Contracts, Agreements of Purchase and Sale, and Closing
Core Concepts
Candidates must understand the elements of a valid contract: offer, acceptance, consideration, capacity, and legality. In real estate, the Agreement of Purchase and Sale (APS) is the central contract. You should know the standard clauses, including conditions (financing, inspection, sale of buyer's property), warranties, representations, and the consequences of breach. Also, understand the closing process: title search, adjustments, statement of adjustments, and transfer of title. Know the role of the lawyer in closing and the importance of deadlines.
Traps in Questions
A frequent trap is the difference between a condition precedent and a condition subsequent. A condition precedent must be satisfied before the contract becomes binding (e.g., financing approval). Another trap is the treatment of deposits – whether they are refundable if a condition is not met. Also, questions may test the requirement for a cooling-off period – Nova Scotia does not have a general cooling-off period for resale residential properties, but there are specific rules for new home purchases under the Homeowner Protection Act.
Worked Example / Rule of Thumb
Rule: If a contract is conditional on financing, the buyer must make reasonable efforts to obtain financing. For example, if the buyer is pre-approved but fails to provide required documents to the lender, they cannot rely on the condition to void the contract. Always advise clients to act in good faith.
Additional Concepts
Understand the implications of the Statute of Frauds – real estate contracts must be in writing. Also, know the rules for handling deposits: they must be held in trust and cannot be released without consent of both parties or a court order.