What Is Included in a Purchase & Sale Agreement in Ontario? A Lawyer’s Guide for Buyers and Sellers

A Purchase and Sale Agreement in Ontario is more than just a basic contract; it serves as the legal foundation for every real estate transaction. Once signed, it becomes a binding document with serious financial consequences if either party breaches it. That’s why buyers and sellers shouldn’t rely on generic contract templates or DIY legal advice. Working with a real estate lawyer can mean the difference between a smooth closing and a costly legal dispute.

At Khan LLP, we regularly review and negotiate Purchase and Sale Agreements for clients across Ontario, making sure every clause protects your interests. You can learn more about our legal services here:
➡️ Purchase and Sale Services: https://khanllp.com/purchase-and-sale

What Exactly Is Included in a Purchase & Sale Agreement?

While every agreement is unique, Ontario real estate contracts generally include these core components:

1. Buyer and Seller Information

Full legal names of the parties, including corporations or non-residents if applicable.
Using incorrect legal names may delay the closing or lead to major issues later.

If you’re a non-resident or buying property on behalf of a foreign corporation, make sure you review our legal resource here:
➡️ https://khanllp.com/purchase-and-sale-for-non-residents

2. Property Description

Includes:

• Legal address
   
• Lot details
   
• Property description from the title
   
• Fixtures included or excluded
   

If the description is wrong, ownership transfer can be delayed at closing. This is one reason lawyers conduct title searches and due diligence before finalizing the deal.

3. Purchase Price & Deposit

The agreement must clearly state:

• Total price
   
• Deposit amount
   
• When deposits are paid
   
• Who holds the deposit?
   

Deposits are usually held in trust by a real estate brokerage or lawyer. If a deal collapses, deposit disputes are common, and this is where legal representation becomes crucial.

4. Conditions (Protective Clauses)

Conditions are the buyer’s “escape route” if something important goes wrong. Common examples include:

• Financing approval
   
• Home inspection
   
• Sale of existing property
   
• Review by a lawyer
   
• Status certificate review (for condos)
   

Once conditions are waived, the agreement becomes firm and binding. If you’re unsure what conditions protect you the most, talk to a lawyer before signing.

Why You Should NEVER Remove Conditions Without Legal Advice

Many buyers try to remove conditions to win in a competitive market. That decision can cost them thousands of dollars later. A lawyer can often negotiate more favorable terms instead of removing protections entirely.

➡️ Learn more about how we protect real estate buyers here:
https://khanllp.com/purchase-and-sale

 5. Closing Date

The closing date is the official day ownership transfers.
On closing, the lawyer:

• Confirms title
   
• Handles funds
   
• Registers ownership
   
• Releases keys
   

If there are issues like unpaid taxes, title defects, or bank delays, closing may get postponed. When that happens, buyers and sellers may be held financially responsible.

 6. Representations & Warranties

These outline what the seller is promising about the condition of the property. Examples:

• Electrical work was done with permits
   
• No flood or structural damage
   
• No outstanding work orders
   
• No tenant agreements unless disclosed
   

Bad warranties = expensive problems later.

 7. Title Search & Legal Protection

This is where your lawyer plays the biggest role. We look for:

• Ownership disputes
   
• Easements
   
• Liens
   
• Encroachments
   
• Unregistered interests
   
• Fraud risk
   
• Title defects
   

Many buyers also choose title insurance, which protects against hidden risks. If you're not sure whether you need title insurance, this guide may help:
➡️ https://khanllp.com/purchase-and-sale

Why Legal Review Matters

Real estate agents are not legally allowed to give legal advice. A lawyer:
✔ Identifies risks in contract language
✔ Suggests edits to protect you
✔ Identifies missing clauses
✔ Ensures closing is compliant
✔ Protects your deposit & rights
✔ Manages tax implications

When Problems Occur: Canceling or Enforcing an Agreement

Once an agreement is firm, walking away is extremely difficult. Buyers and sellers can be sued for damages, forced to complete the sale, or lose deposits.

We often get calls like:
❓ “Can I cancel after signing?”
❓ "What if market prices change?"
❓ “What if my financing fails?”

The answer depends on your specific agreement and conditions, which is why legal review before signing is essential.

SEO FAQ

Q: Is a Purchase & Sale Agreement legally binding in Ontario?
Yes. Once conditions are waived or fulfilled, the contract is binding and enforceable.

Q: Can I cancel a Purchase & Sale Agreement?
Cancellation may be possible only if you have unwaived conditions or legal grounds. Otherwise, you may face legal consequences.

Q: Do I need a lawyer to review the agreement?
Yes. A lawyer ensures you understand the legal impacts of every clause and protects your money and property rights.