Real Estate Purchase

Before choosing a property, you should choose your lawyer:

Purchasing a home is often the largest financial transaction that an individual will be involved in personally during her or his life. It can be very exciting and stressful and there are many things that you should consider when making this enormous financial commitment.

In today's market there are numerous ways that you may find a property that you are interested in purchasing. You may rely on the knowledge and experience of a realtor or you may choose to find a home to purchase through other means. The internet provides a wealth of information in either case.

Once you have found the property that you want to buy you will want to make an offer. Often an offer is made in the form of a draft agreement of purchase and sale and, if you are using a realtor, that offer will likely be made on standard forms provided by the Ontario Real Estate Association (OREA). When an opportunity presents itself, you may feel pressured to act quickly. Therefore, you should have your lawyer ready to respond on short notice.

Before you make an offer you should consult your lawyer:

You may have questions concerning conditions that you may wish to include for your protection. Are you planning on improving or changing the property use? Do you plan on renovations? Putting in a pool? What permits or approvals will you require? Will zoning be a problem? Do you plan to build a new house, or even a second house, on the property in the future? A brief consultation with your lawyer before you make your offer may allow you to walk away from a deal later if you learn that your plans will not be possible. Including conditions in your offer that are appropriate to your situation may save you from being forced to close a deal that ultimately was not what you wanted.

You may have questions concerning the nature of the property. A condominium property may come with rules and conditions that may affect your decision. Are pets allowed? Would you need permission to lease your parking space to someone else if you didn't need it? Cottage properties may come with a host of unexpected restrictions that could prevent you from realizing your dream of an idyllic retreat.

Once your agreement of purchase and sale is signed by both the purchaser and the seller, it is a binding contract.

We can work with your realtor to ensure that your offer is customized to your legal needs. If you do not have a realtor, we can prepare your offer for you. If you are purchasing a new home from a builder, we can help you review the terms of their offer of sale to you (in most cases home builders will have their own comprehensive draft agreements of purchase and sale for use with their customers).

If you choose one of our lawyers to represent you we will ask you to come to our office for an initial meeting. During this meeting we will review our retainer agreement, get to know you, verify your identity as required by Ontario law, discuss the details of your purchase, explain your title insurance options, and answer any questions you may have.

The offer process may result in several counter offers back and forth but at the end there will be a final signed agreement of purchase and sale (the “APS”). When you have a copy of the signed APS in hand you, your realtor, or your builder should provide us with a copy as soon as possible. A real estate deal always proceeds on a series of important dates leading up to the closing day and as soon as the ink from the last signature dries the clock has started.

Next Steps

Next, if you need to arrange financing, you should visit your bank or mortgage broker to arrange the details. Your APS will be conditional upon you obtaining financing if you have brought this requirement to our attention before the APS was signed. Your lender will forward us specific instructions and requirements that need to be satisfied before your closing date.

If you are depending on the proceeds of sale of your old home to contribute to the purchase of your new property we strongly recommend that you contact your mortgage professional to setup bridge financing. Real estate deals (such as your sale) can be subject to unexpected delays outside of your control.

If you are re-financing another property in order to purchase your new property please inform us as soon as possible. Your bank will require us to take additional steps to ensure that your other property can be mortgaged to provide adequate security. Unlike in situations where you are giving a mortgage on the property you are purchasing, we will not have researched the old property as a consequence of investigating the quality of title on your new property.

Before the bank advances the mortgage funds, they will require that you have secured adequate insurance for the home you are purchasing. In the event that your new home is lost in circumstances covered by your policy, the bank will be the first loss payee or in other words, the bank will be first in line to have their mortgage loan covered. Once you have finalized your financing you should arrange property insurance and have your insurance provider forward a copy of your insurance binder to our office either by fax or email.

Ensuring you know what you are buying

In a typical APS, time will be provided for the purchaser to investigate the legal aspects of the property through various searches. The primary search is called the title search. The title search looks for various legal issues such as whether your future property is subject to any easements, subdivision agreements, registered by-laws, judgments, liens, or other matters that could affect your ownership of the property. Some of these matters may be dealt with by requiring the vendor resolve them but some of these matters may remain on title.

We will also have an opportunity to make other enquiries such as determining whether property taxes have been kept up-to-date with the municipality.

When purchasing a condominium unit, the APS will usually include a condition for the review of the Status Certificate. This will typically contain a copy of the condominium's most recent budgets, a copy of the declaration and by-laws, a copy of the most recent reserve fund study and the rules and regulations of the condominium. We will review these documents to ensure that the condominium's finances are in order and that there are no unexpected pending costs such as a special assessment that could lead to an unexpected increase in condominium fees.

Transferring Title, Registering Mortgages/Charges, and Title Insurance

Leading up to closing day we will prepare your draft transfer, mortgage documents, and explain your title insurance options. Generally, we recommend title insurance to virtually all of our purchasing clients as a one-time modest expense to insure the transaction. Title insurance can insure you against a wide variety of potential problems that may or may not be discoverable before you purchase your new property such as someone else having some sort of interest in all or part of your property. An additional short term benefit of title insurance is that we may be able to forgo some expensive searches (such as a survey) that would otherwise be required to determine that there will be no underlying problems with your ownership.

We will also exchange documents with the vendor's lawyer to determine the final adjusted purchase funds required and what promises (undertakings) will be required to tidy up loose ends after closing. The final adjusted purchase amount is determined by factoring in deposits, prorated yearly property taxes, HST rebates in new home purchases, prorated condominium fees, et cetera. Once we determine the amount required, you will be required to provide those funds to us in advance so that we may provide certified funds to the vendor.

On closing day we will exchange keys and funds with the vendor's lawyer, register the transfer of the property to you, calculate and remit provincial land transfer tax on your behalf, and register any mortgages required.

Once the transaction has closed our job is still not done. You will receive our closing package including our reporting letter and all relevant documents for your records. We will also complete a final report for your bank. Finally, we will follow up on any promises made by either side of the transaction such as ensuring that the previous owner's mortgage/charge has been discharged (removed from title).

Helpful Links:

Calculating Land Transfer Tax

Land Transfer Tax Refund for First-time Homebuyers

Canada Mortgage and Housing Corporation (CMHC)

TitlePlus Real Simple Real Estate Guide™

Tarion New Home Warranty

Ontario New Home Warranties Plan Act