OACIQ Promise to purchase forms in effect since June 22, 2021
As part of the measures implemented to address the issues raised by the overheated housing market, the Ministry of Finance and the OACIQ have agreed to amend the promise to purchase forms to reinforce the messages pertaining to the risks of waiving a pre-purchase inspection.
The pre-purchase inspection is an essential step in a real estate transaction
In a real estate transaction, the buyer must act prudently and diligently. Only a proper inspection carried out by an inspector or professional can uncover any apparent defects in the building.
Risks of waiving a pre-purchase inspection
If a problem arises with the property after the conclusion of the sale and the buyer wishes to take legal action, the court will consider whether the buyer acted prudently and diligently. Having waived the inspection could prove detrimental to the buyer.
The buyer may have to live with problems that could have been flagged by an inspector during inspection
The average buyer does not have the skills of a building inspector. By carrying out the inspection by himself, the buyer will not be able to claim, if applicable, that he acted as a prudent and diligent buyer. Even if the expert does not see hidden defects in a concrete way, he can see their apparent manifestations which may not be significant for the buyer.
The buyer may lose his recourse against the seller if an apparent defect is discovered after the conclusion of the sale
If the property is being sold without legal warranty, the inspection is of even more recommended because its process allows the seller's declarations to be completed in greater detail.
Broker's duty to recommend inspection and to inform the buyer about the risks of waiving an inspection.
The broker is not a building inspector. However, he has the duty to recommend that the buyer have a full inspection of the property performed by a professional or a building inspector who:
- has professional liability insurance covering fault, error or omission
- uses a recognized inspection service agreement
- performs inspections according to recognized building inspection standards
- submits a written report to the party that requested the inspection services
(Section 81 of the Regulation respecting brokerage requirements, professional conduct of brokers and advertising).
Amended promise to purchase forms containing an inspection clause:
- An addition specifying that the buyer is informed by the broker of the risks of waiving inspection is intended to further raise the buyer's awareness and to ensure that this matter has indeed been discussed between the buyer and the broker.
- A warning is included to raise the buyer's awareness that he should not waive the pre-purchase inspection, except in exceptional cases, such as the replacement or major renovation of the building.
Since June 22, 2021, only amended promise to purchase forms must be used for real estate transactions conducted through an OACIQ licensee.
