Contracts of Purchase and Sale and Transaction Documentation
Formation and content
A contract of purchase and sale requires offer, acceptance, consideration, capacity, and legality. Know when acceptance is effective (on communication to the offeror), how counter-offers operate, and the difference between an option and a right of first refusal. Standard BC practice uses the Contract of Purchase and Sale form, but candidates must understand its substance: parties, legal description, price, deposit, completion and possession dates, included and excluded items, title and survey review, and subject clauses.
Conditions and risk
Subject clauses (financing, inspection, strata documents, sale of buyer's property) make the contract conditional. Understand that a condition precedent must be satisfied or waived before the contract becomes binding, and that a condition subsequent terminates an existing contract. Know the difference between a condition and a warranty, and how time-of-the-essence clauses and notice-to-complete provisions operate.
Disclosure obligations
Sellers and licensees must disclose material latent defects - defects not discoverable by reasonable inspection that make the property dangerous or unfit. Patent defects are visible and need no disclosure. The Property Disclosure Statement is a seller's statement, not a warranty, and "unknown" answers are common exam fodder.
Traps
Questions confuse the deposit with a down payment, or assume a deposit is refundable when a buyer fails to satisfy a condition. Another trap is the belief that a subject clause can be removed orally. All amendments should be in writing and signed.
Worked example
A buyer's offer is subject to financing until Friday. On Thursday the buyer cannot obtain financing and does not waive the condition. The contract collapses; the deposit is returned under the standard terms, subject to any specific clause to the contrary.