M4. LESSON 3

NEGOTIATING

Negotiating the Sale of Your Home

The buyers have told you that they want to buy your property. The first step in this process is to write a Letter of Intent. A Letter of Intent is an initial agreement between buyer and seller.

 

HERE ARE A FEW THINGS THAT MUST BE IN YOUR LETTER OF INTENT

> names of the parties involved,

> the date of the contract,

> a specific description of the land involved,

> price

Most of these are straightforward. You should use the buyer’s legal names.

Check with your lawyer as to whether your municipal address will do or if you need to use the legal description. Your legal description can be found on your Municipal Tax Assessment Notice or at Land Titles. Your lawyer should be able to help you with Land Titles if you have difficulties.

If you are asking for a deposit, you should know that deposits are just indicators of good faith and not legally required. If there is a deposit you need to determine who will hold it and if it is refundable. Again, you might ask your lawyer for help with this.

Which leads us to what are called contingencies or conditions or “subject to” clauses. These are usually used by the buyer to protect their deposit if something unforeseen should happen. These conditions may include the buyer having to get a loan, and or an inspection being done, and in the case of a condo, a review of the financials. The conditions state that if the buyer does not get the loan or the inspection is not favourable, they will not buy your house. Discuss this with your lawyer. Not working this out up front could give cause for a major legal battle.

You should also discuss and determine a possession or completion date. This is the day that you provide vacant possession. A specific date and time that you have both agreed to in writing can avoid some major confusion.

 

Understanding Conditions (or subject to) clauses

A condition is an additional clause that buyers (and sometimes the sellers) use to protect themselves by allowing them a way out of a deal.

BE VERY CAREFUL OF CONDITION CLAUSES

  • It is best to have as few conditions as possible in the agreement.
  • Make sure you limit by time and performance the conditions that are included.

 

Below is a list of some common conditions

  • Conditional sale — The buyers will purchase subject to the sale of their present home. This is a very weak offer, because it means the sale of your house depends on the sale of another house with another set of sellers and buyers. Keep clear of this.
  • The buyers will purchase subject to new financing — if they’re already fully pre-approved, there may be little to worry about.
  • The purchase is subject to the buyers’ being able to move into the house within a set period of time.
  • Disclosures/inspections — The buyers will purchase only if they approve your disclosures and their professional inspection. Typically they will ask for a set period of time for this, usually a couple of weeks. You probably can’t sell without this condition. This is why it is recommend that you have your own professional Property Inspection completed beforehand.

 

Evaluate the offer by answering the following questions

  • Are the conditions reasonable?
  • Do the conditions nullify the value of the offer?
  • Can I live with the conditions?

Letter Of Intent Template