Buying a home is often one of the biggest financial decisions we make in our lives, and a crucial part of the process is the Promise to Purchase. This legal document outlines the terms of the offer made by the potential buyer.
However, there may be instances where the buyer wishes to cancel the transaction even after signing the Promise to Purchase. One such reason could be due to the pre-purchase inspection, which is a crucial step to ensure the property’s condition is satisfactory.
Our realtors in Lanaudière are well-equipped to handle such a delicate scenario and provide the necessary guidance to ensure a smooth transaction.
What is a promise to purchase?
When buying a home in Quebec, a promise to purchase is a necessary legal document that expresses the intent of the potential buyer to purchase a property at a price agreed upon with the seller. This step in the home buying process is crucial, as it constitutes a binding offer to purchase, which, if accepted by the seller, commits both parties to proceed with the transaction.
Once the Promise to Purchase is given to the seller or their real estate broker, they have a few days to decide whether to accept or refuse the offer. If the offer is accepted, it means that the buyer is now under contract to buy the house under the conditions stated in the Promise to Purchase. If the seller refuses the offer, the buyer can either renegotiate the terms or look for another home to purchase.
It’s important to keep in mind that making an offer to purchase is a legally binding document, so it’s crucial to think through all the details before submitting it.
When can you back out of a home purchase after inspection?
The pre-purchase home inspection is a key step in the real estate buying process in Quebec. Although not mandatory, this evaluation of the property allows you to learn about any particularities of the house and any possible issues.
You have 7 days to complete the pre-chat inspection. Once the results are in, you have 4 days to state your satisfaction or dissatisfaction.
In theory, it is not possible to cancel a promise to purchase after the inspection. However, there are a few cases where it is possible.
If you wish to cancel an offer to purchase after an inspection, it will be possible if your offer to purchase includes a condition related to this inspection. The OACIQ – the authority of real estate brokerage in Quebec – specifies it in their promise to purchase form under point 8.1:
“This promise to purchase is conditional upon the BUYER being permitted to have the IMMOVABLE inspected by a building inspector or a professional within a period of ___ days following acceptance of this promise to purchase. Should this inspection reveal the existence of a factor relating to the IMMOVABLE and liable to significantly reduce the value thereof, reduce the income generated thereby of increase the expense relating thereto[…] [t]his promise to purchase shall become null and void upon receipt, by the SELLER, of this notification together with a copy of the inspection report […].”
How can the home inspection clause break a promise to purchase?
First and foremost, it’s important to understand that the Promise to Purchase is a legally binding document, and both parties are bound by it. Therefore, there must be valid reasons to break a Promise to Purchase, as exemplified in the above excerpt.
For instance, if the buyer discovers significant issues during the inspection, they can use this clause to negotiate with the seller for repairs or an adjustment in the sale price based on the reassessment of the property’s market value. For example, issues with the roof or foundation may warrant invoking this clause. If the issue is substantial, the buyer can withdraw from the purchase, and the seller cannot contest it.
In case the seller refuses to make the necessary repairs or negotiate, the buyer can use this clause to cancel the Promise to Purchase and withdraw from the transaction. Typically, in such cases, the jurisprudence favours the buyer.
However, this clause cannot be used to cancel the Promise to Purchase for reasons unrelated to the inspection. Minor repairs or small jobs do not qualify. As a buyer, you’ve made a commitment to the seller, and sometimes the discoveries made during inspection aren’t even known to the seller. Breaking a Promise should only happen as stipulated in the contract, as both parties are under the same psychological pressure.
Guillaume Tremblay and his team of realtors will assist you in your purchase process
The Promise to Purchase and pre-purchase inspection stages are significantly eased with the assistance of a real estate broker. Being aware of the sensitivity of real estate transactions, we’re at your disposal to help you through the process of making an offer to purchase.
If you’re a potential buyer looking to invest in the region, take a look at our properties in Lanaudière or reach out to us now, and we’ll be more than happy to assist you in your real estate journey and help you acquire your dream property.