Real Estate
11 min read
Agreement of Purchase and Sale: 10 Clauses That Can Make or Break Your Deal
The APS is the most important contract you'll ever sign. Here are 10 clauses that determine whether your home purchase succeeds or falls apart.
Contract Checked Legal Team
# Agreement of Purchase and Sale: 10 Clauses That Can Make or Break Your Deal
Buying a home is the largest financial transaction most people will ever make — and it's governed by a document that most buyers spend less than an hour reviewing. The Agreement of Purchase and Sale (APS) is not a form. It is a legally binding contract, and the clauses in it can cost you your deposit, your deal, or tens of thousands of dollars if they're wrong.
Here are the ten clauses that matter most.
## 1. Financing Condition: The Deadline That Catches Buyers Off Guard
The financing condition gives you the right to walk away from the deal if you can't secure a mortgage on satisfactory terms. But this protection has an expiry — and buyers routinely miss it.
> ⚠️ **Red Flag:** *"This offer is conditional upon the Buyer arranging, at the Buyer's own expense, a new first mortgage for not less than [X]% of the purchase price, bearing interest at a rate of no more than [X]% per annum, amortized over not more than [X] years, on or before [date]. Unless the Buyer gives notice in writing to the Seller that this condition is fulfilled on or before [date], this offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction."*
Two things to watch: First, the waiver deadline — if your lawyer or broker doesn't send the waiver on time, the deal may collapse. Second, the specific mortgage terms. If you're approved for a mortgage at a rate that technically exceeds the rate specified in the condition, you may not be protected. Make sure the interest rate cap in the condition is meaningfully above current rates.
## 2. Inspection Condition: Waiving It Is a Gamble
In competitive markets, buyers are pressured to waive the inspection condition to make their offer more attractive. Sometimes this makes sense. Often it doesn't.
**What you're waiving:** The right to have a qualified home inspector assess the structural, mechanical, and electrical systems of the property — and the right to walk away if they find material issues.
**What you might find too late:**
- Foundation cracks or water infiltration ($10,000–$80,000 to repair)
- Knob-and-tube wiring that insurers won't cover
- HVAC systems at end of life ($5,000–$15,000 to replace)
- Roof near end of life ($8,000–$20,000 to replace)
If you're in a competitive market and considering waiving inspection, at minimum attend a pre-offer viewing with a contractor who can do a visual assessment. Some buyers conduct a pre-offer inspection (coordinated with the listing agent) to get protection without the conditional offer.
## 3. Deposit Forfeiture: When You Lose Your Money
The deposit you pay on acceptance of an APS is typically 5% of the purchase price. If you fail to complete the purchase — other than for a reason protected by a condition — you forfeit this deposit.
> ⚠️ **Red Flag:** *"If the Buyer fails to complete this transaction for any reason other than the Seller's default, the deposit shall be forfeited to the Seller as liquidated damages, and the Seller may also pursue any additional remedies available at law."*
"Pursue any additional remedies" means the seller can sue you for the difference between your offer price and the price they ultimately sell for if the market drops. On a $1M purchase, that could be substantial. Before removing financing and inspection conditions, be confident you can close.
## 4. Closing Date Adjustment Clauses
Closing dates can change — construction delays on a new build, problems with the seller's next purchase, or unforeseen circumstances. How the APS handles closing date adjustments matters.
For resale properties: Who bears the cost of a delay? If the seller can't close on the agreed date, are you entitled to compensation for bridging financing costs or temporary accommodations?
For new construction: Builders typically have extensive rights to push closing dates — sometimes by years — while the buyer's rights to exit are narrowly circumscribed.
> ⚠️ **Red Flag (new construction):** *"Builder reserves the right to extend the Tentative Occupancy Date by up to 365 days in aggregate, with notice provided to Purchaser as required by the Tarion Warranty Corporation."*
While Tarion (in Ontario) provides some framework for this, a one-year extension on a new construction closing can be enormously disruptive to buyers who have sold their existing home, given notice at their rental, or made other plans.
## 5. Chattels and Fixtures: The Stainless Steel Fridge Disappears
Fixtures are items attached to the property (built-in shelving, light fixtures, the furnace). Chattels are moveable items (the fridge, the washer/dryer, window coverings). What stays with the house must be listed in the APS.
> ⚠️ **Red Flag (by omission):** An APS that says the house includes "all existing appliances" without listing them specifically. You arrive on closing day to find a different, older fridge installed.
Be specific: list by brand, type, and location any appliances, light fixtures, window coverings, or other items you expect to remain. Sellers have been known to take items they consider "personal property" that buyers assumed were fixtures. The bathroom mirror. The custom storage unit in the garage. The smart thermostat.
## 6. Status Certificate Conditions for Condominiums
If you're buying a condominium, you should always include a condition allowing you to review the status certificate. This document reveals the financial health of the condo corporation, any pending special assessments, ongoing litigation, and the reserve fund balance.
**What to look for in a status certificate:**
- Reserve fund adequacy (is it underfunded relative to the reserve fund study?)
- Pending or threatened litigation against the corporation
- Special assessments — either passed or under discussion
- Management issues flagged in meeting minutes
- Any arrears among unit owners (which affects the corporation's cash flow)
A condo corporation with a severely underfunded reserve fund may face large special assessments — which become your problem the moment you close. These can run from $5,000 to $50,000+ per unit.
## 7. Title Search Condition: The Protection You Must Keep
Title search conditions give you (through your lawyer) the right to investigate title to the property and raise any objections. This is how you discover:
- Encroachments (a neighbour's fence or structure on your land)
- Easements for utilities, drainage, or access that limit how you can use the property
- Restrictive covenants limiting what can be built
- Outstanding liens from unpaid contractors or taxes
> ⚠️ **Red Flag:** Agreeing to close without a title search, or waiving the right to raise title objections. Your title insurance will cover many issues, but it doesn't give you the right to negotiate adjustments or exit the deal.
Never close without a proper title search conducted by your real estate lawyer.
## 8. Assignment Clauses: Can You Sell Before Closing?
An assignment clause allows you to transfer your rights and obligations under the APS to a third party before closing — effectively selling your contract. This is common in new construction pre-construction condos.
Some sellers (and builders) prohibit assignment outright or impose significant fees. Know this before you sign.
> ⚠️ **Red Flag (new construction):** *"Purchaser shall not assign this Agreement without Builder's prior written consent, which may be withheld in Builder's sole discretion, and a consent fee of $10,000 shall apply."*
If you're purchasing a pre-construction property with any possibility of needing to sell before closing (due to financial changes, relocation, etc.), ensure the assignment clause is either permissive or negotiated.
## 9. Holdback Provisions
A holdback is a sum of money held back from the purchase price (typically in trust with a lawyer) pending the completion of repairs or outstanding items. If the property has known deficiencies that will be repaired after closing, a holdback protects you.
Without a holdback, you're relying on the seller's good faith to complete promised repairs after you've paid. That's a precarious position.
For new construction: deficiency holdbacks are standard practice but need to be specifically documented and managed through the builder's warranty program.
## 10. Representation and Warranty Survival Periods
Sellers make representations in the APS — that they're unaware of any material latent defects, that the property complies with zoning, that there are no outstanding work orders. These representations typically "survive" closing for a limited period.
> ⚠️ **Red Flag:** *"All representations and warranties shall merge with and not survive the completion of this transaction."*
This clause means that the moment you close, the seller's representations are extinguished. If you discover two days after closing that the seller knew about a serious water infiltration problem they didn't disclose, you may have no contractual remedy — only a potential misrepresentation tort claim, which is expensive to pursue.
Push for a representation and warranty survival period of at least 12 months for material issues.
Before signing any Agreement of Purchase and Sale, upload it to **Contract Checked** for a plain-English review of every condition, deadline, and risk provision.
## Related Guides
- [Real Estate APS Analysis: What to Look For](/analyze/real-estate-aps)
- [Purchase Agreement Guide](/analyze/purchase-agreement)
- [Browse All Contract Types](/contract-types)
## Analyze Your Contract Before You Sign
Don't navigate this alone. Upload your contract to Contract Checked and get an instant plain-English analysis — free, no login required. [Analyze your contract now →](https://contractchecked.com/#upload-section)
Buying a home is the largest financial transaction most people will ever make — and it's governed by a document that most buyers spend less than an hour reviewing. The Agreement of Purchase and Sale (APS) is not a form. It is a legally binding contract, and the clauses in it can cost you your deposit, your deal, or tens of thousands of dollars if they're wrong.
Here are the ten clauses that matter most.
## 1. Financing Condition: The Deadline That Catches Buyers Off Guard
The financing condition gives you the right to walk away from the deal if you can't secure a mortgage on satisfactory terms. But this protection has an expiry — and buyers routinely miss it.
> ⚠️ **Red Flag:** *"This offer is conditional upon the Buyer arranging, at the Buyer's own expense, a new first mortgage for not less than [X]% of the purchase price, bearing interest at a rate of no more than [X]% per annum, amortized over not more than [X] years, on or before [date]. Unless the Buyer gives notice in writing to the Seller that this condition is fulfilled on or before [date], this offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction."*
Two things to watch: First, the waiver deadline — if your lawyer or broker doesn't send the waiver on time, the deal may collapse. Second, the specific mortgage terms. If you're approved for a mortgage at a rate that technically exceeds the rate specified in the condition, you may not be protected. Make sure the interest rate cap in the condition is meaningfully above current rates.
## 2. Inspection Condition: Waiving It Is a Gamble
In competitive markets, buyers are pressured to waive the inspection condition to make their offer more attractive. Sometimes this makes sense. Often it doesn't.
**What you're waiving:** The right to have a qualified home inspector assess the structural, mechanical, and electrical systems of the property — and the right to walk away if they find material issues.
**What you might find too late:**
- Foundation cracks or water infiltration ($10,000–$80,000 to repair)
- Knob-and-tube wiring that insurers won't cover
- HVAC systems at end of life ($5,000–$15,000 to replace)
- Roof near end of life ($8,000–$20,000 to replace)
If you're in a competitive market and considering waiving inspection, at minimum attend a pre-offer viewing with a contractor who can do a visual assessment. Some buyers conduct a pre-offer inspection (coordinated with the listing agent) to get protection without the conditional offer.
## 3. Deposit Forfeiture: When You Lose Your Money
The deposit you pay on acceptance of an APS is typically 5% of the purchase price. If you fail to complete the purchase — other than for a reason protected by a condition — you forfeit this deposit.
> ⚠️ **Red Flag:** *"If the Buyer fails to complete this transaction for any reason other than the Seller's default, the deposit shall be forfeited to the Seller as liquidated damages, and the Seller may also pursue any additional remedies available at law."*
"Pursue any additional remedies" means the seller can sue you for the difference between your offer price and the price they ultimately sell for if the market drops. On a $1M purchase, that could be substantial. Before removing financing and inspection conditions, be confident you can close.
## 4. Closing Date Adjustment Clauses
Closing dates can change — construction delays on a new build, problems with the seller's next purchase, or unforeseen circumstances. How the APS handles closing date adjustments matters.
For resale properties: Who bears the cost of a delay? If the seller can't close on the agreed date, are you entitled to compensation for bridging financing costs or temporary accommodations?
For new construction: Builders typically have extensive rights to push closing dates — sometimes by years — while the buyer's rights to exit are narrowly circumscribed.
> ⚠️ **Red Flag (new construction):** *"Builder reserves the right to extend the Tentative Occupancy Date by up to 365 days in aggregate, with notice provided to Purchaser as required by the Tarion Warranty Corporation."*
While Tarion (in Ontario) provides some framework for this, a one-year extension on a new construction closing can be enormously disruptive to buyers who have sold their existing home, given notice at their rental, or made other plans.
## 5. Chattels and Fixtures: The Stainless Steel Fridge Disappears
Fixtures are items attached to the property (built-in shelving, light fixtures, the furnace). Chattels are moveable items (the fridge, the washer/dryer, window coverings). What stays with the house must be listed in the APS.
> ⚠️ **Red Flag (by omission):** An APS that says the house includes "all existing appliances" without listing them specifically. You arrive on closing day to find a different, older fridge installed.
Be specific: list by brand, type, and location any appliances, light fixtures, window coverings, or other items you expect to remain. Sellers have been known to take items they consider "personal property" that buyers assumed were fixtures. The bathroom mirror. The custom storage unit in the garage. The smart thermostat.
## 6. Status Certificate Conditions for Condominiums
If you're buying a condominium, you should always include a condition allowing you to review the status certificate. This document reveals the financial health of the condo corporation, any pending special assessments, ongoing litigation, and the reserve fund balance.
**What to look for in a status certificate:**
- Reserve fund adequacy (is it underfunded relative to the reserve fund study?)
- Pending or threatened litigation against the corporation
- Special assessments — either passed or under discussion
- Management issues flagged in meeting minutes
- Any arrears among unit owners (which affects the corporation's cash flow)
A condo corporation with a severely underfunded reserve fund may face large special assessments — which become your problem the moment you close. These can run from $5,000 to $50,000+ per unit.
## 7. Title Search Condition: The Protection You Must Keep
Title search conditions give you (through your lawyer) the right to investigate title to the property and raise any objections. This is how you discover:
- Encroachments (a neighbour's fence or structure on your land)
- Easements for utilities, drainage, or access that limit how you can use the property
- Restrictive covenants limiting what can be built
- Outstanding liens from unpaid contractors or taxes
> ⚠️ **Red Flag:** Agreeing to close without a title search, or waiving the right to raise title objections. Your title insurance will cover many issues, but it doesn't give you the right to negotiate adjustments or exit the deal.
Never close without a proper title search conducted by your real estate lawyer.
## 8. Assignment Clauses: Can You Sell Before Closing?
An assignment clause allows you to transfer your rights and obligations under the APS to a third party before closing — effectively selling your contract. This is common in new construction pre-construction condos.
Some sellers (and builders) prohibit assignment outright or impose significant fees. Know this before you sign.
> ⚠️ **Red Flag (new construction):** *"Purchaser shall not assign this Agreement without Builder's prior written consent, which may be withheld in Builder's sole discretion, and a consent fee of $10,000 shall apply."*
If you're purchasing a pre-construction property with any possibility of needing to sell before closing (due to financial changes, relocation, etc.), ensure the assignment clause is either permissive or negotiated.
## 9. Holdback Provisions
A holdback is a sum of money held back from the purchase price (typically in trust with a lawyer) pending the completion of repairs or outstanding items. If the property has known deficiencies that will be repaired after closing, a holdback protects you.
Without a holdback, you're relying on the seller's good faith to complete promised repairs after you've paid. That's a precarious position.
For new construction: deficiency holdbacks are standard practice but need to be specifically documented and managed through the builder's warranty program.
## 10. Representation and Warranty Survival Periods
Sellers make representations in the APS — that they're unaware of any material latent defects, that the property complies with zoning, that there are no outstanding work orders. These representations typically "survive" closing for a limited period.
> ⚠️ **Red Flag:** *"All representations and warranties shall merge with and not survive the completion of this transaction."*
This clause means that the moment you close, the seller's representations are extinguished. If you discover two days after closing that the seller knew about a serious water infiltration problem they didn't disclose, you may have no contractual remedy — only a potential misrepresentation tort claim, which is expensive to pursue.
Push for a representation and warranty survival period of at least 12 months for material issues.
Before signing any Agreement of Purchase and Sale, upload it to **Contract Checked** for a plain-English review of every condition, deadline, and risk provision.
## Related Guides
- [Real Estate APS Analysis: What to Look For](/analyze/real-estate-aps)
- [Purchase Agreement Guide](/analyze/purchase-agreement)
- [Browse All Contract Types](/contract-types)
## Analyze Your Contract Before You Sign
Don't navigate this alone. Upload your contract to Contract Checked and get an instant plain-English analysis — free, no login required. [Analyze your contract now →](https://contractchecked.com/#upload-section)
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