of the 10 day deadline. Ideally, the buyers should have their lawyers review the contract before signing it.
To learn more about buying a newly-built condo, visit www.tarion.com. Tarion’s mandate is to protect Ontarians who purchase newly-built homes.
For other types of real estate contracts, however, there is no cooling off period.
One key contract you’ll encounter is a representation agreement with your brokerage (a buyer representation agreement if you’re buying, a listing agreement if you’re selling). Representation agreements are legally-binding contracts that commit you to working with only one brokerage for a stated amount of time. In addition, representation agreements typically include a “holdover clause”, which, in very specific circumstances, may require you to pay a commission to the brokerage if you buy or sell a home within a certain amount of time after you have ended or terminated your agreement.
Signing a representation agreement is a big step, so before you sign on the dotted line, you should make sure you’ve chosen the brokerage and representative that are right for you.
Before you agree to work with a broker or salesperson, make sure you are comfortable with them and their approach to the buying or selling process. It’s also a good idea to talk to a few candidates before you make a final decision. Contacting references can also shed some light on the experience that others have had.
Once you’ve decided who to work with, you’ll be asked to sign the agreement. But before you do that, make sure you and your representative have a mutual understanding about the services they will provide and the fees that you will pay them in return. These things need to be included in the agreement.
Also take the time to fully read the agreement to ensure it meets your needs. Taking the time to understand what you’re signing can avoid potential problems later on. If there’s something you don’t understand, ask your representative to clarify. Don’t sign until you’re comfortable with the whole agreement. If you’re not sure, consider seeking legal advice.
When you’ve found a buyer for the home you’re selling, or you’ve found the home you want to purchase, you’ll be dealing with an Agreement of Purchase and Sale to complete the transaction. This is a legally-binding contract between you and the buyer or seller, and has no cooling off period. That’s why it’s important to read everything thoroughly. Your real estate professional can help ensure that the agreement contains appropriate clauses and conditions to protect you, but don’t rush through the process, and be sure to seek legal advice if you’re not certain.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.