The purchase of a home is the biggest investment most of us will ever make. A real estate closing is a complicated legal process involving the execution of many legal documents which have significant financial implications.
We have compiled some frequently asked questions that our client often ask us to try and reduce this anxiety and make it a positive experience for you.
Should you sell your house before you buy a new one?
The answer to this question depends on the real estate market, your personal finances, and your comfort level taking risks. Either option has its benefits and its drawbacks.
In order to make sure you are making the right decision, Click Here to learn more about the options.
Contact Us in order to discuss which option may be best for you.
What Information must be disclosed to a potential purchaser?
In Ontario it is not mandatory that sellers provide potential purchasers with a Disclosure Statements or a Property Seller Information Statement.
Patent vs. Latent Defects
Patent defects are defects that are discoverable on a superficial inspection of the property by an ordinary purchaser.
A seller does not have an obligation to tell a potential purchaser about patent defects. An example of a patent defect might be a crack in the side of the home or a hole in the living room wall.
Latent defects are hidden, but ought to be discoverable with a home inspection.
A seller is not liable of a latent, defect if they had no knowledge of the defect.
A seller has an obligation to disclose latent defects (hidden defects) such as disclosing if the property is dangerous or likely to be dangerous or unfit for habitation, for example, any mould issues.
A seller must disclose any deficiencies to the purchaser after the Agreement has been signed and prior to the closing date.
If the property is stigmatized, (for example, if there has been a murder, suicide of ghost in the property), the sellers have no obligation to advise potential purchasers.
As a purchaser, you have an obligation to ask as many questions as possible, and complete due diligence on the property prior to signing the Agreement of Purchase and Sale. If it is not in writing it does not exist.
Who is considered a non-resident?
The general rule is that you will be considered a non-resident if you have been living in Canada for less than a total of 183 days in the year or if one has no residence in Canada and customarily lives outside of Canada.
A person who is not a Canadian Citizen will be considered a non-resident of Canada, if he/she normally lives outside of Canada or if he/she lives outside of Canada for more than 183 days in a year. A person who is not a Canadian citizen and is not a landed immigrant, for tax purposes, be considered as a resident if he/she lives in Canada for more than 183 days a year.
For more information about residency/non-residency, see The Canada Revenue Agency website at www.cra.gc.ca or www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html.
Why do I need a real estate lawyer?
Before I started to practice real estate law, I didn't fully appreciate the necessity of real estate lawyers for every real estate transaction.
Real estate layers oversee the process of buying or selling property to ensure the interest and right of clients are preserved. The purchase of a home is one o the biggest investment most of us will ever make. Real estate closing is a complicated legal process involving the execution of many legal documents which have significant financial implications. You want to protect your investment.
First, you want to make sure you are buying what you think you are buying. For example, if whether the basement apartment you were hoping to rent is legal. Second, you want to make sure that you will be able to start any renovation plans that you planned. For example, whether you will be able to tear down a wall or build an extension. This is why it is best to tell your lawyer what you intend to do with the property. These are just a few of the extensive list of issues that a qualified legal professional can help you with. Legal searches are necessary to protect yourself from any unwelcome surprises down the road.
A purchaser’s lawyer goes over the agreement of purchase and sale to make sure the buyer is protected. The lawyer checks title, or chain of ownership of the property, for any problems or liabilities such as liens. All mortgage loan documents and legal papers are verified for the purchaser.
A seller’s lawyer will check the agreement of purchase and sale to protect the seller and address any title issues that arise, arrange for final payoffs for existing loans and prepare the necessary documents to transfer ownership of the property.
As your real estate lawyer, Frost Law, Professional Corporation will examine all of the closing documents on your behalf to make sure your rights are protected.
The guidance of a competent lawyer can make sure this process goes smoothly.
How Should We Take Title to the Property?
In Ontario there are many ways to own real estate. Each with its own benefits and liabilities. When deciding how to take title, it is important to speak with your lawyer to determine which one is right for you.
- Sole Ownership
- Joint Tenancy
- Tenancy In Common
For more information about these types of ownership, Click Here.
Do I need to hire a home inspector?
Unless you are planning on tearing the home down in order to build a new one (this comes with its own set of issues and questions), we always recommend you get a home inspector.
This can be done either prior to making the offer, or as a condition of the offer when you make the offer.
The reasons why it is important to hire a home inspector are discussed Here.
Contact Us in order to discuss which option may be best for you.
Condominium - What happens after I buy a Condominium from a Builder?
Buying a condominium is completely different than buying another type of property. Buying a new condominium has its own considerations. If you have decided to purchase a brand new condominium, either for yourself, a family member, or for investments purposes there are a few things you should know.
When you purchase a new condominium in Ontario from a builder you have 10 days to rescind or cancel your agreement, if you choose to do so. This right to rescission is often called the “cooling off period”.
To learn more about the 10 Day Cooling Off Period Click Here
Condominium - What are Interim Occupancy Fees?
When you purchase a pre-construction condominium from a developer, there is a period of time between when you take possession of the unit and when you take final ownership of the unit. This is known as the “occupancy period” or “interim occupancy”. During this period you will be requested by the developer to pay occupancy fees also known as “phantom rent”.
To learn more about Interim Occupancy Fees Click Here
Do I need to arrange home insurance?
When you purchase a property (that is not a condominium), home insurance is required. You will have to provide your real estaet lawyer with a copy of your home fire insurance binder.
In fact, your institiutal mortage lender will not advance the mortage funds without proof of fire insurance.
While you are obtaining fire insurance coverage, speak with your insurance agent or broker about any other property insurance needs you may have.
If you purchased a condominium, you may want to arrange for content insurance.
What will I have to pay on closing?
At the time of closing of residential purchases of property, many people are often surprised that there are additional closing costs.
These often include title insurance, land transfer tax, legal fees, disbursements, and home insurance. In addition, the final balance owing often has to be adjusted for realty taxes, utilities, or fuel.
When should I contact a lawyer regarding purchasing a home?
When purchasing a home you should contact a lawyer as soon as possible. Once a lawyer is involved, they can start working to protect the purchaser’s interests.
"Buyer Beware" is still the law in Ontario. Be sure to check the home you are planning to buy very carefully. Also insist on the vendor delivering a completed and signed Vendor Disclosure Statement before your offer to buy. In other words, be sure to do your due diligence investigations.
I’ve just hired you to represent me in the purchase of my home. What do you need?
In representing your interests, we'll need the following:
- A copy of the Agreement of Purchase and Sale including all waivers and schedules.
- The full legal name(s), date(s) of birth, current contact information of all people who will be going on title to the property.
- Photo identification of all person(s) who will be going on title.
- The manner in which you wish to take title (ownership) to the property. For example you may take title as Joint Tenants or Tenants in Common.
- The name of the mortgage lender, if there is one.
- It is important to provide Frost Law, Professional Corporation’s contact information to both your real estate agent and mortgage broker or lender as soon as possible.
- Unless the property is a condominium, we will require a copy of the fire insurance binder for the property prior to closing.
- Likely before the date of closing, the purchaser will need to provide the lawyer with sufficient funds to complete the purchase by certified cheque, bank draft or money order. This will include the balance owing to the vendor as well as land transfer tax and any other required adjustments such as property taxes.
Who is eligible for the First Time Home Buyers Land Transfer Tax Refund?
The Ontario Land Transfer Tax is tax is paid by the Purchaser at the date of final closing. The Toronto Land Transfer Tax applies when you purchase a home within the city limits of Toronto, Ontario. You should note that if the property is within the Toronto city limits then the Ontario Land Transfer Tax is also applicable.
To claim a refund, you:
- must be at least 18 years of age;
- must occupy the home as your principal residence within 9 months of the date of transfer; and
- cannot have ever owned a home, or an interest in a home, anywhere in the world.
- your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse; and
- in the case of a newly constructed home, where the agreement of purchase and sale was entered into before December 14, 2007, you must be entitled to a Tarion New Home Warranty.
In Ontario, the maximum amount of the refund is $2,000. If the property is also in Toronto, you can claim an additional the maximum allowable rebate is an additional $3,725.
Learn more about calculating your potential refund and title insurance issues.
Why do I need title insurance?
Title Insurance is a form of indemnity insurance, that insures against financial loss in relation to undetected or unknown title defects, for as long as you own your home. Even if you are the rightful owner of a home, there are instances such as real estate fraud, when your title can come into question. Title insurance continues to protect your ownership from the day of closing to the day you sell your home. Coverage is also extended to heirs who receive your home in the event of your death.
Don’t have an up to date survey? Title Insurance protects against various problems that may have been revealed by an up to date survey of the property.
I am not a Canadian Resident, what happens when I sell my property?
If you are a non-resident of Canada, or will be a non-resident of Canada at the time of closing, it is important that you contact our office as soon as possible.
You will have to apply for a non-residency clearance certificate (through an accountant), and will usually result in 25% of the gross sale price to be held (usually by the seller's lawyer in trust) until the government non-residency clearance certificate has been obtained by the accountant who has filed the appropriate application. This process can take between 60-90 days to process and must be submitted within 10 days of closing to avoid penalties.
Who has to attend your office to sign the closing documents?
Everyone who holds title to the property must attend to sign the closing documents.
If you are married, and title to the property being sold is only in one spouse's name, however, the property is a matrimonial home, both spouses are required to attend our office to sign the transfer as a consenting spouse. In addition, the proceeds from the sale will be made payable to both spouses, unless, we have a signed direction to act otherwise.