What is an APS? Agreement of Purchase and Sale explained

Summary: APS stands for Agreement of Purchase and Sale, the legal contract that sets the terms of a real estate transaction in Ontario, including the purchase price, closing date, deposit, conditions, and what's included in the sale. The standard version is published by the Ontario Real Estate Association (OREA) and used in most deals.

APS stands for Agreement of Purchase and Sale, a legal document that outlines the terms and conditions of a real estate transaction. In Ontario, the standard APS is published by the Ontario Real Estate Association (OREA) and used by most agents, lawyers, and other professionals in buying and selling real estate. This guide focuses on the OREA version, though the structure and purpose apply broadly across the province.

What is an APS in real estate?

An APS is the binding contract between a buyer and seller that sets out every key term of the deal. Once both sides sign, it governs the transaction through to closing, so it pays to understand what's in it before you sign. In practice, the APS starts life as the written offer one party makes to the other; once it's signed and accepted by both sides, that offer becomes the APS that controls the transaction.

APS meaning

APS is short for Agreement of Purchase and Sale. The three letters simply abbreviate the full name of the contract, and you'll hear agents, lawyers, and lenders use "APS" and "the agreement" interchangeably. Whatever it's called, it's the document that records what's being bought and sold, for how much, on what date, and under what conditions, and it's the reference point everyone returns to if a question comes up before closing.

What does the agreement include?

The APS covers the core terms of the transaction: the purchase price, the closing date, the title search date, the deposit, what's included in the sale, and any conditions. The closing date marks the transfer of ownership and sets the deadline for both sides to meet their obligations: the buyer to provide funds, the seller to deliver clear title. If those obligations aren't met by closing, the deal can be delayed or cancelled.

The OREA agreement also requires the buyer to make a deposit when signing, typically at least 5% of the purchase price, though it can be any amount the parties agree to. The deposit is held in trust by the seller's brokerage and applied to the purchase price at closing. If either party defaults, the deposit stays in trust with the brokerage until the parties agree on who receives it.

The agreement also specifies included chattels and excluded fixtures:

What conditions can the agreement contain?

Conditions are requirements that must be met before the sale becomes firm. They aren't part of the standard boilerplate; they're added for the benefit of the buyer or seller. Common buyer conditions include:

1. Financing. The buyer must obtain financing within a set timeframe; if they can't, they may terminate and have the deposit returned, depending on the wording.

2. Home inspection. The buyer can have the property professionally inspected within a set timeframe and renegotiate or terminate if significant issues appear.

3. Review of status certificate (for a condo). The buyer can review and approve the condo's status certificate before committing.

4. Lawyer review. The buyer's lawyer can review the agreement and advise on legal issues before the buyer proceeds.

5. Sale of current property. The buyer must sell their existing home before the purchase can close.

Most conditions carry deadlines. The party who benefits must deliver either a Notice of Fulfilment or a Waiver on or before the deadline, or the agreement is void, so tracking these dates matters. In a hot market a buyer may be tempted to make an offer without some conditions; consider carefully whether you're prepared to fully commit before doing so.

What does the title search clause cover?

The APS sets out the terms for title searches and any defects on title. A title search confirms the seller has clear ownership and that there are no outstanding liens, encumbrances, or restrictions that would block the transfer.

The agreement usually includes a "clear title condition" requiring the seller to provide clear title at closing. If the search reveals a defect, the seller is typically required to fix it before closing, or the buyer may terminate and have the deposit returned. The APS also lists what the buyer agrees to accept as permitted defects, such as easements, covenants, restrictions, and zoning bylaws. For more on this step, see our guide to title searches.

Can the agreement be amended?

Yes. The APS is binding, but it can be amended if both parties agree. Any change to the original agreement must be agreed to and initialled by both parties to be valid. Don't count on the other side agreeing to amend later; decide what you need in the original agreement before you sign.

Who should draft or review the agreement?

It's common for a real estate agent, rather than a lawyer, to draft the APS, and that can create issues. Agents are knowledgeable about the market but aren't legal professionals, and may not be familiar with every law, regulation, and standard that applies, which can lead to errors or omissions. It's important to have a lawyer help interpret and explain any legal language or complex clauses before you sign. For a sense of the other documents you'll encounter, see what documents you'll sign when you purchase a property.

Frequently asked questions

What does APS stand for in real estate?

APS stands for Agreement of Purchase and Sale. It's the written contract between a buyer and seller that sets out the price, closing date, deposit, conditions, and what's included in an Ontario real estate transaction.

Is an Agreement of Purchase and Sale legally binding?

Yes. Once both parties sign, the APS is a binding contract that governs the transaction. Any later change must be agreed to and initialled by both parties.

How much is the deposit on an APS in Ontario?

On the OREA standard form the deposit is typically at least 5% of the purchase price, but it can be any amount the parties agree to. It's held in trust by the seller's brokerage and credited to the price at closing.

What's the difference between chattels and fixtures?

Fixtures are permanently attached to the property (built-in appliances, hard-wired lights) and usually stay; chattels are not attached (freestanding appliances, furniture) and usually go. Either can be reassigned by specifying it in the agreement.

Can I add conditions to protect myself?

Yes. Common buyer conditions include financing, home inspection, status certificate review, lawyer review, and the sale of your current home. Each carries a deadline you must meet to keep the protection.

Can I back out after signing the agreement?

Only if a condition lets you (for example, financing or inspection isn't satisfied within its deadline). Walking away from a firm deal with no conditions can mean losing your deposit, so review the agreement with a lawyer before signing.

About the author

Benjamin Berry is a co-founder and principal lawyer at Ownright. He works on Ontario residential real estate transactions and writes to make the documents and steps of buying and selling a home clear for the people going through them.

At Ownright, we focus entirely on Ontario residential real estate law. We help buyers and sellers with purchase closings, sales, refinancing, and status certificate reviews, pairing a digital platform that tracks every milestone with an in-house legal team you can reach by chat, email, or video call, including help reviewing your agreement before you sign. You can start your closing online or get in touch with any questions.

Important note: This article is not legal advice. No one should act, or refrain from acting, based solely on the information in this post or any linked materials without first seeking appropriate legal or professional advice.