What Is an APS (Agreement of Purchase and Sale) in Real Estate?
The Agreement of Purchase and Sale (APS) is the most important document in an Ontario real estate transaction. It is the legally binding contract that sets out all the terms between buyer and seller, including price, conditions, deposit, closing date, and what is included in the sale. Understanding every component of the APS protects your interests and ensures a smooth transaction.
What Does an APS Contain?
The standard Ontario APS (OREA Form 100 for resale, Form 101 for condos) is a comprehensive document that covers every aspect of the transaction. Here are the key components:
Purchase Price and Deposit
The agreed-upon purchase price and the deposit amount (typically 5% in the GTA). The deposit is held in trust and applied to the purchase price on closing.
Closing Date
The date when ownership transfers from seller to buyer. This is when the buyer pays the balance, the seller vacates, and the keys are handed over through the lawyers.
Chattels and Fixtures
Lists what is included (chattels like appliances) and excluded (fixtures the seller wishes to take). Clear documentation prevents closing-day disputes.
Conditions
Clauses that must be satisfied before the deal becomes firm. Common conditions include financing approval, home inspection, and status certificate review for condos.
Common Conditions in an Ontario APS
Conditions (also called "subjects" in some provinces) are protective clauses that give the buyer a way to exit the deal if certain requirements are not met within a specified period, typically 5-10 business days. Here are the most common conditions:
Financing Condition
Allows the buyer time to secure mortgage approval from their lender. Even with a pre-approval, the lender must approve the specific property. This condition typically has a 5-day window and protects the buyer from being committed to a purchase they cannot finance. In competitive markets, some buyers waive this condition, which carries significant risk.
Home Inspection Condition
Gives the buyer the right to hire a qualified home inspector to examine the property for structural, mechanical, electrical, and other issues. If significant problems are found, the buyer can renegotiate the price, request repairs, or walk away from the deal. A thorough inspection typically costs $400-$600 and takes 2-3 hours for a standard home.
Status Certificate Condition (Condos)
Required when purchasing a condominium. The status certificate provides critical information about the condo corporation's financial health, reserve fund, pending lawsuits, rules and by-laws, and any upcoming special assessments. Your lawyer should review this document carefully before you waive this condition.
Lawyer Review Condition
While less common, some buyers include a condition allowing their lawyer to review the APS before it becomes binding. This can be valuable for complex transactions, properties with unique legal situations, or buyers unfamiliar with Ontario real estate contracts.
Negotiating the APS
Every element of the APS is negotiable. An experienced real estate agent will craft your offer strategically, considering market conditions, the seller's motivations, and competing offers. Key negotiation points include:
For Buyers
- Offer price based on comparable sales analysis
- Include appropriate conditions to protect yourself
- Request a closing date that aligns with your timeline
- Clearly list all desired chattels and exclusions
For Sellers
- Evaluate the strength of offers beyond just price
- Consider deposit size as an indicator of buyer commitment
- Fewer conditions generally mean a stronger, more certain offer
- Counter-offer to improve terms rather than outright rejecting
Important Legal Note
The APS is a legally binding contract with significant financial implications. Always work with a qualified real estate agent and have a lawyer review the document before signing. The Battaglia Team works closely with experienced real estate lawyers to ensure your interests are fully protected.
Learn more about the offer process in our Buying Process Guide and review Standard Forms for Buying.
Frequently Asked Questions
What does APS stand for in real estate?
APS stands for Agreement of Purchase and Sale. It is the legally binding contract between a buyer and seller in an Ontario real estate transaction. The APS outlines all the terms of the deal including the purchase price, deposit amount, closing date, conditions, and what is included in the sale (chattels and fixtures).
Is the APS legally binding once signed?
Yes, once both the buyer and seller sign the APS and it is delivered, it becomes a legally binding contract. However, if the APS contains conditions (such as financing or a home inspection), the buyer may be able to walk away without penalty if those conditions are not satisfied or waived within the specified timeframe. Once all conditions are fulfilled or waived, the agreement is firm and binding.
What happens to my deposit after signing the APS?
After signing the APS, the deposit is typically held in trust by the listing brokerage. The deposit is applied toward the purchase price on closing day. If the buyer fails to close the transaction without a valid reason, the seller may be entitled to keep the deposit as damages. The standard deposit in the GTA is usually 5% of the purchase price, though this can vary.
What are the most common conditions in an Ontario APS?
The most common conditions include: financing (ensuring the buyer can obtain a mortgage), home inspection (allowing the buyer to have the property professionally inspected), sale of the buyer's existing home, and for condominiums, review of the status certificate. Each condition has a deadline by which it must be fulfilled or waived.
What is the difference between chattels and fixtures in an APS?
Fixtures are items permanently attached to the property and are included in the sale unless specifically excluded (e.g., built-in shelving, light fixtures, plumbing). Chattels are moveable items that are NOT included unless specifically listed in the APS (e.g., refrigerator, washer/dryer, window coverings). It is critical to clearly list which chattels are included to avoid disputes.
Can I back out of an APS after signing?
You can back out of an APS if it contains unfulfilled conditions within the condition period. For example, if your financing is not approved during the condition period, you can choose not to waive the condition and the deal is terminated. Once the APS is firm (all conditions waived or fulfilled), backing out could result in legal action, loss of your deposit, and potential liability for damages.