McClelland Minute - February 21, 2010

Conditional Offers

Most offers on real estate contain conditions that provide support to the buyer’s decision making process and due diligence on the property.

Subject to achieving financing by a certain date.  Fairly straightforward with two aspects – the buyer’s ability to service the debt, and the value of the property as determined by independent appraisal needs to be equal to or greater than the sale price.

Subject to a current Real Property Report and Letter of Municipal Compliance.  The RPR is a survey showing the boundaries of the parcel and the location of improvements within it.  The compliance letter is a statement from the municipal government saying that the current use of the property and how it is been developed is appropriate to the zoning bylaw.  For example, if the bylaw requires a house to be set back 25’ from the street to allow room for a boulevard, sidewalk, and vehicle parking, the RPR will provide the actual distance.

The property sells without liens and encumbrances other than those easements, covenants, or agreements that are acceptable to the buyer.  Utility company corridors as an example.  If you want electricity, you need a power line, and so on.  Possibly the neighbour’s driveway cuts across the corner of your lot, as it has for past 40 years, so you see no harm.  However, you are buying an acreage and the sewer discharges on someone else’s land.  Changing that could be expensive; is it worth the risk without a proper encroachment agreement?

Subject to a Property Condition Disclosure Statement. This forms part of the contract and can be used in a court of law.  Many times it prompts sellers to tell the buyer about aspects of the house they may not been able to have observed for themselves, like there is seepage every spring on to the basement floor or the water softener does not work.

Subject to a professional home inspection, with results acceptable to buyer.  I bet you didn’t climb on the roof before making the offer did you?  If you don’t have the skill to do this yourself, spend the money and accompany the inspector while he takes a close look at the property.  Don’t sweat the small stuff; look for big ticket items that would prove costly to repair or may be a hazard.

With acreages, subject to a water quality and quantity report acceptable to buyer.  Wells can change quickly.  Have an independent professional test for flow and check the pumping equipment.  Send a water sample to the lab.  Coliforms can make you and your family sick; don’t take this area for granted.

Designate which appliances, window treatments, and other unattached goods are to stay.  They are to be in working order at date of possession.  Want to know what gives Realtors the most grief in a house sale?  Used appliances, swapped out light fixtures, and dirty homes.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

Comment Notification

Subscribe to this post's comments using RSS