Once your offer has been accepted by the vendor, a Sales and Purchase Agreement is drafted by the vendor’s lawyer and forwarded to the buyer’s attorney for comment and review. This standard contractual agreement The SPA is the legal document that fixes the rights and obligations of the parties, and establishes the terms of the transaction that binds the parties. The agreement will also set out obligations and conditions that the buyer and/or seller must abide by. These may include what access the buyer may have to inspect the property before settlement and ensuring the property remains insured until the settlement date, etc.
Once signed by the parties, this agreement becomes a binding contract with regard to the purchase of the property.
If all conditions have been met on the sales agreement, then it becomes fully enforceable on either party. The deposit placed by the purchaser is non-refundable and is paid to the seller in the event of purchaser default. This occurs very rarely and the normal closing period is 30 days from the satisfaction of all conditions as set out in the Sales Agreement. Why 30 days? Well, once all conditions have been met, your lawyer will notify the Department of Planning of the sale. They, in turn, require up to 28 days to inspect the property for any illegal development. After this time, the property is deemed to be free from any development that contravenes the Planning Act. This is an important step and should not be missed. If you take possession before the Department of Planning has inspected the property, then you become liable for any illegal development which may have occurred prior to your ownership.
The closing period can take longer for various reasons, but it is normally negotiated into the contract. It is important to notify your lending institution of the closing date. At this point, you may also consider insuring your property which your agent can help you with.
Typically, the day of closing or the previous day, the purchaser will sign the conveyance documents then the seller will follow. All funds are placed with the purchaser’s lawyer including the deposit, less any commissions. The purchaser’s lawyer will then disburse the funds, including paying any mortgages or liens on the property. The lawyer then gives the balance to the seller, keys are exchanged and the deal is closed.