When you make the decision to sell your home, you are doing so with the benefit of the experience of home ownership. Still, a home sale is a very significant transaction, so often tied to your plans for the future. You may be selling so that you can upgrade to meet the needs of your growing family or facilitating a work relocation. You may be downsizing for retirement. In any case, this is a transaction that you will want to happen smoothly so that your plans for the future can become a reality.
What will we do for you?
REAL ESTATE - SELLING A HOME
As your lawyers in a sale transaction we will:
- receive and review the agreement of purchase and sale, including all conditions and warranties
- respond to title requisitions of the purchaser’s legal counsel
- draft closing documentation including the statement of adjustments
- preparation of electronic documentation for registration of the transaction when funds are received
- contact your mortgage lender(s) to obtain payout figures and discharge statements for any outstanding mortgages
- assist you in negotiation of issues which may arise with the purchasers
- attend on management of the transaction finances, ascertaining that all funds are in certified form and duly received before the transfer takes place
- attending to all required payouts, including mortgages to be discharged, any tax and utility arrears discovered by purchasers’ counsel, real estate commission balance, payouts required by your mortgage lender, etc.
When you sell a property, it is very important to consider its condition and what you are telling the buyer about its condition. If a reasonable buyer could discover a defect (something that is not working or detracts from the value of the property) on reasonable inspection, lawyers term that issue a “patent defect”. With respect to these patent defects, the rule is “Buyer Beware” and if the agreement of purchase and sale says nothing about the defect concerned, the buyer is bound to accept the property subject to the readily apparent issue.
However, some issues are not so readily apparent. Perhaps there is a violation of electrical or plumbing standards concealed behind drywall. These defects would not likely be found by a reasonable inspection before purchase. Sometimes even a home inspection is incapable of discovering the problem. These are called “latent defects”. The law is clear that if a vendor knows about a latent defect but fails to disclose it to a potential purchaser, the vendor may be held responsible.
Of course, these are terms of art and different interpretations can lead to litigation and other unhappy and unexpected events in your transaction. What should you do to avoid this?
If you are aware of an issue with the home (especially a latent defect), declare the concern to the purchaser or purchaser’s agent while the agreement is being negotiated. Insist on a recital in the agreement. Doing so at the front end, when the buyer is motivated, excited to buy and more accepting of minor problems, is much easier than explaining and negotiating those same problems 24 hours before closing!
Sometimes in the negotiation of an agreement of purchase, some aspects of the property present certain questions. Perhaps the agreement is being negotiated in December and there is no way to tell whether the swimming pool is in good condition until the spring. As such, a common warranty to be included in the agreement of purchase and sale would be that the equipment, appliance or item “will be in good working order at the date of closing” or in the case of a pool, “will be in good working order at the date that it is intended to be opened”. This sort of warranty does not ascertain that the equipment or thing is in new condition but does give the buyer confidence that the items will work when the property changes hands.
Problems do arise, however, on the issue of when the item ceased to work. Vendors should review each item conveyed with the property to ensure that each item works before closing. Upon possession, buyers should likewise look at and test each individual item at their pre-closing inspection and immediately after closing, even before moving in. If the item is not working as was promised, some compensation may be in order.
Properties sold are often subject to mortgages which must be discharged. Acting for you as the vendor, we will contact your mortgage lender to obtain a payout statement, inclusive of all outstanding principal amounts, interest, fees or penalties for early prepayment. To do so, we will need the name and /or branch of the lending institution concerned and your mortgage account number. You can usually find this information on your annual account statement or in your original account information.
Be aware that institutions may waive early prepayment penalties or other fees associated to mortgage discharges if you are taking a new mortgage with the same institution. In your discussions with the bank or mortgage broker, be sure ask for and obtain the bank’s commitment to waive these penalties and/or fees.
As the outgoing vendor, your utility providers will need to read your meter on the date of closing, to make sure you are responsible for charges up to the closing date, while the incoming purchaser is responsible for utilities after taking possession. Delay in reading your metre could result in charges being applied to your account which don’t belong to you. To avoid this, contact your individual utility providers well in advance of your closing date and request the metres to be read.
You must keep insurance on the premises until closing on the date the transaction is completed. If, for some reason the deal is delayed and not completed on the scheduled date, don’t forget to contact your insurer or broker to reinstate the insurance, providing the new closing date to potentially avoid a devastating coverage cap.
Answering Title Requisitions
Part of our role as your counsel is to address title requisitions brought by Purchasers counsel. Each requisition must be reviewed on its own merit, to determine its validity and timeliness and we will, at all times, protect your interests as our vendor client.
Statement of Adjustments
In negotiation of your deal, you will remember the process of determining the purchase price well. However, in addition to an adjustment of the purchase price to acknowledge the purchaser’s deposit, the purchase price is almost always subject to reasonable adjustments to deal with apportionment of property taxes, condo fees (where applicable), fuel oil charges, etc. between the vendor and the purchaser. We will fully explain these adjustments at our pre-closing meeting and will make this statement available to you so you can plan your transaction.
To assist you in the drafting of the statement of adjustments, we require some information from you, including the amount of taxes for the year and the amount you have paid so far in the present calendar year. Generally, this information is available on municipal tax
invoices. If you are closing a deal at a point in the year when final taxes have not been established, we will work on the basis of the previous year’s final tax numbers and incorporate an estimated increase in our final tax adjustments.
Whether you are buying or selling, we assemble a closing package for you which will contain our opinion letter and a summary of the financial breakdown of the transaction. This package will also contain copies of important documentation which forms a record of the transaction for your files.
A Note on Bridge Financing
Most often, when a client is trading one home for another, the equity in the first home is required to finance the new purchase. This presents a difficulty, inclining clients to sell their current home
on the same day they are purchasing their new place. This can work but it can also be very stressful. If for some reason, your sale is delayed, your purchase will inevitably be delayed. Moreover, you can’t buy until you have money from your sale, but through no fault of you or your lawyer, the details of your sale may not come together, jeopardizing your new home and your move.
The answer to this common dilemma is Bridge Financing. When you are purchasing a new home, upgrading one for another or downsizing, it is most convenient to fix your closing date for your sale to a date after your purchase will be completed. In doing so, you will have a place to live as you prepare to occupy the new property, including cleaning, painting, renovating or moving, before all of the space is encumbered by furniture, etc. Further, on the closing day of your purchase, we will not have to wait for completion of your sale to close your transaction and provide you with keys. If you are selling your present home and buying a new one, be sure to ask your mortgage lender whether bridge financing is right for you.
REAL ESTATE - BUYING A HOME
Your home may be the single most expensive purchase you make in your lifetime. A careful eye and a cautious approach are your best weapons. We recommend that you make your offer conditional on an inspection by a qualified home inspector. If you are suspicious, ask the Seller for a warranty. It is difficult and sometimes impossible to get a Seller to assume financial responsibility for problems which you did not notice prior to closing, unless the Seller has deliberately misled you.
What will we do for you?
The role of your lawyer is to ensure that you obtain the land which you intend to buy, free of any debts or other encumbrances. If you are arranging a mortgage with a financial institution, a full certification of title from a lawyer will be required.
When we act as your legal counsel, we conduct a search of title to ensure that you do not become liable for someone else’s arrears and we search those who have owned the house before you to make sure that there are no judgments which would affect your property.
We prepare all the necessary documents to complete your purchase and finalize the transaction through the registry office.
When should you talk to us?
The best time to talk to your lawyer about a house purchase is BEFORE you sign the offer. We do not charge for this service which can be invaluable in dealing with potential problems.
What does it cost?
Like any product, legal services in real estate vary from lawyer to lawyer. For something this important, you should use someone that you trust, with experience in the area. Most lawyers are prepared to be competitive but you should hire the lawyer with whom you are most comfortable and negotiate a price. Make sure that the quote includes all fees, disbursements, title insurance and HST. KEEP IN MIND THAT A FEW DOLLARS SAVINGS MAY NOT BE WORTH YOUR PEACE OF MIND. In legal services, the right balance between cost and quality is absolutely crucial to your experience as a home buyer. Contact us for a quote and we will explain everything!
All financial institutions require a survey which is no more than 10 years old to finance your purchase. Title insurance, among other things, replaces this requirement and the premium you will pay is a small fraction of the cost of a new survey and standard “off-title” searches. Title insurance is generally acceptable to lenders in lieu of an up-to-date survey. Here are some of the covered title risks for residential properties:
- someone else owns an interest in your title
- existing liens against the title
- Violations of municipal zoning bylaws
- encroachments onto an adjoining property (other than fences and boundary walls)
- setback violations
- realty tax arrears
- outstanding municipal utility charges (providing such charges for a lien on title)
- existing work orders
- lack of legal access to the property
- un-marketability of the land due to adverse matters which would have been revealed by an up-to-date survey
- fraud, forgery and false impersonation to the extent they affect the validity of title
First Time Home Buyer?
If all parties to a purchase are first time home buyers, you may be eligible for a Land Transfer Tax rebate. Make sure you mention that you are a first-time buyer when you decide to contact us.
It’s the responsibility of the Buyer and Seller to notify all utility companies providing service to the property as privacy legislation means we are no longer able to arrange final readings on your behalf. You will also want to ask the utility company whether a deposit or administration fee will be charged.
You will need to place insurance on the property you are purchasing. If there is a mortgage, the mortgage company will need to be named on the policy, so we will require the name and contact information of your insurer or broker so that we can secure evidence that insurance will be effective on the closing date, protecting you and your lender.
Your Mortgage - This is Teamwork!
If you intend to use mortgage financing to purchase your property, excellent and timely communication between yourself, your broker or banker and your lawyer is crucial. Your lender will need information from you and will need to meet with you, hopefully several weeks before closing, to move the application forward. You will need to provide financial information and documentation and sign the mortgage application, commitment and associated documents. These materials are provided to the administration unit of the lender.
If the process with your banker is delayed, this transition can cause further delay in instructing us which creates setbacks in closing. The sooner you meet with your bank to complete all documentation and requirements, the better. If you have any doubts, it’s an excellent idea to follow up frequently with the broker or account manager to make sure they have all information needed and that the mortgage has been sent for processing.
There’s nothing more exciting than the moment you pick up those keys for your new home. As your lawyers, we do everything we can to make that moment as early as possible on the closing date so you can get your move-in started.
Unfortunately, complete predictability is never possible. Sometimes there are financing delays at the institution advancing funds for your mortgage. Sometimes the vendor’s lawyer is delayed and not prepared to close early, as there may be signing delays or title requisitions which take more time to satisfy. Sometimes your pre-closing inspection will discover issues that take time for the vendor or the vendor’s lawyer to rectify or clarify physically and legally. Usually, early to middle afternoon is a good guess as to the time of closing. It’s good to be flexible with respect to moving arrangements, furniture and appliance delivery. Rest assured, our objective is to get your deal closed smoothly, efficiently and as soon as we can. We want you to be happy and have plenty of daylight to complete your move!
Do you need a will?
As a home owner, it is very important that you have a Will and Powers of Attorney in place. See the wills and powers of attorney tab for more information.