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

When You Need A Lawyer: Selling a House or Condominium

When you decide to sell your home you will need to retain a lawyer to assist you. This article provides information about the sale process and the services I will provide if you retain me to act for you on your sale.

Reviewing your sale agreement

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

• what you are selling,
• the sale price, the deposit and who holds the deposit,
• when your sale 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 purchaser.

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

What is included

The sale will include everything that forms part of the real property, including any equipment or other items that are affixed to the buildings, unless you make exceptions for them. Light fixtures, stained glass windows, built in bookcases etc. are all included. Any fixtures you wish to remove must be specified in the agreement.

Be wary of giving a warranty that appliances and other equipment will be in good working order on closing. If you do and an appliance breaks before the closing, you will have to pay to fix or replace it.

What I will need from you

To complete your sale I will need you to provide me with a copy of any survey of the property in your possession. If there is a mortgage on the property, I will need the details, including the name and address of the lender and the mortgage reference number. I will contact the mortgagee to obtain a discharge statement, showing the precise amount that will be need to be paid from the sale proceeds in order to discharge the mortgage on closing. If you are paying the mortgage off early, you will probably be charged a penalty of three months interest by the lender. The fee for registering the discharge and an administration fee may also be charged.

You will also need to provide me with a copy of your tax bill and details of the amount of the taxes you have paid. The taxes will be adjusted on closing so that you pay a proportion based on the number of days of the calendar year you have owned the property and the purchaser pays the balance. You will need to inform me if there are other adjustments to be made, such as alarm system fees, equipment rental charges, common expenses (for condominiums) or rent from tenants of the property.

Tenancies

If you have rented part or all of the property to tenants, you must comply with the Residential Tenancies Act. Selling your house is not a valid reason for terminating a tenancy unless the purchaser or a member of the purchaser’s family wishes to occupy the property. In this situation, you must give notice of termination on behalf of the purchaser after the agreement is signed. The length of notice is usually 60 days prior to the end of a tenancy period (the month end for a monthly lease and the year end for a yearly lease) but depends on the lease term. It is very important to comply with the law as the tenant does not have to move out if proper notice is not given.

Completing the sale

You will need to contact the local utilities to arrange meter readings or call in the meter readings on the day of or the day before the closing date. You should keep your house insurance in place until I advise you that the sale has closed.

A few days before the closing I will ask you to come to my office to sign the closing documents. At that time you will need to bring me a house key. All other keys in your possession, including garage openers, passcards for condominium buildings etc., should be locked in the house or unit when you leave it for the last time.

When you come to my office to sign the closing documents you will need to bring an identification document, such as your driver’s licence or passport, unless I have previously acted for you and have seen your identification at that time. The Law Society requires me to verify your identity before completing the sale transaction for you.

You will be expected to sign undertakings to pay the taxes and utilities up to the date of the closing, an affidavit confirming that you are not a non-resident of Canada, a warranty that you have not caused the buildings to be insulated with ureaformaldehyde insulation, a statement confirming that the sale is exempt from GST as the sale of a used residential property and a declaration of possession, as well as the deed and other sale documents. If any documents are being signed under a power of attorney, a copy will need to be registered on title before the closing.

Once we have received payment of the sale proceeds, we will release the deed to the purchaser for registration. If a mortgage is being discharged, a portion of the sale proceeds will be paid directly to the mortgagee for the amount owing on the mortgage. If your mortgage is a fixed term mortgage, you will likely be charged an interest penalty by your mortgagee unless your closing date is at the end of the term of your mortgage or you are obtaining a new mortgage with the same lender for a house purchase. This penalty is usually an amount equal to three months’ interest but may be higher in certain circumstances. You will need to review the prepayment provisions of your mortgage to determine how the penalty is calculated. If you are obtaining mortgage financing for a purchase with the same lender you should ask your lender to waive the penalty.

Following closing we will mail a cheque to your real estate agent for any balance owing on the commission. The purchaser’s lawyer normally looks after notifying the City and, if applicable, the condominium corporation, of the ownership change.

Access and Inspections

When you complete the vendor’s property information report, be sure that you provide accurate and complete information. Hiding information about defects that you know about may cause serious problems during or after the sale and could allow your purchaser to withdraw from the sale or demand an abatement of the purchase price. If you agree to have work completed before closing be very specific about what is to be done.

If a home inspection is a condition of your sale, you must allow the purchaser and the inspector full access to all areas of your house so that a proper inspection can be completed. You may also need to give the purchaser’s mortgage appraiser access to complete the appraisal. If the sale agreement gives the purchaser the right to visit the house on one or more occasions before closing, you must cooperate in arranging those visits.

You should ensure that the house is vacated, with all garbage removed, no later than late morning on the day of the closing.

Condominiums

After you sign your condominium sale agreement you will need to obtain a “status certificate” for your unit and copies of the financial statements, most recent reserve fund study, budget for the current year and condominium documents (declaration, by-laws, rules and regulations etc.). A fee of $100 is usually payable by the vendor to the condominium corporation for the document package. Your purchaser will have an opportunity to withdraw from the purchase if these documents are unsatisfactory.

Closing Procedures

If you retain me to act for you on your sale, I will delegate some of the tasks described above to my real estate conveyancer and legal assistant. I will oversee your sale 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 issues or problems arise.

If you are selling one house and buying another, it is prudent not to arrange both closings for the same day. Arranging bridge financing so that your purchase can close a few days before the sale will make the sale process much less stressful for both of us and help to ensure that you do not end up homeless.

Please contact me with any questions you may have about selling your house or condominium unit.