Conveyancing

Pre Sale Real Estate Agreements are used by builders or construction companies for the purpose of securing buyers in residential construction, units, apartments or condominium projects that are either pre-built or under construction. A pre sale agreement is frequently used when the purchaser agrees to buy the property according to certain specifications outlined on the plan. In some cases, this will involve an initial preview of a similar apartment that has been constructed for the express purpose of buyer demonstration and in other cases the buyer will be making the purchase from �mocked up� multimedia presentations or print literature.

A presale real estate agreement is considered an addendum to the real estate purchase and sales agreement. These pre sale contracts deal with pre purchase obligations and the legal rights of the prospective purchasers. The terms and conditions that comprise part of the real estate pre sale agreement stipulate processes to cover closing date commitments, buyer review entitlements, any conditions and restrictions, specifications and plans, fixture and chattel provisions, change clauses and the conditions for delivery of the agreed property. The agreement also contains clauses that specify deposit and payment terms.

If the buyer disapproves the property according to the criteria provided for in the pre sale real estate agreement, because the property deviates substantially from the material representation that the agreement was formed under, he/she may be entitled to terminate the agreement and receive a deposit refund. This may be conditional on any provisions that allow the offering party to rectify the situation. Similarly, if the developer cancels the construction of the property the buyer will be entitled to a refund of any deposit monies held.

In cases where the prospective buyer decides he/she no longer wishes to purchase the property, the pre sale agreement will include conditions for non performance of the contract. This may include forfeiting any deposit money held by the developing party and payment for any custom work that has been completed by the developer. In most cases pre sale agreements have good faith and fair dealing provisions. It is expected that in the event of minor changes, negotiation will take place. Minor changes are not considered sufficient to exercise cancellation rights.

Finance companies and banks are other potential users of pre sale real estate agreements. The nature of these agreements usually extends to providing finance for approved purchasers of designated projects at competitive interest rates and with flexible payment terms. These types of agreements are sometimes used by financial consortiums to sponsor community based projects or joint ventures where the developer and finance provider create a packaged deal tailored for the individual project requirements.

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