Notice of Offer to Purchase Residential Land or Offer via a Contract of Sale Document?

I often find that purchasers do not understand the difference between an ‘Offer to Purchase/Expression of Interest’ and an ‘Offer by Contract of Sale Document’. Many purchases are worried to make a formal offer in the form of completing a contract of sale document as they feel they will be locked in and will be required to pay penalties to exit.

Offer to Purchase/Expression of Interest

-         This is not a contact of sale document

-         Both the purchaser and the vendor must sign a contract of sale document before this ‘Offer to Purchase’ becomes legally binding – meaning that if a contract has not been completed the vendor can accept another offer at any time.

Contract of Sale

-         This is a legally binding agreement between the purchaser and the vendor to purchase property

-         The purchaser can withdraw from the contract to purchase without paying any penalty at any time within the cooling off period which is 2 business days after receiving the Form 1.

-         The vendor can not withdraw from the contract to purchase after both the vendor and purchaser have signed the document – they become locked in, protecting the purchasers offer!

If you are serious about purchasing a property often the contract is the best way to make your offer as when/if the vendor accepts your offer/signs the contract of sale document they are locked in, yet you still have the ability to exit the contract within the cooling off period or exercising your rights pursuant to the conditions you have included in the contract of sale document eg Subject to Building Inspection, Subject to Finance etc.