What needs to be included in the preliminary contract?

The preliminary contract is an important step in any purchase of new or a property to be built.  At all times, the unequivocal will for the buyer to acquire the property must be registered.  Although the Civil Code of Quebec specifies the mandatory content of a preliminary contract, the statements contained therein are not exhaustive.  To be valid, the preliminary contract must include a certain number of mandatory information, under penalty of nullity. It is also possible to insert various optional clauses in this contract to deepen the conditions of this one. 

Content

Essentially, the preliminary contract should include the following information:

Information about the parties

• Contact details of the seller and the buyer (name and address);

Information about private portions

• Description of the apartment (address and cadastral description);
• Description of the materials used and the elements of equipment;
• Identification (if any) of the private parking and storage portions, and their cadastral description;
• Superficial area of the private portions;
• Identification and the ID number (if applicable) of the parking and storage space(s) allocated as (a)common portion(s) for restricted use;

Sales Information

• Agreed sale price of the unit(s) and conditions of revision:
• Terms of payments;
• Amount(s) of any deposit(s);
• Whether or not the buyer intends  to request a hypothecary loan to finance the purchase, as well as the data relating to this financing;
• Furniture or items that are included in the purchase price (e.g., appliances, curtains and lighting);
• Rented devices or apparatus;
•  Conditions suspending the contract, in particular that relating to obtaining a loan (if the price is to be paid with the help of a loan);
• Date of taking possession of the unit;
• Date scheduled for the signing of the deed of sale;
• Actual damage to the building (if applicable);
• Useful information relating to the characteristics of the immovable;
• Name of the notary before which the deed of sale is to be signed;
• Valid duration of the preliminary contract, i.e. the date and time from which it becomes null and void;
• Stipulation in which the promisor-buyer can withdraw (right of withdrawal) from the preliminary contract and the compensation to be paid if necessary;

The preliminary contract also indicates the work that the buyer may reserve for himself.

Adhesion contract

If it is written on a pre-established form, and completed by the promoter after the essential conditions (choice of unit, finishing options, total price and down payments) have been agreed, the preliminary contract constitutes an adhesion contract. Article 1437 of the Civil Code of Quebec allows courts to refuse to give effect to the clause of a similar contract that confers an excessive or unreasonable advantage on its drafter. Recall that the unfair term of an adhesion contract is null and void or the resulting obligation, reducible. Any term that disadvantages the promisor-buyer in an excessive and unreasonable manner is unfair, thus going against what good faith requires. However, this type of contract usually includes on the back general conditions stipulated in small print and which are often ignored or misunderstood by buyers.

 WHAT YOU SHOULD KNOW! The agency, la Garantie de construction résidentielle (GCR) (the Residential Construction Guarantee), has adopted a preliminary contract form for the use of purchasers of “on plan” properties. It is in the best interest of consumers to request its use by the developer, as this document includes all the necessary protections.

WHAT TO KEEP IN MIND: A promisor-purchaser should always take the time to read and understand the entire preliminary contract, have obtained and consulted all the documentation to which he is entitled, including the information note, before signing.

WARNING! Once you've signed, there's almost no room left for negotiation. The signing of the parties formalizes the promoter's promise to sell and your promise to buy. 

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