Cancelling an offer to purchase, is-it possible? - Key information
Is it possible to withdraw from an offer to purchase following an inspection?
After various searches with your real estate broker, you finally made the decision to buy a property. You then make an offer to purchase to the seller and it is accepted. After reading and certifying the seller’s declaration form, it is now time for the inspection of the property. However, following the inspection, you decide to withdraw from the offer to purchase. Is it possible? Here are some important tips and information you need to know.
Declarations by the seller of the immovable form
The transparency of the seller
The Seller’s Declaration Form of the Immovable (commonly referred to as ‘’SD’’) is a mandatory document that must be completed by the vendor when selling his property. It is the seller’s duty to be transparent in his statement. This form of approximately six pages describes the history and details of the property, from past renovations, insect infestations to water damages. The declaration has to be read carefully by the buyer, who has to take note of the various statements made. The ‘’SD’’ is then signed and appended to the Promise to purchase.
Once the Promise to purchase is accepted, a time limit is set to fulfill the terms of the offer to purchase including the inspection. This time limit is variable and is approximately seven to 15 days.
Prepurchase Inspection
During and after the inspection
The real estate broker plays an important role in the inspection of the property. Indeed, whether it is with the buyer or the seller, the broker will participate in the inspection and make observations about the property. For his part, the building inspector will provide an inspection report and give various comments to the buyer.
Although sometimes neglected in order to speed up the sales process, the inspection of a property is a crucial step. During the inspection, the broker can detect disturbing elements of the property or highlight major issues that were not listed in the seller’s declaration form.
Completion or non-completion of the inspection condition
Following the inspection, within a 24 to 48 hours delay, the report is sent to the broker. Once this report is received and analysed, the buyer can declare himself satisfied and no change will be made to the promise to purchase. The transaction is ongoing.
If the buyer is not satisfied, there are options available to him. However, the promise to purchase is a contract that binds the two parties involved. The reasons for modifying an offer must be valid. So there has to be elements that came out of the inspection report that are problematic, which means that they represent a risk or additional costs associated with the property. These so-called “problems” may also not have been mentioned in the seller’s declaration form. At this point,the buyer may then negotiate the price or withdraw from the offer to purchase.
Following this decision, a notice and a copy of the inspection report must be sent to the seller in order to formalize the cancellation of the promise to purchase.
Cancellation terms of the offer
The new laws require valid reasons to cancel a purchase offer after the inspection. These reasons now include a major issue leading to significant costs in proportion to the selling price. It must be a serious, non-cumulative problem, and only revealed by the inspection.
Valid reasons for modification
The reasons for modifying an offer must be directly related to problematic elements identified in the inspection report. These elements must represent a risk or additional expenses associated with the property and must not have been mentioned in the SD form.
Renegotiation and withdrawal of the offer
Renegotiation is no longer an automatic tool after the inspection. It is possible only if the seller is willing, and the buyer must have a genuine right to withdraw. The new laws aim to ensure that the seller agrees to negotiate rather than lose the buyer.
In this evolving legislative context, being accompanied by a real estate broker remains essential to navigate through these new requirements and ensure a compliant purchase or sale. Do not hesitate to seek the expertise of our real estate brokers at every step of the process.
Contact one of our real estate brokers to answer your questions
Read more real estate articles
OACIQ and APCIQ: What’s the Difference Between these Two Key Real Estate Organizations?
L’APCIQ An association representing the real estate brokerage profession Although they both work in the real estate market, the APCIQ and the OACIQ are two
Drop in Key Interest Rate to 3.75%: An Opportunity for Buyers and Sellers!
Table des matières Montreal, October 23, 2024 – Today, the Bank of Canada announced a substantial cut in its key interest rate to 3.75%. This
Provident Fund, Maintenance Booklet and Inspector Certification for the Real Estate Sector: Bill 16
Table des matières On December 5, 2019, the provincial government adopted a major reform of the Régie du logement, marked by Bill 16. This initiative
