When buying or selling your home, it’s a good idea to get your lawyer involved as early as possible. You’ll probably find yourself asking “Who should officially own the property?” or “What kind of mortgage should you get?” It’s important to know all the legal issues involved in buying your home. It’s also important that all these issues are properly handled.
Although real estate transactions can be fairly complex, I've tried to simplify the process to three main steps. The first, of course, is for you (as the client) to sell your home, buy a home, or both. There are many things to consider when you buy a home, which I've addressed in my previous blog, so please have a read.
After you've bought/sold a property, the agreement is known as the "Agreement of Purchase and Sale". This is a legally binding contract! It lists all the important information about the relevant property, including price and any conditions.
Third, your lawyer will perform relevant searches and other administrative matters, such as: Title-related matters, including insurance and deed registration; closing funds and closing adjustments; tax issues; and mortgages, including transfers, discharges, and registrations.
Whether buying or selling, you will need to meet with your lawyer at closing. If you are buying, you should get your keys. If you are selling, you may want to ask for a reporting letter from your lawyer.
Some basic information you may want to discuss with your lawyer (if he or she does not provide it) include:
· The names of the lawyer responsible for your matter and anyone else working on the file, along with their functions and confirmation that the lawyer will supervise all non-lawyers;
· Your marital status and residency;
· Joint retainer issues (if applicable);
· Differences between 'joint tenancy' and 'tenancy-in-common';
· Methods of assuring Title (and the client's selection);
· Closing adjustments (confirm a detailed review before closing to ensure you're only paying your share of taxes/utility/fuel, and other pre-paid costs);
· Property insurance as a requirement;
· Proposed mortgage financing;
· Surveys (their importance and if one exists);
· (Condo) Extent of review of the Status Certificate;
· (NEW home) Tarion inspection, HST, New Home Rebate;
· Instructions about arranging utility and other service accounts;
· Fees and disbursements estimate, and land transfer tax;
· Required closing funds (certified cheque/bank draft); and,
· How and when keys will be available.
THE AGREEMENT OF PURCHASE AND SALE (APS)
Most agreements are made using the OREA (Ontario Real Estate Association) standard form with the assistance of real estate agents. Don't forget that an offer to purchase is a legally binding contract. Once accepted, it is the binding contract that sets out the legal rights and obligations of the buyer and seller.
An unfortunate yet common misperception is that many believe all Agreements are, in fact, standard. However, each real estate transaction is unique so both parties
An unfortunate yet common misperception is that many believe all Agreements are, in fact, standard. However, each real estate transaction is unique so both parties should seek legal advice prior to entering into a binding Agreement. That being said, most people do not consult a lawyer before signing an APS. If you do consult one before signing, you can discuss the points listed above as well as: your intended or future use of the property, survey issues, financing, due diligence, relevant searches, and deadlines.
TITLE AND OTHER MATTERS
As part of title-related duties and responsibilities, a lawyer usually will check that the seller has a right to sell the property, and no one else has a claim to it or a lien on it. He or she will also consider survey-related issues such as encroachments. The local municipality and utilities are also contacted to ensure no liens against the property because of unpaid bills. If the home is being rented, note that tenants may have rights affecting your ownership.
If there are problems that could affect title to your property, your lawyer could take steps to fix the matter (often working with the vendor’s lawyer). If it cannot be corrected, your lawyer will explain to you the risks of taking title without resolving the problem.
There are three main approaches to assure good title. It will be up to you and your lawyer to decide which is most appropriate in your situation. No matter which option you choose, your lawyer will conduct searches & inquiries to find out if there are any title-related problems with the home you plan to buy.
· Option 1: Lawyer’s Opinion on Title – A lawyer will provide you with a Letter of Opinion that states the lawyer’s view of whether or not you have good and marketable title to your property. However, if a problem is identified after closing, seeking compensation may be difficult;
· Option 2: Title Insurance – An insurance policy helps to protect your investment in your property if there is a problem with title. It also protects you against the loss you suffer because of many title-related problems. Most title policies also cover your legal costs if your title is challenged;
· Option 3: TitlePLUS – This option includes both an insurance policy and an 'e-process' that collects data from lawyers who apply for a TitlePLUS policy as they go through the steps in a residential real estate transaction. The policy provides protection for both the title-related aspects of buying a home and the legal services provided by your lawyer. It also automatically provides you and the lender with coverage.
In closing, seeing a lawyer before you sign that offer can help avoid difficulties later on and ensure your best interests are protected. For example, the inclusion of escape clauses; a request for warranty of conformation to all by-laws, zoning regulations, etc.; exact listing of accessories expected to buy with home, and so on. As you can see, there are many details and issues to address - both great and small. If you take them one step at a time, the task won't seem so daunting. And remember: your lawyer is always there to help!