Ever wonder what is involved in the documentation clause of a home offer? When purchasing a property there are specific documents, such as certificate of location and repair invoices, to review. The documentation clause is one of the most important clauses when purchasing a property. It allows you to protect all parties involved by making sure the buyer is aware of all the important information regarding the property.
Important Documentation
When making an offer on a property you will want to see the:
- Seller’s Declaration form
- Previous home inspection report (if available)
- Home warranty (If the home is under 5 years)
- Municipal tax bill
- School tax bill
- Invoices regarding work that was done on the property
- Electricity Bills
If you are purchasing a revenue property, the relevant documents also include:
- Current leases
- Tenant application’s to lease
If you are purchasing a condo, be sure to include these for your home offer’s documentation clause:
- Annual general meeting minutes of the last 2-3 years
- Financial statements of the last 2-3 years
- Current budget
- Building inspection/engineer reports (if available)
Depending on the specific property and situation, you may want to request other documents as well.
What is the Cost?
When you use the Documentation Clause in a Home Offer, there should be no cost associated to receiving the documentation. If a seller tries to charge you for providing your documentation, speak to a real estate professional to discuss further.
What if the Seller Refuses to Share Documentation?
This is a big red flag. At the very minimum the seller must share a seller’s declaration form stating everything they know about their property. If the seller is unwilling to share any reasonably requested document, a buyer will need to evaluate how badly they want the property and if the unknown risks are worth it.
Don’t Hesitate to Ask Questions
Before you sign an offer to purchase a property, it’s important to ask these questions:
- What is the true cost of purchasing this home?
- How much will I have to pay in taxes, insurance and utilities each year?
- What repairs/renovations will need to be done in the short-term?
These are all questions that need answers before moving forward with the purchase and the documents mentioned above can help you verify the cost of each before moving forward. Additionally don’t be shy to ask follow up questions once you have reviewed pertinent documentation. Different parties in negotiations may not be so inviting to your investigations. However, don’t let their unfriendly negotiation tactics dissuade you. You have every right as the buyer to know everything there is to know about the property you are buying.
The inspection clause is also extremely important. The buyer can request an inspection as part of their due diligence before closing on the property.
Reviewing documents before an offer
It is always advisable to review documentation prior to submitting an offer. However, not every seller will agree to provide this information at an early stage. Reviewing documentation prior to submitting an offer will allow you to waive this clause and can make your offer more attractive.
Conclusion
If you have any doubts about a property, don’t hesitate to ask questions. Always make sure that you ask for the documents mentioned above if they are not already available to you. Don’t forget that you are protecting yourself as well as the seller by ensuring that there are no surprises or problems when it comes time for closing.
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