The Key Components in a Purchase and Sale contract created by the British Columbia Real Estate Association (BCREA) and The Canadian Bar Association – BC Branch

The purchase and sale contract from the British Columbia Real Estate Association (BCREA) is the core legal document used in any real estate transaction in British Columbia. It outlines the terms the buyer and seller agreed upon, and understanding it is essential for a smooth transaction. This contract covers everything from the property description and purchase price to deadlines, inclusions, and dispute resolution.

Why the Contract is Important

The BCREA contract ensures both parties mutually understand their obligations and rights. It acts as a legal safeguard and minimizes the risk of misunderstandings, making it a vital part of the buying or selling process. While it uses standard terms, it can be customized to suit specific deals, so each detail must be reviewed carefully.

Key Elements of the Purchase and Sale Contract

1. Parties Involved

The contract identifies the buyer(s) and seller(s). Ensuring the correct names are listed is important, especially in cases involving multiple buyers or sellers or legal entities such as corporations or trusts. Any errors in this section can lead to disputes or delays later on.

2. Property Description

This section includes the legal address, parcel identification number (PID), and sometimes other information like lot numbers or strata lot details. Being precise is critical to ensure both parties understand which property is transacted, especially in more complex developments like condos or townhouses.

3. Purchase Price and Deposit

The contract specifies the purchase price the buyer has agreed to pay for the property. This includes details of the deposit, typically held in trust by a third party (such as the buyer’s real estate brokerage) until the sale is complete. The deposit is a sign of good faith, and the contract outlines what happens if the deal falls through. The amount of the deposit is usually 5% of the accepted price. 

4. Completion and Possession Dates

These are key dates in the transaction. The completion date is when the legal title of the property is transferred from the seller to the buyer, and funds are exchanged. The possession date typically follows shortly after, marking when the buyer can physically possess the property. Missing these dates can lead to penalties or legal issues, so they must be agreed upon with care. The adjustment date usually falls at the same time as the possession date. This date is part of the agreed time for any miscellaneous cost that needs to be prorated from completion to possession of the home. 

5. Conditions and Subject Clauses

The contract often includes conditions, or subject clauses, that protect the buyer. These may include securing financing, completing a home inspection, or reviewing strata documents. The buyer must remove these conditions by a specified subject removal date to make the contract firm and binding. Failure to meet these conditions can lead to the collapse of the deal.

For example, a common subject is financing approval, which ensures the buyer can secure a mortgage before committing to the purchase. Similarly, a subject-to-inspection clause allows the buyer to back out if a home inspection reveals serious issues.

6. Inclusions and Exclusions

This section details what is included or excluded in the sale, such as appliances, fixtures, or furniture. Specifying these items is important to avoid misunderstandings on the possession date. For instance, built-in appliances are often included, but sellers may take free-standing items unless otherwise agreed upon – ie. Heirloom chandelier

7. Representations and Disclosure

Here, the seller provides assurance about the property’s condition, such as whether recent repairs have been made or if there are any known issues with major systems like plumbing or roofing. The buyer may have legal grounds for recourse if these claims prove false.

8. Dispute Resolution

The contract typically includes a dispute resolution clause outlining how disagreements should be handled, often encouraging mediation or arbitration before resorting to legal action. This helps both parties resolve conflicts more efficiently and affordably than going through the courts.

Legal Considerations

Even though the BCREA Purchase and Sale Contract is a standardized form, buyers and sellers should consult a real estate lawyer or notary before signing. Each real estate transaction is unique, and legal professionals can help ensure the contract’s terms are fair and protect your interests. Missing deadlines, misinterpreting clauses, or overlooking key terms could lead to significant financial or legal repercussions.