Is a Verbal Agreement to Buy Land Enforceable in Alberta?

You agreed on a price with a seller, shook hands, and maybe even paid something. Nothing was signed. Now you want to know whether either of you is actually bound.

Land is treated differently from everyday purchases. This article explains in plain terms why writing matters, what a proper contract normally contains, and what steps make sense if you are in this position. Whether a particular handshake deal can be enforced turns on the specific facts, and a lawyer can confirm.

This article covers the law of Alberta.

Why land deals are different

Land is usually the biggest asset a person owns, and the terms of a sale are detailed: the exact property, the price, the deposit, the conditions and the dates. That is why land sales are normally recorded in a signed written contract rather than left to memory.

Whether a particular handshake deal can be enforced depends on what was said, what was done afterwards, and what evidence exists. That is a question to put to a lawyer before you rely on, or walk away from, the arrangement. Alberta government guidance also notes that buyers may have a lawyer review the agreement before signing.

What a written purchase contract normally covers

Alberta government guidance says a standard contract is used for residential purchases, and it sets out the buyer, seller, property details and financing terms, including the deposit amount. It is also not unusual for the contract to include a home inspection as a condition.

Having those terms on paper protects both sides. If something is missing from a verbal deal, such as the deposit, the conditions or the closing dates, each person may remember the deal differently.

• The names of the buyer and seller.
• A clear description of the property.
• The price and the deposit amount.
• Financing terms.
• Conditions, such as an inspection.
• Dates for closing and moving in.

Money paid on a handshake deal

If you handed over a deposit, how it was held matters. A brokerage must put trust money in a trust account, and it may pay it out only under written terms of the trust agreed to by all parties. A licensee must also sign a service agreement before receiving money that sets out how the money will be received, held and disbursed.

If the money went directly to a seller or to a private individual, those protections may not be in place. For a new home bought from a builder, a buyer who paid a deposit to the builder may register a caveat on the land title to protect it. Whether that fits your situation is worth confirming with a lawyer.

For a new condominium unit bought from a developer, the developer must hold the purchaser's money (other than rents or security deposits) in trust until title is issued.

Time limits for a dispute

If a deal goes wrong, a claim for breach of a purchase contract, or for return of a deposit, must generally be brought within 2 years after the claimant first knew, or ought to have known, of it, or 10 years after the claim arose, whichever expires first. Other provisions can affect a particular claim, so the facts matter.

With a verbal agreement, delay is especially risky, because memories fade and messages get deleted.

What to do next

• Write down what was agreed, when, and who was present, while it is fresh.
• Save every text, email, receipt, cheque image and bank record connected to the deal.
• Do not move in, spend money on the property or sign anything new until you understand your position.
• If a deposit was paid, ask in writing who holds it and on what terms.
• Ask a lawyer whether the deal can be enforced, and whether to sign a proper contract now. Buyers may have a lawyer review the agreement before signing.

Frequently asked questions