The Agreement of Purchase and Sale is the most important document that you will sign when you purchase a home, regardless of whether it is a newly built or resale home. The Agreement is a contract that sets out all of the important details of the purchase. When you purchase a resale home, the Agreement is usually prepared on a pre-printed form that your real estate agent completes. When you purchase a newly built home, the builder prepares the Agreement. This gives the builder a significant advantage as it can determine the terms of the contract. The Agreement for a newly built home is much more complex than that for a resale home.

It is a mistake to think that all Agreements are standard and have been prepared for your benefit. In the case of the contract for a newly built home, the builder drafts a contract that will likely contain many provisions of benefit to the builder. A careful purchaser will take the Agreement to an experienced real estate lawyer before signing anything.

The first section of the Agreement sets out the names of parties to the contract, a description of the property and the purchase price. The following section sets out when deposits will be payable. The contract will then provide a closing date.

The body of the contract sets out the rights and obligations of the parties involved. Many first time purchasers will not read over this information, assuming that it contains standard wording and usual clauses. The body of the contract includes very small print that is difficult to read and even more difficult to understand, and is quite intimidating for the first-time purchaser. Here too, an experienced real estate lawyer can help ensure a purchaser’s interests are protected.

Among other things, the body of the contract will usually set out extra costs that come with purchasing the new home. Some builders have a policy of clearly outlining what the extra costs will be. Others may not, and many purchasers are surprised to learn of these extra costs when they meet with their lawyer to sign the closing documents. Fortunately, however, many of these costs can be reduced or even capped if a lawyer has the opportunity to review the contract before it is signed. A lawyer will be able to estimate what the extra costs will be in order that the purchaser can properly budget for the costs of their new home.

Most builder contracts contain a series of schedules describing the details of the home to be built and any extras that have been ordered. If the builder promises you any extras, these should be clearly set out in writing. Anything that is promised orally cannot be counted on unless it is included in a contract that has been signed by both parties. In the event of a dispute between you and your builder, reference will first be made to the contract to determine who is correct.

The contract should also include information proving that the builder is registered with Tarion, the organization that regulates the home building industry and provides warranty coverage to new homebuyers. It is important to confirm that the builder is registered with the Tarion so that your new home has a valid warranty. The contract will also provide important information regarding possible restrictions that may affect what you can do with your home.

Buying a new home can be very exciting. However, you should not commit to anything without the benefit of legal advice.