When buying or selling a home, several steps must be followed by both parties to ensure a smooth transaction. Once the seller accepts and signs the Offer to Purchase, it becomes a Promise to Purchase. This document obligates all parties to complete the transaction at the notary’s office by signing the Deed of Sale.
Typically, the period between signing the Promise to Purchase and finalizing the Deed of Sale last two to three months. This timeframe allows the notary to complete necessary formalities and verifications.
Let’s learn everything about this precious document.
What is the Deed of Sale?
In Quebec, the Deed of Sale is the official document that formalizes the transfer of property ownership and is prepared by a notary. It is divided into three distinct sections:
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Description and terms: This section includes a detailed description of the property and the terms and conditions of the Promise to Purchase.
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Conditions and obligations: This part outlines any conditions, restrictions, or obligations related to the sale.
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Signatures: The final section contains the signatures of all parties involved in the transaction.
Signing the Deed of Sale: the role of the notary
The notary, a recognized public official with expertise in real estate law, plays a crucial role in property transactions. The documents they prepare, such as the Deed of Sale, are legally binding and authentic in court, and they provide valuable advice on decisions related to buying or selling property.
The notary’s responsibilities include:
- Ensuring that the documents presented by both parties comply with legal requirements.
- Confirming that the conditions outlined in the Promise to Purchase are met.
- Facilitating the buyer's mortgage financing before finalizing the sale.
- Safeguarding the investment throughout the transaction.
- Resolving any issues that arise to protect the interests of both parties.
- Registering the real estate transaction in accordance with the law.
- Authenticating the documents signed by the buyer and seller.
In Quebec, the buyer generally pays the notary’s fees associated with the property sale. However, the seller might also face additional expenses, including obtaining tax statements, addressing any required corrective measures, preparing and receiving deeds of cancellation, and other costs necessary to ensure the buyer receives a valid title to the property.
What kind of information is included in the Deed of Sale?
A Deed of Sale must include detailed information about the property, the terms of the transfer, and the parties involved in the transaction. Here is an overview of the key sections typically included in this document:
Verification and identification of parties
Both parties involved in the transaction must present two forms of identification from reliable and independent sources, such as a driver's license or passport. These documents must be clear and valid.
The notary is responsible for verifying that the individuals signing the Deed of Sale have the legal capacity to complete the transaction. This includes confirming that the seller has the legal right to sell the property, and that the buyer has the necessary funds and qualifications to complete the purchase, among other requirements.
Property description
The Deed of Sale must include a comprehensive description of the property. This should cover:
- The complete legal address of the property.
- Details of any parking spaces or storage areas associated with the property.
- For condominiums, information about common areas and shared facilities must be included.
This thorough description ensures that all aspects of the property being transferred are clearly documented.
Property selling price
The Deed of Sale must clearly specify the sale price of the property and outline the payment terms. The payment is usually deposited into the notary's trust account.
Typically, payment is made to the notary via bank draft, as most notaries do not accept cash, personal checks, or certified checks. Once the Deed of Sale has been validated, the funds are transferred to the seller.
Please note that the sale price must be provided to the notary before the contract is signed. Any amounts already paid into an account will be deducted from the final sale price of the property.
Taking possession and transfer of risk
Ownership of the property is officially transferred at the notary’s office when the contract is signed, and possession typically occurs on the same day. If the property includes rental units, the seller must provide copies of the rental leases.
The Deed of Sale includes a risk transfer clause stating that, "once you have signed the Deed of Sale, you assume responsibility for any risks and losses related to your new property." Therefore, it is essential to secure the necessary insurance, such as home insurance, effective from the day of the transaction.
Declarations concerning the Promise to Purchase
Since the Promise to Purchase is an official document, it is not necessary to include all its terms in the Deed of Sale. Therefore, the Deed of Sale typically contains a clause stating that, unless otherwise specified, the parties acknowledge "the agreements made in the Promise to Purchase, but not detailed here."
Sales contract and legal warranty
In Quebec, the seller is obligated to provide both the warranty of title and the legal warranty of quality.
- Warranty of title: This ensures that the property is free from title defects and that the seller has full ownership of the property, with the legal right to sell it.
- Warranty of quality: This guarantees that the property is free from hidden defects that were not apparent at the time of sale.
These warranties protect the buyer by allowing them to either cancel the transaction or request a reduction in the sale price if serious, non-visible defects are discovered that existed before the sale.
In the case of co-ownership
When the contract is signed at the notary's office, the buyer receives an official copy of the Declaration of Co-ownership. By signing the Deed of Sale, the buyer agrees to adhere to the Declaration of Co-ownership and the building’s by-laws.
Can a Promise to Purchase be cancelled?
Once accepted by both the seller and buyer, the Promise to Purchase generally cannot be cancelled, and the Deed of Sale must be signed, unless:
- There is a specific clause allowing for cancellation. For instance, a condition based on an inspection.
- Both parties agree to cancel the agreement.
- A court orders the cancellation of the contract.
Additionally, a buyer may withdraw their offer and cancel his offer to purchase by providing written notice, provided that the seller has not yet received the Promise to Purchase.
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