A. Beth Moore, B.A., LL.B.

When You Need A Lawyer: Buying a House or Condominium

Buying a house may be the biggest investment you make in your life. As your lawyer I provide a number of services for your purchase:

Reviewing your purchase agreement

Your agreement of purchase and sale is a legal contract. It sets out:

• what you are buying,
• how much you are paying and who holds your deposit,
• when your purchase will be completed,
• the conditions (e.g. financing, home inspection) to be satisfied before the contract becomes binding, and
• any special arrangements between you and the seller.

It is prudent to have it reviewed by your lawyer before it becomes final.

Checking the title to your property

Once your agreement is finalized I will conduct a title search which will tell us:

• the names of the registered owners of the property - if the seller in your agreement does not match the names of the owners on title a correction will be needed
• whether the title is subject to mortgages or other liens - these will need to be discharged on closing
• whether the property is subject to utility easements, a mutual drive or other rights or restrictions that may affect its use, and
• whether there are unsatisfied judgments against the seller or persons with similar names to be dealt with before closing so that they do not form a lien against title to your property.

Other searches and title requisitions

To ensure that you receive a good title, I will write to the seller’s lawyer setting out the title issues to be dealt with prior to closing.

Other searches that I may carry out depending on the situation, your instructions and whether you are buying title insurance, include:

• a tax certificate to confirm the amount of the property taxes and any arrears
• the zoning of the property and whether there are outstanding work orders
• searches specific to rental properties.

If a survey showing the existing fences and buildings is available I will review it to see if it shows that there are any encroachments. If an up-to-date survey is not available and you are considering making major renovations or there appear to be any ambiguities about the boundaries of your property, I may recommend that you have a new survey prepared.

Preparing the deed/transfer of land

If you and your spouse or another person are buying the property together, you will need to decide whether to take title as:

• joint tenants - if one of you dies, the other becomes the sole property owner
• tenants-in-common - if an owner dies his/her share of the property passes to his/her heirs by Will or intestacy.

Your full names and birthdates and an address for service must be set out in the deed.

Reviewing the statement of adjustments

The Statement of Adjustments shows amounts, such as municipal realty taxes and rent from tenants, that need to be adjusted based on the number of days in the current year that the seller and you each own the property.

Preparing your mortgage documents

Your mortgage arrangements should be finalized several weeks before closing. If your mortgage is with a bank or trust company and you and the lender both consent, I can act for both you and your lender. If I am acting for both you and the lender, I have solicitor-client obligations to both of you. Information that you provide to me cannot be kept confidential to your lender and vice versa.

If your mortgage is with a financial institution such as a bank, trust company or credit union and more than 75% of the purchase price of your property is being financed by the mortgage, you will be charged a premium for NHA mortgage insurance equal to 2.5% of the principal amount of your mortgage. This insurance protects the lender if you default but does not relieve you of the obligation to repay your mortgage in full. The amount of the insurance premium plus sales taxes is added to your mortgage. The lender may also charge administration and appraisal fees.

Your lender will send me detailed mortgage instructions. I will prepare the mortgage documents. On the closing day, your lender will advance the mortgage funds to me, either by depositing them into my trust account or by issuing a cheque to my law firm in trust. You must arrange house insurance coverage, which covers both you and your mortgage lender, before the closing. If you are buying a condominium unit, the building insurance will be provided by the condominium corporation but you must obtain a condominium owner’s package which covers the contents of your unit and your liability as a unit owner.

Completing the sale

A few days before the closing you will need to come to my office to sign the closing documents. At that time you will need to bring a certified cheque or bank draft for:

• the balance due on closing (including adjustments) less your deposit and mortgage funds
• my fees and estimated disbursements
• land transfer tax (provincial and City of Toronto if your property is in Toronto)
• your title insurance premium.

Also required are two pieces of identification including a government issued picture ID such as a driver’s licence or passport (health cards are not acceptable) and other identification such as a SIN card, birth certificate, major credit card etc.

On the closing day I will send the signed documents and closing funds to the seller’s lawyer and he/she will send me the seller’s documents and keys, which I can release to you once your deed is registered.

Condominiums

Buying a condominium involves special considerations. Once the purchase agreement is signed, you or your lawyer will be sent the “status certificate” for your unit and copies of the condominium’s by-laws, declarations, budget and most recent reserve fund study. You must review these with your lawyer and decide if you want to go ahead with your purchase. Since you will only have a few days to do this, do not delay.

Buying a newly built home

When you buy a newly built home you should expect the following:

• delays in the closing date - closings are frequently delayed by a year or more
• substantial deposits, often paid in instalments over six months or more
• adjustments for costs such as the Tarion new home warranty fee, upgrades, utility meter connections, landscaping, tree planting, driveway paving etc. They will cost you $1,000s over and above your purchase price
• GST (HST after July 1, 2010) (net of any rebate to be assigned to the developer) will be included in the purchase price
• for warranty purposes you must inspect the house prior to closing and indentify all deficiencies and incomplete items.

If you are purchasing a new condominium unit, you will likely have an occupancy closing and a final closing. The occupancy closing takes place when the unit is ready for occupancy before the condominium project has been registered on title. You will pay your down payment at the time of the occupancy closing and will then pay what is essentially a rental equal to the costs of financing the balance of the purchase price until the project has been registered and the final closing can take place. The monthly payments you pay during the occupancy period are not applied to your mortgage. If you are able to pay the full purchase price at the time of the occupancy closing you will save yourself the cost of these monthly payments. However, your mortgage cannot be registered on title until the condominium project has been registered so you will not have the funds to pay the full purchase price if you are mortgaging the unit to finance your purchase.

Always ask that your new home purchase agreement be conditional on review by your lawyer. I will review the adjustments and may be able to help you negotiate some limits on them. I will also explain how the closing delay provisions and the GST rebate work.

Closing Procedures

If you retain me to act for you on your purchase, I will delegate some of the tasks described above to my real estate conveyancer and legal assistant. I will oversee your purchase and you may contact me at any time with your questions. I will meet with you when you come to my office to sign the closing documents and will contact you if any unusual title issues arise.

I will expect you to respond promptly to my requests for information and to finalize your mortgage and insurance arrangements well in advance of closing. You will also need to contact the local utilities to set up accounts.

My office will notify the tax office and, if applicable, your condominium corporation, of the change of owners after closing.

Please contact me if you have questions about buying a home. By working together we can make your home purchase go smoothly.