In Toronto’s high-velocity real estate market, it is common for buyers and sellers to feel immense pressure to sign an Agreement of Purchase and Sale (APS) quickly. Bidding wars, “bully” offers, and tight closing timelines can make it feel like there is no time to slow down for a legal consultation.
However, once you sign an APS in Ontario, you have entered a legally binding contract. A real estate deal is often the largest financial transaction of your life, yet many people involve a lawyer only after the agreement is already firm—when key risks are no longer fixable. At Sarkaria Sethi LLP, we believe a real estate lawyer’s best value is provided before you sign, ensuring your deposit is safe and your interests are protected.
What Is the Agreement of Purchase and Sale (APS)?
The APS is the core legal contract for buying or selling property in Ontario. It standardizes the terms of the transaction, but it is far from “one-size-fits-all.” It sets out:
- Purchase Price & Deposit: The exact amount and strict deadlines for payment.
- Irrevocability: The window of time the offer remains open for acceptance.
- Conditions: Clauses for financing, home inspections, or condo status certificate reviews.
- Chattels and Fixtures: Specific items included (e.g., appliances) or excluded (e.g., a family heirloom chandelier).
- Completion Date: The specific day the title and funds are exchanged.
Once conditions are waived or fulfilled, the deal becomes “firm.” At that point, backing out can lead to the loss of your deposit and potential lawsuits for damages if the seller eventually sells the home for less than your agreed-upon price.
How Ontario Law Shapes Your Agreement
Ontario real estate transactions are governed by complex statutes that dictate how contracts are interpreted.
1. Real Estate and Business Brokers Act (REBBA)
While real estate agents are regulated by REBBA to ensure ethical conduct, agents are not permitted to provide legal opinions. Your lawyer at Sarkaria Sethi LLP ensures the APS aligns with your legal interests, moving beyond the standard form language to address your specific risks.
2. Land Registration Reform Act
This act governs the electronic land registration system in Ontario. Your lawyer uses this framework to conduct title searches, looking for encumbrances, easements, or liens that could prevent you from truly “owning” the land you are paying for.
The True Cost of Closing in the GTA
Many buyers focus solely on the purchase price, but the “hidden” costs of closing can be a shock if not calculated in advance.
Land Transfer Taxes (LTT & MLTT)
In Toronto, buyers are subject to two separate land transfer taxes. On a $1,000,000 home, the Ontario LTT is approximately $16,475, and the Toronto Municipal LTT is another $16,475, totaling $32,950. While first-time buyer rebates exist, they often do not cover the full amount in today’s high-priced market.
Statement of Adjustments
Your lawyer prepares a final “Statement of Adjustments” to reconcile costs between the buyer and seller, including:
- Prepaid property taxes
- Unpaid utility bills
- Monthly condo fee adjustments
- Rental equipment contracts (e.g., hot water tanks)
The Condo Status Certificate Masterclass
For those buying a condo in North York, Scarborough, or downtown Toronto, the Status Certificate is the most important document you will ever read. It acts as a financial “health check” for the condo corporation.
Your lawyer reviews this document to flag:
- Reserve Fund Deficits: Is the corporation saving enough for major repairs like roof or window replacements?
- Pending Litigation: Is the building suing the developer? This can make it impossible to secure a mortgage.
- Special Assessments: Are owners about to be hit with a surprise $20,000 bill for balcony repairs?
Closing Logistics Timeline: The Final Countdown
- 30–60 Days Prior: Your lawyer at Sarkaria Sethi LLP begins the title search and reviews mortgage instructions from your lender.
- 1–2 Weeks Prior: We calculate the final “cash to close” and prepare the transfer documents for your signature.
- Closing Day: We transfer the funds to the seller’s lawyer and register the title electronically. Keys are typically released once the registration is confirmed, usually by mid-afternoon.
Common Industry Red Flags
- Vague Financing Conditions: A clause that simply says “conditional on financing” is dangerous. It should specify the loan amount and interest rate to allow you a safe exit if the bank’s appraisal comes in too low.
- Illegal Suites: In Toronto, many “basement apartments” do not meet fire or zoning codes. Your lawyer reviews the seller’s representations to ensure you aren’t buying a liability.
- Title Fraud & Encroachments: From identity theft to a neighbor’s fence sitting three feet onto your lot, early legal due diligence identifies these issues before they become your problem.
Frequently Asked Questions
1) When should I contact a real estate lawyer? Before you sign the offer. A quick “lawyer’s approval” clause can give us 24–48 hours to fix drafting errors that could otherwise cost you your deposit.
2) Can I back out of a firm deal? Only at great risk. You will almost certainly lose your deposit, and the seller can sue you for the difference if they have to sell the home for a lower price later.
3) What is “Title Insurance”? It is a policy your lawyer arranges to protect you against future losses related to title defects, survey errors, or even some types of fraud.
Conclusion: Protect Your Investment Before You Sign
The Agreement of Purchase and Sale is not just paperwork—it is a binding commitment that shapes your financial future. At Sarkaria Sethi LLP, our client-first approach ensures you have direct access to your lawyer and clear, practical advice when it matters most.
Contact us today for a consultation or a review of your Agreement of Purchase and Sale before you commit.
