Real Estate
Buying a Home
Buying a home is probably the most significant investment you will ever make. From the time you submit your offer to purchase to the day you pick up the keys, you need the advice and assistance of an experienced lawyer. Galbraith Law is there to help.
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Offer to Purchase for Buyers
The first step in buying a home is submitting the offer to purchase. This document is called a "Real Estate Purchase Contract". Your real estate agent will help you prepare and submit the offer. Ask your realtor if you have any questions about your offer. Once your offer is accepted, it is a legal contract, and you are bound by all the terms. Remember - i f it’s not in writing, it’s not part of the Offer.
After the offer is submitted and the deposit is paid, take steps to deal with many of the issues that arise well in advance of the closing or possession date. It is usually your responsibility to arrange for insurance and utility hook-ups. Make sure you can get insurance for your new home. We have seen several cases in the past couple of years where a buyer could not get fire insurance either because the house was too old or too remote.
You also need to make sure all your financing arrangements are in place. If you are obtaining a mortgage, the lender will need time to prepare and issue mortgage instructions. If you are cashing in investments, it often takes several days or more to process the transaction. If you are selling a home at the same time as buying a new one, many timing issues and complications can arise. Often, you will need the money for your purchase before you receive the money from your sale. Talk to your realtor, your banker and us well in advance to ensure that any complications are addressed. For example, you may need to obtain interim or bridge financing.
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How Can We Help?
After the Offer of Purchase and Sale has been accepted, the bulk of your lawyer’s work begins.
We start by checking the taxes and the property description. We do a search at Land Titles to ensure that there are no registrations against the title that affect your ownership. We also search the Personal Property Registry to ensure that any freestanding items that you may be purchasing such as appliances are free and clear and to ensure that there are no outstanding judgments against any of the parties that may interfere with closing.
Then we do a full search of title. Should we find anything unusual or unexpected we will contact you. The vast majority of encumbrances on title will not interfere with your use and enjoyment of the property. Utility right-of-ways, restrictive covenants and easements are typically encountered.
Please ask us for a full explanation of any of these encumbrances and how they can affect your ownership. For example, should you build a garage on top of a utility right-of-way you may be faced with a costly task when the utility company needs to access the utility line and substantially damages your garage in the process. Since you built your garage on top of the utility right-of-way you will have to pay for all the repairs to your garage and the extra costs the utility company may incur as a result of the presence of your garage.
Galbraith Law will prepare all the necessary purchase and mortgage documents. We are authorized to prepare and register mortgages on behalf of all the major financial institutions.
We will arrange to discharge any mortgages or liens, advise you of any problems, attend to registration of the property in your name and requisition and pay the purchase money. We will confirm that registration has been properly completed as you have requested. We will contact the vendor’s lawyer and ensure that keys are released to you.
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The Closing
After the closing, we will ensure that any outstanding encumbrances are discharged from title. For example, it can often take several weeks for the vendor’s lawyer to obtain a discharge of their mortgage and register it at Land Titles. We will also attend to any other unfinished matters such as the registration of encroachment agreements or the fulfillment of outstanding conditions. Our job is not finished until all these loose ends are completed.
Finally we will provide you with a complete written report with copies of all relevant documents to show that you have good title to the property.
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Selling a Home
Selling your home is an important event involving thousands or even hundreds of thousands of dollars. With that much money involved, you want to be sure everything goes smoothly and according to plan. Fortunately, Galbraith Law is there to help.
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Offer to Purchase for Sellers
Review any offer you receive in detail with your realtor. Only sign or accept the offer when you are satisfied with its contents. Make sure you understand all of your obligations. Make sure the purchaser has provided a substantial deposit.
If you are selling a house, you will likely need to provide a Real Property Report and evidence that your home complies with all municipal zoning by-laws. Obtain the Real Property Report well in advance of closing. If there are any problems such as missing development permits or an accessory building built on top of a utility right-of-way they can sometimes take several weeks to solve. If not solved in advance, they can delay the closing or result in some portion of the sale price being held until the problem is solved.
If you are selling a condominium, you will likely need to provide a complete set of condominium documents. This includes a set of the latest financial statements, minutes from recent board meetings, minutes from the Annual General Meeting, a copy of the reserve fund study and a copy of the bylaws.
You must disclose any financial encumbrances that will remain on the title on closing. You must also disclose any "hidden" defects or problems with the property or buildings that could not be reasonably discovered by inspection. Make sure you amend the contract to fully disclose the state of the title and the property and exactly what you will provide.
Make sure that you understand any conditions the purchaser attaches to their offer. If the offer is "subject to mortgage approval" then you have not really sold your house until the purchaser obtains mortgage approval. Similarly, if the offer is subject to an inspection there is no sale until the inspection is complete. Conditions such as these should expire or the purchaser should remove them well before the closing date whenever possible.
Should the purchaser offer to assume your mortgage, make sure that you understand the possible consequences. If you have a CMHC mortgage you will likely remain personally liable to the mortgage holder even after the property is sold. If the new buyer obtains approval from CMHC then you can be released from any further liability. Many lenders are insisting that a new buyer be approved before allowing an assumption of the mortgage. Failure to do so can result in the lender launching foreclosure action after the transfer is complete.
Any items firmly attached to the property must remain with the property. This includes things such as light fixtures, appliances or valances. Make sure you list in the contract those items you plan to take.
Remember, you are responsible for canceling your insurance and utilities.
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Conditions
What happens after offer is accepted
Once you accept the offer and provide a copy to us, we conduct several searches. We obtain a copy of title from the Land Titles Office. We do a property tax search at the local municipal taxing office. We search Personal Property Registry to ensure that there are no encumbrances registered against any of the items you are selling such as appliances. If any of the searches disclose a problem we contact you to discuss their resolution before closing.
Next, we attend to all the paperwork. We prepare the transfer, statement of adjustments, undertakings, and various title documents. If there are mortgages or liens on your property, we will obtain payout statements and review them with you. We then handle everything required to discharge these so that clear title is given to the purchaser of your home. Should problems arise, we advise you and take the necessary corrective measures.
If you are planning to use your sale proceeds to purchase a new home, make sure you tell us well in advance. You must also plan carefully if both your sale and your purchase overlap or happen within a couple of days of each other. You may have to arrange interim financing or make other arrangements to ensure that the correct money is in the correct place at the correct time.
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Receiving the Purchase Money
We will receive the purchase money on your behalf and then present a cheque to you. Money covering the following items will be deducted: any realty commissions still owing, the amounts required to discharge liens or mortgages on your property, any adjustments (taxes, etc.), and our legal fees. If you are using the sale proceeds to buy a new home, we will transfer funds for use in the purchase.
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Commercial or Rental Property
Special considerations apply to commercial or rental property. Mortgage qualifying and the placement of a new mortgage are based on factors such as income from the specific property as well as the usual qualifications. A larger down payment is typically required.
Tax considerations are important in this area. The allocation between the price paid for the building (a depreciable asset) and the land (a non-depreciable asset) has a significant tax impact. GST is typically payable and is not usually included in the stated selling price.
Financial Statements should be reviewed. Pay special attention to the budget for capital items such as the replacement of the roof or heating system. These are important clues to the state of repair and standard of maintenance.
Adjustments for advance rent, damage deposits and interest earned on damage deposits must also be addressed. Existing leases must be reviewed and verified. Any tenants that are remaining will need to be contacted and arrangements made to transfer any leases to the new owner.
Galbraith Law can assist you with all aspects of the purchase of a rental or commercial property. Contact us early in the process so that we can provide you with timely advice and avoid unnecessary problems at the eleventh hour.
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New Mortgage
Many people find it necessary to place a new mortgage that is not part of a real estate purchase. For example, many people are using the equity in their home to obtain a personal line of credit at a very low interest rate secured with a mortgage against their home. This can then be used for investments or to pay for home renovations, help to purchase a new vehicle or simply for emergency or unforeseen purposes.
Financial institutions are now more competitive in their quest to obtain your mortgage business. This will often result in the transfer of a mortgage to a new financial institution. This may require the placement of a new mortgage.
People will sometimes transfer a mortgage for business or tax purposes. A mortgage interest payment for a mortgage on a rental property or for a loan that is used for investment or business purposes is fully tax deductible while interest payments on a mortgage on your personal residence are not tax deductible.
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Commercial Lease
Modern commercial leases are long complex documents full of potential traps and pitfalls. Unlike residential leases where the terms are largely restricted by legislation, a commercial lease can contain a broad package of rights and remedies. Failure to include or exclude important terms at the outset can cause major problems when a dispute arises. Whether you require the preparation of a new lease or review of a proposed lease, contact us.
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For further information call one of our friendly staff at 780.483.6111 or toll free at 866.483.6111 or click here to send us an e-mail. |
