Real Estate Insights

How to Read a Purchase Agreement: Key Clauses Every Ontario Buyer Must Know

When you make an offer on a home in Ontario, you sign an Agreement of Purchase and Sale. This is not a formality. It is a binding legal contract, and once both parties sign, backing out has real financial consequences. Yet most buyers spend less time reading it than they spend reading a restaurant menu.

Here are the clauses that matter most and what to watch for in each.

The Purchase Price and Deposit

The deposit is typically 5% of the purchase price and is due within 24 hours of acceptance (sometimes less in competitive markets). This money is held in trust and applied to your down payment on closing. If you back out without a valid condition to rely on, you lose it. Make sure you have the deposit liquid and accessible before you make an offer.

The Completion Date

This is your closing date. The gap between acceptance and closing is typically 30 to 90 days, though it can be shorter or longer by negotiation. A few things to know: your mortgage rate hold needs to cover this date, your lawyer needs enough time to do the title search, and if you are selling your current home, the two closing dates need to line up or you will need bridge financing.

Conditions (Clauses)

Conditions are time-limited requirements that must be satisfied for the deal to proceed. Common ones include:

• Financing condition: Gives you a set number of days (usually 3 to 5 business days) to confirm your mortgage. If your lender declines, you can walk away with your deposit returned.
• Home inspection condition: Gives you the right to have a licensed inspector review the property. If the inspection reveals serious issues, you can renegotiate or exit the deal.
• Status certificate condition (condos only): Gives your lawyer time to review the condo corporation's financial health, reserve fund, and any pending special assessments. Never waive this one.
• Sale of property condition: Allows you to exit if your current home does not sell in time. Sellers rarely accept this in competitive markets.

Chattels and Fixtures

Fixtures are things attached to the property and are included in the sale by default (light fixtures, built-in shelving, central vac). Chattels are freestanding items that are excluded by default (fridge, washer, dryer, curtain rods). The agreement will list what is specifically included and excluded. Read this list carefully. Disputes over appliances and fixtures are among the most common post-closing complaints.

HST

For resale homes, HST is generally not applicable. For new construction, HST is included in the purchase price but there are rebates available. If you are purchasing a newly built home, ask your lawyer and builder to clarify exactly how HST is handled in your specific agreement before signing.

Title and Title Insurance

Your lawyer will conduct a title search to confirm the seller legally owns the property and that there are no liens, encroachments, or easements that would affect your ownership. Title insurance (typically $200 to $400 as a one-time premium) protects you against issues that the title search might miss. It is worth purchasing in nearly every transaction.

Ontario Land Transfer Tax: What You Will Owe and How to Reduce It

Land transfer tax is paid by the buyer every time a property changes hands in Ontario. It is calculated as a percentage of the purchase price on a sliding scale, and it catches a lot of buyers off guard because it is due in full on closing day, on top of your down payment and legal fees.

How Ontario Land Transfer Tax is Calculated

The provincial rate applies to every purchase in Ontario. The rates are tiered:

For a $1,200,000 home, the Ontario LTT is approximately $18,475. This is not a rounding error on your closing costs. It needs to be in your budget.

If You Are Buying in Toronto

The City of Toronto charges an additional municipal land transfer tax on top of the provincial one, using an almost identical rate structure. Buying a $1,200,000 home in Toronto means paying roughly $36,950 in combined land transfer tax. This is one of the most significant financial differences between buying in Toronto proper and buying in a surrounding municipality like Mississauga, Oakville, or Vaughan, where only the provincial tax applies.

First-Time Buyer Rebates

If you are a first-time buyer, you may qualify for a rebate on both the provincial and (if applicable) Toronto municipal LTT.

• Ontario rebate: Up to $4,000, which effectively eliminates the provincial LTT on homes priced up to approximately $368,000, and reduces it for homes above that threshold.
• Toronto rebate: Up to $4,475 for homes purchased in the City of Toronto.

How to Estimate Your Closing Costs

A useful rule of thumb: budget 1.5% to 2.5% of the purchase price for total closing costs, which includes land transfer tax, legal fees, title insurance, home inspection, and any adjustments. On a $1,000,000 purchase, this means having $15,000 to $25,000 available in cash on top of your down payment. Lenders will not finance closing costs in most cases, so this needs to be liquid.

Freehold vs. Condo: A Real Comparison for GTA Buyers in 2025

The freehold vs. condo decision is one of the most consequential choices a GTA buyer makes, and it is rarely as simple as "condos are cheaper." The right answer depends on your budget, lifestyle, risk tolerance, and long-term plans.

What You Are Actually Buying

With a freehold property, you own the structure and the land it sits on. You are responsible for all maintenance and repairs, but you answer to no one and pay no ongoing fees (beyond property tax and utilities). With a condo, you own your unit and a proportionate share of the common elements. The condo corporation handles exterior maintenance, landscaping, and shared amenities, but you pay monthly maintenance fees that are not optional and are subject to increases.

The Real Cost of Condo Fees

Maintenance fees in the GTA typically range from $0.50 to $1.00 per square foot per month. On a 700 square foot unit, that is $350 to $700 per month, or $4,200 to $8,400 per year. This has two important implications:

• Mortgage qualification: Lenders include 50% of condo fees in your debt service ratios when calculating how much you can borrow. High fees reduce the mortgage you qualify for.
• Long-term cost: Over a 25-year mortgage, $500 per month in fees adds up to $150,000 in non-equity expenses. This needs to be factored into any affordability comparison with a freehold.

Reserve Funds and Special Assessments

Every condo corporation is required to maintain a reserve fund for major repairs (roof replacement, elevator servicing, parking garage work). Before buying a condo, your lawyer should review the status certificate, which includes the current reserve fund balance and whether it is adequately funded. An underfunded reserve is a serious red flag. If the reserve runs short, the corporation can levy a special assessment, which is a one-time charge payable by all unit owners, sometimes in the tens of thousands of dollars.

Appreciation: Who Wins Over Time?

Historically in the GTA, freehold properties have appreciated faster than condos over the long term, largely because freehold owners own land, which is finite. Condos can appreciate strongly in specific periods (particularly low interest rate environments with high investor demand), but freehold ownership in desirable areas of Oakville, Mississauga, or Toronto has generally been a stronger store of value over 10-plus year horizons. That said, condos offer lower entry points and lower carrying costs in some scenarios, which can be the right trade-off at certain stages of life.

Which Makes Sense at Different Budgets

5 Things That Quietly Hurt Your Home's Value Before You List

Buyers look at dozens of homes. They make judgments in the first 90 seconds of a showing and spend the rest of the visit either confirming or challenging that first impression. As a seller, you stop noticing things you live with every day. Here are the five issues that consistently suppress offers, and what to do about each one.

1. Deferred Maintenance That Signals Neglect

A cracked caulk line in the bathroom, a dripping faucet, a sticking door, a loose handrail. None of these is expensive to fix. But buyers see them as evidence of a seller who deferred maintenance, and they start wondering what else has been deferred. A pre-listing inspection (typically $400 to $600) will catch the items you have stopped noticing. Fix them before your first showing. The cost is almost always a fraction of the offer reduction they would cause.

2. Outdated or Poor Lighting

Lighting has a disproportionate impact on how a home feels. Warm, well-distributed light makes spaces feel larger and more inviting. Harsh overhead fluorescents, bare bulbs, or dark rooms do the opposite. Before listing, replace all bulbs with matching warm-white LEDs (2700K to 3000K), add floor lamps to dark corners, and ensure every light fixture is working. This is one of the highest return-per-dollar improvements a seller can make.

3. Clutter and Excess Furniture

Buyers need to see your rooms, not your belongings. Excess furniture makes rooms look smaller, and personal items (family photos, collections, heavy decor) make it harder for buyers to picture themselves in the space. Rent a storage unit before listing and remove at least 30% of your furniture and personal items. Staging, whether professional or DIY, consistently results in faster sales and higher offers.

4. Curb Appeal Neglect

The exterior of your home is the first thing buyers see, and it sets the emotional tone for the entire showing. Peeling paint on the front door, a cracked driveway, overgrown shrubs, or a tired garden bed can suppress interest before a buyer even walks inside. A fresh coat of paint on the front door (one of the best ROI items in real estate prep), power-washed driveway and walkways, trimmed hedges, and a few potted plants at the entrance can change the first impression entirely at minimal cost.

5. Pet Odours and Stale Air

This is the one sellers are least likely to notice themselves. Pet odours, cigarette smoke, and musty basement smells are among the top reasons buyers lose interest during a showing. Have someone who does not live in the home walk through with honest feedback. Deep clean carpets, replace furnace filters, air out the home before every showing, and if needed, consider an ozone treatment for persistent odours. Buyers who smell something unpleasant leave faster and offer lower.

What Closing Day Actually Looks Like in Ontario

Closing day is the day the property legally changes hands. For buyers, it is the day you get your keys. For sellers, it is the day the sale proceeds land in your account. Most buyers and sellers have no clear picture of what actually happens, which leads to anxiety and occasionally avoidable last-minute problems.

In the Weeks Before Closing

Your lawyer receives the closing documents from the seller's lawyer and begins the title search, title insurance application, and mortgage instruction review. You will receive a statement of adjustments, which is a document that accounts for prepaid property taxes, utility deposits, and other credits or debits between you and the seller. Review this carefully. You will also receive wire transfer instructions for the closing funds. Do not transfer money based on emailed instructions without calling your lawyer directly to confirm. Real estate closing fraud (where scammers intercept wire instructions) is a real and growing problem in Canada.

The Day Before Closing

Ensure your certified cheque or wire transfer is ready and confirmed. Do your final walkthrough of the property to confirm it is in the condition agreed upon, that all included chattels are present, and that no damage has occurred since you last viewed it. If something is wrong, contact your lawyer immediately as it is much harder to resolve once the keys change hands.

On Closing Day

You will sign documents at your lawyer's office (usually the day before or the morning of closing). Your lawyer and the seller's lawyer exchange documents and funds electronically through the Teraview land registry system. Once the transaction is registered, your lawyer will call you to confirm the property is yours and arrange key pickup. This typically happens between noon and 5 PM, though it can run later if there are delays in the chain (especially if your seller is also buying somewhere else that day).

Common Closing Day Problems and How to Avoid Them

• Funds not received in time: Wire transfers can take longer than expected. Always transfer your closing funds at least one full business day before closing.
• Outstanding conditions or paperwork: Make sure every condition is formally waived in writing and every required document is signed well before closing day. Last-minute paperwork causes delays.
• Chain closings: If your seller is buying another property with the proceeds from your purchase, a delay in their purchase can delay your keys. This is common and usually resolves the same day, but plan accordingly.
• Utilities not transferred: Set up your electricity, gas, internet, and water accounts to transfer to your name on the closing date. Do not assume this happens automatically.

When Do You Actually Get the Keys?

Keys are released once the transaction is registered, which is controlled by your lawyer and the land registry. You will not pick them up from the seller directly in most cases. They will typically be held by your agent or the seller's agent and released once your lawyer confirms registration. If you are planning a move, do not schedule your movers for 8 AM on closing day.

Conditional Offers in Ontario: What They Are and When to Use One

A conditional offer is an offer to purchase that includes one or more conditions that must be satisfied before the deal becomes firm. Conditions are a form of protection for buyers, but they also signal risk to sellers. Knowing when to include them and when the market allows you to waive them is one of the most important tactical decisions in a purchase.

The Most Common Conditions

Financing condition: This gives you a defined period (typically 3 to 5 business days) to confirm mortgage approval from your lender. Even if you have a pre-approval, a financing condition is important because pre-approvals are not guarantees. The lender still needs to approve the specific property (its value, condition, and title) before issuing a firm commitment.

Home inspection condition: This gives you the right to have a licensed home inspector review the property and report their findings. If the inspection reveals deficiencies, you can renegotiate the price, request repairs, or exit the deal. In very competitive markets, buyers sometimes conduct pre-offer inspections (arranged before submitting the offer) to allow them to waive the condition while still having inspected the home.

Status certificate condition (condos): This gives your lawyer 3 to 10 days to review the condo corporation's status certificate. The status certificate discloses the reserve fund balance, any ongoing litigation, upcoming special assessments, the current budget, and the rules of the corporation. A poorly managed condo corporation is a significant financial risk. This condition should almost never be waived.

Why Sellers Prefer Firm Offers

A conditional offer means the seller cannot treat the deal as done. They cannot make firm plans to buy their next home, cannot take the property off market with full confidence, and face the possibility of the deal falling through. In competitive markets with multiple offers, sellers will often choose a lower firm offer over a higher conditional one, particularly for the financing condition, which is seen as the buyer's problem to solve before making an offer.

When It Is Reasonable to Waive a Financing Condition

Waiving a financing condition is only reasonable if your financial position is exceptionally solid: you have a genuine pre-approval (not just pre-qualification) with a lender who has reviewed your full documentation, you have enough cash to close even if the property appraises below the purchase price, and the property is a straightforward type that lenders will readily finance. If any of those factors are uncertain, keep the condition. The deposit you risk losing if financing falls through is not worth the competitive edge.

How Long Do Conditions Last?

Conditions typically run 3 to 10 business days from the date of acceptance. During this period, the property is considered conditionally sold and is usually taken off the market (unless the seller has included an escape clause allowing them to continue showing). Once the condition period expires without a waiver, the deal is automatically void and your deposit is returned. Once you waive the condition in writing, the deal becomes firm and your deposit is at risk if you walk away.