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Do real estate contracts have a “cooling off” period?

Some do, some don’t.

In Ontario, consumer protection legislation provides a “cooling off” period for certain types of contracts, during which consumers can change their mind and cancel the contract without penalty. An important example of this is the contract to purchase a newly-built condo from the builder.

In that case, they cancel the purchase within 10 calendar days of receiving the fully signed purchase agreement and disclosure statement from the condo corporation. Because of the short timeline and steps required in the process, a buyer who wants to take advantage of the cooling off period should work with their lawyer to get the wheels in motion well in advance of the 10-day deadline. Ideally the buyers should have their lawyers review the contract before signing it.

To learn more about buying a newly-built condo, visit www.tarion.com. Tarion’s mandate is to protect Ontarians who purchase newly-built homes.

For other types of real estate contracts, however, there is no cooling off period.

One key contract you’ll encounter is a representation agreement with your brokerage (a buyer representation agreement if you are buying, a listing agreement if you are selling). Representation agreements are legally binding contracts that commit you to working with only one brokerage for a stated amount of time. In addition representation agreements typically include a “holdover clause”, which in very specific circumstances, may require you to pay a commission to the brokerage if you buy or sell a home within a certain amount of time after you have ended or terminated your agreement.

Signing a representation agreement is a big step, so before you sign on the dotted line, you should make sure that you have chosen the brokerage and representative that are right for you. Before you agree to work with a broker or salesperson, make sure you are comfortable with them and their approach to the buying or selling process. It’s also a good idea to talk to a few candidates before making a final decision. Contacting references can shed some light on experiences that others may have had.

Once you’ve decided who to work with, you’ll be asked to sign the agreement. But before you do that, make sure that you and your representative have a mutual understanding about the services they will provide and the fees you will pay them in return. These things need to be included in the agreement.

Also, take the time to read the agreement fully to ensure that it meets your needs. Taking the time to understand what you are signing can avoid potential problems later on. If you don’t understand something, ask your representative to clarify. Don’t sign until you are comfortable with the whole agreement. If you’re not sure, consider seeking legal advice.

When you’ve found a buyer for the home you are selling, or have found the home you want to purchase, you’ll be dealing with an Agreement of Purchase and Sale to complete the transaction.

This is a legally binding contract between you and the buyer or seller and has no cooling off period. That’s why it is important to read everything thoroughly. Your real estate professional can help ensure that the agreement contains appropriate clauses and conditions to protect you, but don’t rush through the process and be sure to seek legal advice if you are uncertain.

By Joe Richer: Registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professional in Ontario. You may email questions to askjoe@reco.on.ca  or find more tips at www.reco.on.ca

 

 

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