Selling real estate in Newfoundland & Labrador is, generally, easier than buying it. There are two core documents that a seller needs to concern themselves with:
- A Purchase & Sale Agreement; and
- A Deed of Conveyance.
These are not the only instruments that your lawyer will require or create on a sale of land, but the Purchase & Sale Agreement and the Deed of Conveyance are key to any real estate transaction involving a transfer of title.
Purchase & Sale Agreement
The Purchase & Sale Agreement is the document that sets out the deal. In this province business is often done informally, or on a “handshake” basis. It’s fine to have a level of comfort and trust between parties be able to do business on verbal agreements, but when it comes to contracts dealing with land agreements are legally required to be in writing, otherwise they are almost certainly unenforceable.
A Purchase & Sale Agreement is the contract between the buyer and seller where the seller promises to sell their real property and the buyer promises to buy it, and on what terms. Nota bene: A Purchase & Sale Agreement might perhaps more efficiently be called just a “Purchase Agreement” or just a “Sale Agreement”, but who doesn’t love excess traditional verbiage?
If you have a real estate agent helping you sell your property, then very often the real estate agent might prepare the Purchase & Sale Agreement, and your lawyer might have no input before a signed contract lands on their desk. These are typically standard form contracts with adjustments made for the particular deal negotiated with the help of the agent. Without meaning to offend any real estate agents, it might not be a bad idea to have a lawyer look at a Purchase & Sale Agreement before signing what might be one of the highest-dollar value contracts of your life.
If there is not a real estate agent involved then it will be on the parties to come up with their own Purchase & Sale Agreement. Definitely consider getting your lawyer involved with drafting or reviewing this document before you sign anything, especially if you or the other party are attempting to put together a contract without professional help.
A good Purchase & Sale Agreement should be fairly comprehensive, and clearly spell out what is expected of each party, and when. At a minimum things that would be addressed in a Purchase & Sale Agreement (and thus should be discussed before a deal is struck), include:
- The purchase price, and where and how it should be paid;
- The deposit, and where and how it should be paid, and what happens to it in different situations if the deal can’t close;
- The closing date;
- Dates for people to complete searches and inspections;
- What sort of survey is being provided and who is paying for it;
- What other reports are being procured and who is paying for them;
- What sort of title is expected from the seller and what happens if they can’t provide it;
- What sort of deed is expected from the seller;
- What sort of warranties are expected from the seller;
- What sort of certifications are expected from the seller;
This is just a short list for the purpose of pointing out that there is more to a land deal than the sale price, and a good agreement will spell all of it out.
The Deed of Conveyance
This is the instrument that a seller has to write in order to convey their title to a buyer in Newfoundland & Labrador. The seller’s lawyer almost always is responsible for preparing this document, and in effect this is what the buyer is getting in exchange for their money. It is important to make sure that it is done properly. If you accept cash for a homemade “bill of sale” (which has been historically common in some communities), then you should expect the buyer, or their successors or assigns, to come back looking for you or your successors or assigns at some point to get a proper deed.
Sometimes people who have not engaged a lawyer to help them may just try to pass over their survey instead of a proper deed of conveyance. This is also a mistake.
If you are thinking about selling a building or house and land in Newfoundland & Labrador, it’s not bad idea to call your lawyer first before putting that ad online, so you’re better-equipped to negotiate a purchase & sale agreement with potential buyers.