An Agreement of Purchase and Sale (APS) in Ontario is the binding contract between a buyer and seller of real property that specifies the price, closing date, conditions, and terms of the transaction. In Ontario, the APS is typically prepared on a standard form (often the OREB form or a lawyer's form) and includes conditions such as home inspections, mortgage financing approval, and title verification. Once both parties have signed the APS, it becomes a legally binding contract, and backing out without satisfying conditions or legal grounds can result in legal action and financial penalties. Ontario buyers often underestimate the importance of the APS. Conditions written into the APS—such as a home inspection condition or financing condition—protect you by allowing you to exit if issues arise. However, these conditions have strict timelines and procedures, and failure to meet the deadline or follow the proper process can result in losing your condition and being forced to close even if the inspection reveals major problems. Working with a lawyer to review the APS before signing is strongly recommended, as the form contains legal language that significantly impacts your obligations and recourse.
What is a Property & Real Estate?
An Agreement of Purchase and Sale in Ontario is the binding legal contract governing a residential real estate transaction. It specifies the purchase price, deposit amount, property description, closing date, and any conditions (like home inspection or financing). The APS includes representations and warranties by the seller about the property's condition, taxes, and status, and specifies remedies if these representations are breached. Conditions must be satisfied or waived before closing; if a condition is not met and not waived, either party can back out without penalty.
Red flags to watch for
A home inspection condition is your primary protection against purchasing a property with hidden defects; waiving it transfers risk to you.
Without a financing condition, you're obligated to close even if financing is denied; timelines must be realistic.
Some liability is reasonable, but total exclusion of warranties leaves you with no recourse for misrepresentation.
Compressed timelines prevent proper due diligence; closing dates should allow 30-45 days for inspection and financing.
Deposits must be refundable if conditions aren't satisfied; non-refundable deposits expose you to loss.
The APS should address property taxes, utility responsibilities, and property status; ambiguity creates closing disputes.
Your legal rights
In Ontario, a signed APS is a binding contract governed by contract law and the Sale of Land Act, 1990. The Law Society of Ontario recommends that buyers obtain independent legal representation. The APS typically includes standard conditions that must be satisfied or waived; if a condition is not met, either party can terminate without liability. The seller must disclose the Property Condition Disclosure Statement, which discloses known defects. Misrepresentation by the seller can result in rescission or damages.
Questions to ask before you sign
- 1Does the APS include a home inspection condition, and what is the deadline to satisfy it?
- 2Does the APS include a financing condition, and is the timeline realistic for mortgage approval?
- 3What property taxes and utilities are the buyer and seller each responsible for after closing?
- 4What warranties or representations does the seller make about the property's condition?
- 5What happens to my deposit if financing is denied or conditions aren't met?
- 6Has the seller provided a Property Condition Disclosure Statement, and are there any known issues?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.