Agreement of Purchase and Sale

What is an Agreement of Purchase and Sale?

The Agreement of Purchase and Sale (APS) is the binding contract that records the terms of a real estate transaction. Once signed by both parties and any conditional periods are waived, the APS commits the buyer to purchase and the seller to sell on the agreed terms. The standard residential APS in Ontario is OREA Form 100; commercial and condominium variants exist as separate forms. The APS is the single most heavily exam-tested document across the Humber program.

What the APS contains

A complete residential APS sets out:

• Parties: buyer and seller names, addresses
• Property: civic address and legal description
• Purchase price and deposit amount + holder
• Irrevocability period: how long the offer stays open for acceptance
• Closing date: when the transfer of title and possession occur
• Inclusions and exclusions: chattels staying or leaving with the property
• Conditions: financing, inspection, status certificate review, sale of buyer's property
• Title requisitions date: when the buyer's lawyer's title objections must be raised
• Adjustments: taxes, utilities, common-element fees
• Schedules: additional terms, often A through D, attached as part of the agreement

Every blank on Form 100 is exam-relevant. Common questions test what happens when a blank is left empty, what the default behaviour is, and which clauses prevail when schedules and the main form conflict.

Conditional vs firm offers

A conditional offer becomes binding only after each condition is waived or fulfilled within its stated period. A firm offer is binding from acceptance. Common residential conditions:

• Financing (the buyer's mortgage being approved)
• Home inspection
• Sale of the buyer's existing property (SPP)
• Status certificate review (condos only)
• Lawyer review (rare in residential, common in commercial)

The buyer waives a condition by delivering a Notice of Fulfillment / Waiver (Form 510) within the conditional period. Failure to waive on time terminates the agreement.

Where this appears in your Humber program

The APS is the central document in Course 2: Residential Transactions, with deeper specialty content in Course 3 (condos, new builds), Course 4 (commercial APS variants), and the simulation papers. Brokerage and broker exams test APS-specific scenarios from a supervisory perspective.

Practical guidance for registrants

• Read every schedule before presenting an offer. Schedule A frequently contains terms that contradict Form 100. The contract resolves contradictions in favour of the schedule unless the form says otherwise.
• Track conditional periods in writing. Missed waiver deadlines kill deals and trigger E&O claims.
• Confirm the deposit holder and the deposit destination on Form 100. Depositing into the wrong account is a Code of Ethics issue and a trust-account compliance risk.

Irrevocability and acceptance

The irrevocability clause sets the deadline by which the offer must be accepted. The standard wording reads "this offer shall be irrevocable by [party] until [time] [date]." Irrevocability is one of the most precisely-tested elements of an APS:

• The party named (buyer or seller) cannot withdraw before the deadline
• After the deadline, the offer automatically lapses unless extended
• Counter-offers terminate the original offer entirely; the new clock restarts on the counter
• Acceptance must be communicated in the same medium the offer specifies (signed paper or electronic per the agreement's signing instructions)

Common exam scenarios involve irrevocability that's been incorrectly time-zoned (Ontario uses local time; cross-border deals can confuse this), or counter-offers that mistakenly continue using the original irrevocability deadline. The rule: every counter starts a new clock.

Adjustments at closing

Closing-day adjustments reconcile prepaid items between buyer and seller. The APS's adjustment date (usually the closing date) determines who paid for what up to that point. Standard adjustments:

• Property taxes: prorated by the day, with the seller credited for any prepayment past closing or debited for unpaid amounts
• Utilities: typically meter-read on closing day, with final bills sent to the seller
• Common-element fees (condos): prorated like taxes
• Fuel oil and propane: measured on the day, seller credited for tank contents
• Rent and security deposits (income properties): apportioned and transferred to the buyer
• Mortgage assumption (rare today): interest is prorated to the closing date

Adjustment errors are a frequent source of post-closing disputes. The lawyer's Statement of Adjustments is the controlling document, but the APS sets the framework. Course 2 dedicates substantial math to adjustment calculations.

Lifecycle of an APS

A typical residential APS moves through stages:

1. Drafting: the buyer's salesperson prepares Form 100 with the buyer's instructions
2. Presentation: offer presented to the seller's brokerage (in person, electronically, or via broker-to-broker email)
3. Acceptance, counter, or rejection: the seller responds within the irrevocability period
4. Conditional period: if conditional, each condition's countdown starts on the date specified
5. Waiver / fulfillment: the buyer delivers Form 510 for each condition before its deadline
6. Firm: all conditions waived; the APS is now binding on both parties
7. Title search and requisitions: the buyer's lawyer reviews title and raises objections by the requisition date
8. Pre-closing: mortgage funding finalized, walk-through performed, adjustments calculated
9. Closing: title transfers, funds change hands, possession passes
10. Post-closing: any holdback releases, post-closing adjustments, key handover

Frequently asked questions

What is the Agreement of Purchase and Sale in Ontario?

The Agreement of Purchase and Sale (APS) in Ontario is the legally binding written contract between a buyer and seller for a residential or commercial property. The standard residential form is OREA Form 100. Once both parties sign and any conditional periods are waived, the APS commits the buyer to purchase and the seller to sell on the agreed terms. Conditions, schedules, and adjustments are integrated into the same document.

Where do I get an Agreement of Purchase and Sale form?

Standard Ontario APS forms come from the Ontario Real Estate Association (OREA). The most common is Form 100 (residential resale). Forms are available to OREA members through the orea.com Member Tools portal. Non-members typically obtain forms through their brokerage, lawyer, or via paid third-party form libraries. The OREA forms are revised annually and after major legislative changes (the post-TRESA 2023 revisions were extensive).

Can a buyer back out of an Agreement of Purchase and Sale in Ontario?

A buyer can back out of an Ontario APS only (a) before any conditional periods expire by failing to waive a condition, (b) by mutual release with the seller, or (c) under a specific termination clause in the agreement. Once all conditions are waived and the offer is firm, walking away from a binding APS exposes the buyer to forfeiture of the deposit and a possible damages claim from the seller. The Court of Appeal has repeatedly enforced firm APS agreements against buyers who try to back out.

Can anyone write a Purchase Agreement?

Yes. Any two parties can draft and sign a real estate purchase agreement. In Ontario practice, however, OREA standard forms are used in essentially every brokered transaction because they have been tested in court, integrate with TRESA disclosure requirements, and protect both parties from common drafting errors. Custom agreements drafted from scratch are common only in very large commercial deals where lawyers tailor the language to the specific transaction.

Practice this topic

ExamAce drills APS scenarios (clause interpretation, condition timing, schedule conflicts, and irrevocability) across the Course 2 question bank and every simulation paper.