What is land transfer tax in Canada and who pays it?

Land transfer tax (or property transfer tax) is a provincial tax payable by the buyer upon the transfer of real property. In Ontario, it is payable under the Land Transfer Tax Act (R.S.O. 1990, c. L.6), calculated as a percentage of the purchase price on a graduated scale. The City of Toronto imposes an additional municipal land transfer tax. In British Columbia, property transfer tax is payable under the Property Transfer Tax Act (R.S.B.C. 1996, c. 378) at rates of 1% on the first $200,000, 2% on the portion from $200,001 to $2,000,000, and 3% on amounts above $2,000,000. Alberta does not have a land transfer tax but charges a land title registration fee. First-time home buyers may qualify for exemptions or rebates in Ontario and British Columbia.

Is a home inspection required before buying property in Canada?

A home inspection is not legally required in any Canadian province, but it is strongly recommended by the Canadian Real Estate Association (CREA) and most real estate lawyers. A home inspection condition in the purchase agreement gives the buyer the right to have the property inspected by a qualified home inspector before the transaction becomes firm. If the inspection reveals significant defects, the buyer can negotiate repairs, a price reduction, or terminate the agreement and receive a full refund of the deposit. In Ontario, some properties (such as new construction) may be covered by the Ontario New Home Warranties Plan Act (R.S.O. 1990, c. O.31), which provides warranty coverage through Tarion.

What happens to the deposit if the deal falls through?

If the purchase agreement is terminated due to the non-fulfilment of a condition (such as a financing or inspection condition), the deposit is typically returned to the buyer in full. However, if the buyer breaches the agreement by failing to close without a valid condition, the seller may be entitled to retain the deposit as liquidated damages, subject to the terms of the agreement and applicable provincial law. In Ontario, the Real Estate and Business Brokers Act, 2002 (S.O. 2002, c. 30, Sched. C) requires that deposits be held in trust by the listing brokerage. In British Columbia, deposits are typically held in the conveyancing lawyer's or notary's trust account. If there is a dispute over the deposit, the matter may be resolved through litigation or the applicable dispute resolution mechanism.

Simple Real Estate Purchase Agreement (Canada) — Australia

Create a Canadian Simple Real Estate Purchase Agreement for residential property sales. Compliant with provincial Land Title Acts and Land Transfer Tax legislation. Includes deposit terms, financing and inspection conditions, closing date, adjustments, and title requirements. Download as PDF or Word.

What Is a Simple Real Estate Purchase Agreement (Canada)?

A Canadian Simple Real Estate Purchase Agreement (also commonly referred to as an Agreement of Purchase and Sale) is a legally binding contract between a buyer and seller for the purchase and sale of residential real property in Canada. This agreement sets out the essential terms of the transaction, including the property description, purchase price, deposit, conditions (such as financing and inspection), closing date, inclusions and exclusions, and the representations and warranties of the parties.

Real estate transactions in Canada are governed by a combination of provincial and federal legislation. The conveyancing process and title registration are governed by provincial land title legislation, such as the Land Titles Act (Ontario, R.S.O. 1990, c. L.5; Alberta, R.S.A. 2000, c. L-4), the Land Title Act (British Columbia, R.S.B.C. 1996, c. 250), or the Registry Act (Ontario, R.S.O. 1990, c. R.20) for properties still under the registry system. Land transfer tax is governed by the Land Transfer Tax Act (Ontario, R.S.O. 1990, c. L.6) or the Property Transfer Tax Act (British Columbia, R.S.B.C. 1996, c. 378).

In Quebec, real estate transactions are governed by the Civil Code of Quebec (CQLR c. CCQ-1991), which imposes specific requirements for the sale of immovable property, including the obligation of the seller to disclose latent defects and the buyer's right to a legal warranty of quality. Quebec transactions are typically completed through notarial acts executed by a Quebec notaire.

When Do You Need a Simple Real Estate Purchase Agreement (Canada)?

A Canadian Simple Real Estate Purchase Agreement is needed whenever a buyer and seller wish to formalize the terms of a residential real estate transaction. This agreement is the primary legal document that governs the sale of houses, condominiums, townhouses, and other residential properties throughout Canada. It is typically prepared after the buyer and seller have agreed on the basic terms of the sale, either directly or through their respective real estate agents.

The agreement is essential for establishing the legal obligations of both parties, including the purchase price, deposit arrangements, conditions that must be satisfied before the transaction becomes firm, the closing date, and the division of costs and adjustments. Without a written agreement, the parties have no enforceable contract and may be unable to complete the transaction or seek legal remedies in the event of a dispute.

Each province has its own standard form of agreement of purchase and sale. In Ontario, the Ontario Real Estate Association (OREA) Form 100 is widely used. In British Columbia, the standard form is the Contract of Purchase and Sale published by the British Columbia Real Estate Association. In Alberta, the Real Estate Purchase Contract is the standard form. This template provides a simplified version suitable for straightforward residential transactions, but buyers and sellers are strongly advised to consult with a real estate lawyer or notary before signing.

What to Include in Your Simple Real Estate Purchase Agreement (Canada)

An effective Canadian Simple Real Estate Purchase Agreement must include several essential elements to create an enforceable contract and protect both parties. The agreement must identify the buyer and seller by their full legal names and addresses, and describe the property by both its municipal address and legal description as it appears on the certificate of title.

The purchase price must be stated in Canadian dollars, and the deposit provisions should specify the amount, due date, and the identity of the person or entity holding the deposit in trust (typically a real estate brokerage's trust account or a lawyer's or notary's trust account). The agreement should address conditions precedent, such as the buyer obtaining satisfactory mortgage financing and completing a home inspection, with clear deadlines and procedures for waiving or invoking conditions.

The closing date section should specify when the title will be transferred and the balance of the purchase price is payable. The inclusions and exclusions section should clearly list all chattels and fixtures included in or excluded from the sale. The title section should include the seller's representation that they have good and marketable title, free of undisclosed encumbrances.

The adjustments section should address the proration of property taxes, utility charges, and other items between the buyer and seller as of the closing date. The land transfer tax section should reference the applicable provincial legislation and any available exemptions. A risk clause should allocate the risk of damage to the property before closing. The governing law clause should specify the province where the property is located, and the agreement should include a statement that time is of the essence.

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Create a professional Simple Real Estate Purchase Agreement with our free online generator. Document a straightforward property sale with essential terms including purchase price, earnest money deposit, financing contingencies, inspection periods, closing date, and title requirements. Suitable for residential home sales between private parties or with real estate agents. Includes standard contingencies for financing, appraisal, and home inspection. Preview in real time and download as PDF or Word. Electronic signature support included. Valid across all 50 US states. Consult a real estate attorney for complex transactions.