A Canadian Purchase Agreement Addendum is a legal document that supplements, modifies, or adds terms to an existing Agreement of Purchase and Sale (APS) for real property. In Canadian real estate transactions, the original purchase agreement establishes the fundamental terms of the sale, including the purchase price, closing date, conditions, and property description. However, circumstances frequently arise after the original agreement is signed that require changes or additions to these terms. The addendum provides a formal, legally binding mechanism for making such changes without invalidating the original agreement.

Under Canadian contract law, any material modification to a binding contract must be agreed to by all parties and documented in writing. The Statute of Frauds, which is part of the law in all common law provinces (e.g., Ontario's Statute of Frauds, R.S.O. 1990, c. S.19), requires that contracts for the sale of land be in writing to be enforceable. This requirement extends to any amendments or addenda to the original agreement. The addendum, once signed by both parties, becomes an integral part of the original agreement and has the same legal force.

In practice, addenda are commonly used in Canadian real estate transactions to address a wide range of situations: adding additional property to the sale, adjusting the purchase price after an appraisal or inspection, extending or changing the closing date, modifying conditions or adding new conditions, addressing issues discovered during a home inspection, and clarifying or amending any term of the original agreement. Each province has its own standard forms for real estate transactions, published by the provincial real estate association (e.g., OREA forms in Ontario, BCREA forms in British Columbia).

A Canadian Purchase Agreement Addendum is needed whenever the parties to an existing real estate purchase agreement wish to modify, supplement, or clarify any term of the original agreement. The most common scenarios include price adjustments following a home inspection that reveals deficiencies, changes to the closing date due to financing delays or other circumstances, the addition of chattels or fixtures not originally included in the agreement, modifications to conditions (such as extending a financing condition deadline), and addressing title issues discovered during the due diligence process.

The addendum is also necessary when additional property is being added to the transaction. For example, if the buyer and seller agree after the original APS was signed that an adjacent lot, garage, parking space, or storage unit should also be included in the sale, an addendum is the proper vehicle for documenting this addition and specifying the additional purchase price and terms.

In Ontario, the Real Estate and Business Brokers Act, 2002 (S.O. 2002, c. 30, Sched. C) and its regulations govern real estate transactions, and the OREA standard forms include specific provisions for addenda. In British Columbia, the Real Estate Services Act (S.B.C. 2004, c. 42) governs, and the BCREA Contract of Purchase and Sale has its own addendum format. The addendum should be prepared promptly after the parties agree to the changes and must be signed by both parties before it becomes binding.

An effective Canadian Purchase Agreement Addendum must include several essential elements to be legally valid and enforceable. The addendum must clearly reference the original Agreement of Purchase and Sale by date and identify both parties (Buyer and Seller) by their full legal names and addresses. The effective date of the addendum must be specified, and the document must explicitly state that it supplements and forms part of the original agreement.

The substantive terms of the addendum must be clearly and unambiguously stated. If additional property is being added, the legal description and municipal address must be provided. If the purchase price is being changed, both the new price and the payment terms must be specified. The payment method should reflect Canadian banking practices, such as certified cheque, bank draft, wire transfer, or electronic funds transfer. The closing date must be clearly stated if it differs from the original agreement.

The addendum must address the allocation of applicable taxes, particularly the provincial land transfer tax. In Ontario, the Land Transfer Tax Act (R.S.O. 1990, c. L.6) imposes a graduated tax based on the purchase price. British Columbia charges a Property Transfer Tax under the Property Transfer Tax Act (R.S.B.C. 1996, c. 378). Alberta does not have a land transfer tax but charges land title registration fees. The GST/HST may also apply to certain real estate transactions, particularly new construction, under the Excise Tax Act (R.S.C. 1985, c. E-15).

The addendum should include a clause confirming that all other terms and conditions of the original agreement remain in full force and effect, except to the extent they conflict with the addendum terms. Both parties must sign and date the addendum. The governing law clause should reference the applicable provincial law.