MADAMSER LAW

Real Estate


PURCHASE

When you buy a home the first step is usually to sign an Agreement of Purchase and Sale. This Agreement outlines each person’s rights and obligations and sets out what must happen before the final closing. As such, it is generally a good idea to have the Agreement reviewed by a lawyer before you sign the Agreement. This will help prevent you from agreeing to something that is not in your interests.

It is also especially important when buying a new home from a builder because of the numerous and lengthy provisions in the agreement, including those relating to extra charges and changes to the closing date. On the purchase of a resale home, however, the standard agreements are familiar to most agents and are drafted to balance the interests of the vendors and the purchasers. Most people will therefore not have this agreement reviewed by their lawyer before signing, although of course they may choose to do so.

When you bring your new home purchase Agreement to your lawyer, he/she will review it and advise you of the various provisions and how they will affect your purchase. The lawyer will also very often recommend changes to be incorporated into the agreement to better protect your interests. As stated earlier, new home agreements are lengthy and contain many provisions which may be contrary to your interest. This is your opportunity to know about what you are agreeing to and avoid agreeing to something you should avoid. We highly recommend that you have all builders’ agreements reviewed by a lawyer before signing a firm and binding Agreement.

Once the agreement is finalized, whether it is for a resale home or from a builder, your lawyer’s task is to make sure that you obtain what you are entitled to in the agreement. Most essentially, this means making sure that you obtain good title to the property. That is, to ensure that the title is free of liens, debts, mortgages, title defects, etc. You do not want to buy someone else’s legal problems or debts when you buy your home. Your lawyer’s job is to make sure of this.

SALE

When you sell your home, your lawyer again ensures that you only provide the buyer with what you have agreed to provide and, most importantly, makes sure that funds are properly received before releasing the title deed of your property to the buyer. Your lawyer will also pay any outstanding mortgages and Real Estate Commission, deliver the keys, and notify the utility companies of the closing.

If you are selling before you buy, your lawyer will ensure that the funds from your sale are applied to your purchase. Also, if you are buying before you sell; your lawyer will handle the bridge loan.

CONDO ASSIGNMENT

Selling on an Assignment:

If you have purchased a pre-construction condo and wish to sell it today, you will have to assign your condo. This type of sale is called an assignment sale. The building has not been registered and you do not have ownership, therefore you are
selling the Purchase Agreement.

What you need to know:

  • The New Buyer (assignee) will take over the responsibilities of the original buyer and assumes all rights and terms of the original Agreement.
  • Assignor (original purchaser) remains responsible if new buyer defaults on closing.
  • New buyer occupies and pays interim occupancy fees until closing.
  • New buyer places deposit in trust till closing (balance divided on closing to original purchaser and Builder/Vendor).

Get the Builder’s Approval!

To proceed with selling your purchase agreement, you need to have consent in writing from the builder. There maybe a fee associated with selling your condos interest. Terms and fees vary. Standard fees are up to 1%.

Avoid Paying Interim Occupancy fees and closing costs:

Have the New Buyer pay for Interim occupancy fees (“Phantom rent”) from acceptance of assignment until closing and pay for all closing costs + adjustments. A reasonable deposit will be secured till closing. You will receive the deposit plus profit on closing. The New Buyer will have a mortgage in place to pay the builder.

Avoid Paying Provincial and Toronto Land Transfer Tax:

By selling your interest, you will avoid all closing costs including the Provincial and Toronto Land Transfer Taxes.

List and sell your Interest:

After review of your agreement and receiving consent from the building to sell your interest, hire a professional Real Estate representative who has experience selling condo assignments. Not many Realtors have the expertise and experience handling condo assignments.

New Buyer Benefits

  1. Price will be better than competing resales.
  2. Never occupied.
  3. Closing date closer than buying pre-construction (3 months vs. 3 years).
  4. No builder deposit – just a good faith deposit.

Original Buyer Benefits

  1. Sell prior to closing – avoid double closing costs.
  2. Avoid adjustments costs.
  3. Avoid GST (or HST) rebate disqualification.
  4. Avoid Interim Occupancy costs.
  5. Get builder deposits and Net Proceeds upon Final Closing

PROS AND CONS TO SELLING BEFORE REGISTRATION – ASSIGNMENT:

  1. The ‘first buyer’ will save the Land Transfer Tax with a transfer of their ‘interest’.
  2. The ‘first buyer’ will usually have to pay either an admin or transfer fee to the developer for the right to transfer their ‘interest’.
  3. GST. If the ‘first buyer’ declared that the property was a personal use property, then the GST rebate has already been assigned to the developer. If the ‘second buyer’ is not buying the property for personal use then the developer will lose the GST rebate and will then add the GST to the sale price to the ‘first buyer’.
  4. The ‘first buyer’ will be liable for Capital Gains Tax.
  5. The ‘second buyer’ requires a larger down payment on closing (to cover the deposits by the ‘first buyer’ plus the difference in price between the first sale and the second). There is no mortgage financing at this stage because there is no property to register against. The end result for the ‘first buyer’ is a smaller pool of buyers for their property. Alternatively, the ‘first buyer’ takes back a promissory note with a direction for repayment from the proceeds on the closing.
  6. If the Assignment is done on the day of registration, the second Buyer can finance their purchase through a mortgage.

PROS AND CONS OF SELLING AT OR AFTER REGISTRATION- REGULAR SALE:

  1. The ‘first buyer’ will pay the Land Transfer Tax.
  2. The Offer to Purchase is easier to understand.
  3. There will be carrying costs during the occupancy period and/or after. These costs can be minimized if one allows the ‘second buyer’ to occupy and pay a rent to the ‘first buyer’ during part of the occupancy period. Or the ‘first buyer’ can rent the unit in the occupancy period and after registration to a tenant, and then sell later.
  4. If you never allow a tenant or the ‘second buyer’ to occupy the unit, you may be able to declare the property as a ‘principle use’ property and hence avoid Capital Gains Tax.
  5. GST may or may not be applicable, depending on point (4) above and point (3) under ‘BEFORE REGISTRATION’.
  6. The ‘second buyer’ can arrange mortgage financing for the purchase and the property can then appeal to high ratio buyers i.e. a larger pool

Checklist For a Tenant

  1. Report on title search including municipal and registered restrictions.
  2. Advise whether notice of lease registered and if not, consider whether necessary to register notice.
  3. Describe the premises demised and any appurtenant rights.
  4. Term of lease.
  5. Amount of rent and when and where payable.
  6. Tenant’s responsibility with respect to additional rent.
  7. Report with respect to prior mortgages. Consider whether non-disturbance or postponement agreements should be obtained.
  8. Advise with respect to renewal or purchase options and the provisions with respect to each.
  9. Permited uses. Consider in light of applicable zoning.
  10. Insurance obligations.
  11. Repair obligations.
  12. Report and explanation with respect to fire and damage clauses.
  13. Right to assign or sublet.
  14. Security deposits.
  15. Escalation clauses with respect to rent.
  16. Ownersip and removal of fixtures and equipment.
  17. Rights with respect to alterations and improvements.
  18. Environmental Matters.

Closing Adjustments

Buying

Many people are concerned about their closing costs as they often hear of unwelcome surprises when they are asked to deliver funds to their lawyer’s officer. Again, we hope to clarify this. Your closing costs generally consist of Land Transfer Tax and Registrations, Legal Fees/Costs, Disbursements, Title Insurance and HST.

Land Transfer Tax is payable by all purchasers of homes unless they are first time buyers. If not, Land Transfer Tax is payable at a rate that increases with the price of the home. This will generally amount to 1-2% of the purchase price. Registration expense where there is a mortgage will generally be in the amount of $148.60.

Legal Fees/Costs – Lawyers charge a fee for legal services in addition for charge for disbursements (these are the costs incurred in obtaining the assurance of title such as title searches, execution searches, certificate, couriers, etc.) Title Insurance and H.S.T. The various disbursements like search costs and Title Insurance costs can vary significantly, which leaves purchasers uncertain about their closing costs.

Our firm offers Fixed Closing Costs of $1300.00 plus H.S.T inclusive of all fees and disbursements, plus Title Insurance and Land Transfer Tax. Please feel free to e-mail us at db@madamser.com with your purchase price and we will be able to provide you with a Fixed Closing Cost Quote.



Selling

The sale of a home is much the same except that there is no Land Transfer Tax to be paid by the Seller and the disbursements are lower. We offer Fixed Closing Costs on Sales in the amount of $950.00 plus H.S.T. inclusive of all fees and disbursements. Again, please feel free to e-mail us at db@madamser.com for a written quote.

Note: The quotes above are just for general information purposes and do not bind the undersigned in all cases. To get a quote for a particular transaction, please email or call us and we will be happy to provide you with the same. Adjustments on closing You should also be aware that there may be adjustments on closing for items such as property taxes whereby the same are adjusted on a pro rata basis between the buyer and seller based on the date of closing.

We trust this helps clarify your lawyer’s role in your Purchase or Sale. If you require further information, please feel free to call at the direct line of the undersigned.

FINTRAC

In Canada, as of June 23/08, sellers (who are listing a property for sale) and buyers (signing an offer to purchase ) are now required to show a photo identification (at the time of signing) to the real estate salesperson or broker who is now required to record on a form called:

“CLIENT INFORMATION RECORD”

the details from the photo I.D. as well as the person’s occupation. This information must be retained in the Real Estate Broker’s company files as a private record for FINTRAC review (if needed) regarding verification of the identity of persons buying or selling real estate in Canada.

Canada’s federal law, THE PROCEEDS OF CRIME (MONEY LAUNDERING) AND TERRORIST FINANCING ACT has established an administration called FINTRAC (The FINancial Transactions and Reports Analysis Centre of Canada) which currently has a staff of over 300 people (head office in Ottawa with Regional Offices in Toronto, Vancouver and Montreal) to administer the requirements under Canada’s federal law which now affects NOT ONLY real estate brokers (as of June 23/08) but also has already covered the banking industry, life insurance companies, security dealers, foreign exchange businesses, accountants and casinos.

Worldwide, it is established that the equivalent of about $500 BILLION (U.S.) is laundered each year and most industrialized countries over the last several years have established new laws in order to fight both money laundering and suspected terrorist financing activities on both the domestic and international levels.

To find out more about Canada’s laws on money laundering and terrorist financing, visit FINTRAC’s website www.fintrac.gc.ca or call toll free: 1-866-346-8722




New Home Purchases and the HST


Effective July 1, 2010, new home buyers became subject to 13% HST on their purchase agreements. The HST, consisting of a 5% federal portion and an 8% Ontario portion, applies to a builder’s sale of newly-constructed or substantially renovated homes where both ownership and possession are transferred after June 30, 2010. There are two exceptions to this rule where the old GST rules will continue to apply: if either ownership or possession was transferred before July 1, 2010 or if the agreement was signed on or before June 18, 2009.Former GST New Housing Rebate

Under the pre-HST rules, a rebate of any GST paid on the purchase of a new home was available to buyers. For homes priced up to $350,000, 36% of any GST charged by the builder was eligible for a rebate. This rebate was gradually phased-out and eliminated altogether once the purchase price reached $450,000. Under the new HST, these rules continue to apply to the 5% federal portion of the HST for new home purchases.

New Ontario Housing Rebate or the PST Part Since new home buyers are paying an additional 8% of Ontario HST on new home purchased after July 1, 2010, a new Ontario Housing Rebate was introduced as a relief measure. The rebate applies to all price ranges and is calculated as 6% of the Ontario HST on the first $400,000. In effect, home buyers are paying 2% Ontario HST on the first $400,000 of the purchase price and 8% on the remainder.

For example, a house priced at $300,000 is subject to $39,000 of HST ($300,000 x 13%). Provided that the purchase is eligible for rebates, the purchaser would receive an Ontario New Housing Rebate of $18,000 ($300,000 x 6%) and a GST New Housing Rebate of $5,400 ($300,000 x 5% x 36%). The Purchaser would still pay $15,600 in tax.

Similarly, a house selling for $500,000 would be subject to $65,000 of HST ($500,000 x 13%) and eligible for an Ontario Rebate of $24,000 ($400,000 x 6). The purchaser would not be entitled to claim a GST Rebate since the purchase price exceeds the $450,000 threshold and as a result pays $41,000 in tax.

Both the GST and Ontario New Housing Rebates are available for purchases of newly-constructed and substantially-renovated houses and condominium units, co-operative housing, owner-built housing, mobile homes, floating homes, and housing on leased land.

Pre-HST, builders typically included GST in the price and any rebates available were assigned to the builder. This practice will likely continue as builders will include the full 13% HST in the purchase price and buyers will receive credit for the old GST and new Ontario New Housing Rebates when assigned to the builder on signing of the paperwork. The reality however, is that prices will rise to compensate for these costs. So in the end the consumer pays.

Retail Sales Tax (RST) Transitional Housing Rebate

A new home buyer may also be eligible for an RST Transitional Housing Rebate where construction of a new home was not yet complete at July 1st and HST applies to the purchase. Construction must have been at least 10% complete at July 1st to be eligible. This rebate is calculated based on an estimate of the Ontario RST included in the cost of the home and the extent of construction at July 1st:

Extent of Completion of Construction on July 1st Applicable Tax Rate
Less than 10% Nill
10% to 24% 25% of the estimated RST
25% to 49% 50% of the estimated RST
50% to 74% 75% of the estimated RST
75% to 89% 90% of the estimated RST
At least 90% 100% of the estimated RST



There are two methods to determine the amount of estimated RST: the floor space method ($45.00 per square metre of completed floor space) or the fair market value method (2% of the purchase price).

For example, if your home was purchased on January 1, 2010 for $450,000, is 60% complete at July 1, 2010 and closes on August 31, 2010, a rebate of $6,750 ($450,000 x 2% x 75% completed) would be available under the fair market value method.

Individuals who purchase single detached homes, semi-detached homes, row houses or duplexes are entitled to this rebate. Builders who first rent these types of homes may also claim the rebate. Rebates in respect of residential condominium units or apartment buildings may only be claimed by the builder, rather than the purchaser.

Transitional Tax Adjustment

Given that many homes were partially constructed at July 1st, transitional rules were passed to address transactions that straddled both the June 18, 2009 and July 1, 2010 key dates. Homes bought prior to June 18, 2009 but both ownership and possession did not transfer until after July 1, 2010 are “grandfathered”, meaning that they are not be subject to the 8% Ontario portion of the HST. In order to approximate the amount of Ontario RST that would have been paid on construction materials and costs incurred after July 1, 2010, a Transitional Tax Adjustment will be charged to builders. This Tax Adjustment will be based on the total purchase price and extent of construction as determined by the builder at July 1st.



Existing Owner Title Insurance

What is “Title”?

The word “title” is a legal term that means you have legal ownership of property. A person obtains title to a property when the owner/seller signs the deed (transfer document) over to you. Title is then registered in the government’s land registration system in favour of the new owner.



What is Title Insurance?

Title insurance is an insurance policy that protects residential or commercial property owners and their lenders against losses related to the property’s title or ownership for the period prior to their becoming owner thereof.



Do I Really Need Title Insurance?

Title insurance is usually required by the lender when a purchaser gets a mortgage for financing the purchase of a property in Ontario. If the purchaser is not getting a mortgage, Title Insurance is not a requirement in Ontario but it is highly recommended to take the owner’s policy through the lawyer acting on the transaction. The decision on whether or not you should purchase title insurance should be discussed with your lawyer, title insurance company or insurance agent/broker, to fully understand what type of protection title insurance can provide you, and to determine if other options exist. Once you get all the facts, you can make an informed decision based on your specific situation and needs. It is important to keep in mind that title insurance does not replace legal advice when purchasing property.



What Does Title Insurance Cover?

For a onetime fee, called a premium, a title insurance policy may provide protection from such losses as:

  • Unknown title defects (title issues that prevent you from having clear ownership of the property);
  • Existing liens against the property’s title (e.g. the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property);
  • Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property. This depends upon lot of factors);
  • Title fraud;
  • Errors in surveys and public records;
  • And other title related issues that can affect your ability to sell or even refinance,


or lease your property in the future. Your title insurance policy will protect you as long as you own your property, and will cover losses up to the maximum coverage set out in the policy. It may also cover most legal expenses related to restoring your property’s title.



What is “Title Fraud”?

Title fraud (or real estate title fraud) is a form of real estate fraud that harms individual homeowners and their lenders. Title fraud typically involves a fraudster using stolen personal information, or forged documents to transfer your home’s title to him/herself (or an accomplice), without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money.



If you are a victim of title fraud, you may be able to receive compensation for your losses if you submit a claim through the government’s Land Titles Assurance Fund (LTAF). For more information on the Land Titles Assurance Fund visit www.gov.on.ca/LTAF/.



What Does Title Insurance Not Cover?

When purchasing title insurance, it is important to read the policy and ask questions to be aware of the coverage that is provided. You also need to be aware of possible exclusions, which may include:



  • Known title defects (that were revealed to you before you purchased your property);
  • Environmental hazards (e.g. soil contamination);
  • Native land claims;
  • Problems that would only be discovered by a new survey or inspection of your property (e.g. the property is smaller than originally thought);
  • Matters that are not listed in public records (e.g. unrecorded liens and encroachments);
  • And zoning bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating. You need to carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property.


Title insurance does not provide compensation for non-title related issues. It is not a home warranty or home insurance policy, and will not provide compensation for:



  • Damages due to flooding, fire or sewer backup;
  • General wear and tear of your home (e.g. replacing old windows, a leaky roof, or an old furnace);
  • Theft (e.g. a burglar breaks into your home and steals your television);
  • And other losses or damages due to nontitle related issues.


    • Refer to your title insurance policy for a full list of exclusions, restrictions, and terms and conditions.

    Do I Need Extended Title Insurance Coverage?

    For an additional fee, some title insurance companies may also offer you protection from additional risks that are not covered by a standard title insurance policy, such as identity theft and certain known title defects. Speak to your lawyer, title insurance company, or insurance agent/broker to determine if you require extended or additional title insurance coverage. They can compare several different title insurance products and recommend the product that would best meet your needs.



    What are the Different Types of Title Insurance?

    There are two main types of title insurance policies:

    • Owner’s policy – Protects the property owner from various titlerelated losses that are listed in the insurance policy, for as long as the property is owned. An owner’s policy sets a maximum amount of coverage.
    • Lender’s policy – Protects the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A lender’s policy usually provides coverage for the amount of the property’s mortgage.


    You can purchase title insurance for both residential and commercial properties. Types of residential title insurance include:

    • Policies for new homeowners
    • Policies for existing homeowners
    • Policies for lenders in a residential mortgage Types of commercial title insurance include:
    • Policies for individuals purchasing commercial properties
    • Policies for lenders in a commercial mortgage


    What Types of Properties can be Insured?

    Residential title insurance policies can insure:
    • houses
    • condominiums
    • cottages
    • rental units
    • vacant land
    • cooperatives
    • leased properties
    • rural properties Commercial title insurance policies can insure:
    • office buildings
    • industrial buildings
    • shopping centres
    • apartment buildings
    • rental units
    • warehouses
    • vacant commercial land
    • leased commercial properties


    Residential Title Insurance

    If you are planning to purchase a house or condominium, or even if you already own a home, you may want to consider purchasing residential title insurance.



    What coverage does residential title insurance provide?

    Residential title insurance can provide:

    • Comprehensive coverage – It provides comprehensive insurance coverage against losses related to the property’s title. It may also provide coverage for your lawyer’s negligence or errors relating to title risks that are covered by your policy.
    • Gap coverage
      • – It insures you for the “gap” between the time your property purchase is finalized (home closing) and the time your title is registered in Ontario’s land registration system.
    • Survey coverage – It may eliminate the need for a new uptodate survey of your property. It is acceptable to most lenders as an alternative to a survey or Real Property Report (RPR).
    • Legal coverage – The title insurance company will pay for most legal expenses* involved in defending your home’s title.
    • Savings of time and money – It simplifies the closing process for your lawyer, thereby saving you time and money.


    When residential title insurance is normally purchased?

    Residential title insurance is usually purchased when you buy your home. However, you can also purchase residential title insurance any time after you purchase your home. Note: Title insurance policies for existing homeowners are slightly different than policies that are obtained at the time a property is purchased.



    How much does it cost?

    The cost of residential title insurance varies based on the value of your property, and the insurance company you choose. You will need to pay a onetime fee, called a premium.



    How long does the coverage last?

    Residential title insurance coverage lasts as long as you own the property. Most residential title insurance policies extend coverage to your heirs through a will, to a spouse in the event of a divorce, or to children when the property is transferred from parents to children for nominal consideration.



    Where can it be purchased?

    You can purchase residential title insurance through your lawyer or title insurance company, or you can contact an insurance agent/broker. For a list of insurance companies who are licensed to sell title insurance in Ontario, visit the Financial Services Commission of Ontario’s (FSCO) website at www.fsco.gov.on.ca, click on Licensing & Registration, and select Licensed Insurance Companies in Ontario.



    Title Insurance Purchasing Tips

    When purchasing residential title insurance make sure:
    • Your property is insured for its full value;
    • Your policy’s effective date is the same as your property’s closing date (for policies obtained at the time a property is purchased); *Refer to your title insurance policy for full details on what legal expenses are covered.
    • You carefully review your policy to ensure that it correctly describes all of the property you are purchasing;
    • You understand what title related losses your policy will cover;
    • And you know what your policy excludes or does not cover. It is important to know that all lawyers practicing real estate law in Ontario are required to carry professional liability insurance. Your lawyer’s professional liability insurance may provide coverage for title related issues that relate to the services your lawyer provides in the real estate transaction. A lawyer will provide you legal advice in order to help you make an informed decision about title insurance and other aspects of the transaction.

      Since title insurance policies contain a lot of legal terminology, make sure you ask your lawyer or title insurance company questions about anything that you do not understand.

      Title insurance companies and insurance agents/brokers should meet best practice standards that include:
    • providing information to clients on all available options;
    • supplying full details for all matters related to the title insurance transaction;
    • And ensuring that the recommended product meets the client’s needs.


    Keep in mind that you are the customer and can choose any one of the title insurance companies that you think would best meet your needs.



    How Do I Make a Claim?

    1. Double check your insurance policy to verify that the title related problem is covered by your policy. Your insurance company will not provide compensation for an issue that is excluded by your policy.
    2. Submit your claim as soon as possible. Ask your title insurance company or refer to your policy to find out when claims must be submitted.
    3. Make your claim in writing. Write a letter to the title insurance company and include information on the losses you have experienced due to a title related problem. Make sure you include your policy number, contact information and any relevant documents related to your claim.

      You may want to contact your title insurance company or insurance agent/broker to obtain information on its claims handling process.


    4. Keep a copy of your claim for your records.
      Once your claim is received by the title insurance company, it will be reviewed to determine if you qualify for coverage, based on your policy. Your title insurance company will then contact you to let you know that the claim was received. A decision about your claim should be communicated to you within a reasonable amount of time.


    If You Have a Complaint

    If you are not satisfied with how your claim is being handled, there are steps you can take. Improved measures have been put in place to help consumers get their insurance complaints resolved more quickly. Among them is the establishment of a Complaint Handling Protocol by all title insurance companies licensed to operate in Ontario. How the complaint process works varies from company to company. Your company representative (agent, broker, claims adjuster or customer service representative) will be able to provide you with specific information about the procedures to follow should you have a complaint.



    In addition, each company has a Consumer Complaint Officer who oversees the complaint handling process. The Consumer Complaint Officer is an employee of your insurance company responsible for ensuring that your complaint is addressed. If you are unable to obtain information about the protocol from your company representative, or if you are having difficulty obtaining a response outlining your company’s position, then you should contact your company’s Consumer Complaint Officer.



    For your convenience, the Financial Services Commission of Ontario (FSCO) has compiled a list of all company Consumer Complaint Officers. This list is available online at www.fsco.gov.on.ca. If you are unable to find the name of your company’s Consumer Complaint Officer on this list, you should direct your complaint to the Chief Executive Officer of your insurance company, or contact FSCO at (416) 2507250, Toll free: 18006680128.

    If you are unable to resolve your complaint with your insurance company, your company is obligated to provide you with a letter stating its final position on your complaint, as well as provide you with the name and details of an independent ombudsman organization that can review the complaint.

    If you decide to write to the independent ombudsman organization referred to in your company’s final position letter, make sure you describe your complaint and why you disagree with the company’s position. Remember to include your company’s letter and any documentation that relates to your complaint.

    Upon receipt of your unresolved complaint, a Complaint Officer at the independent ombudsman organization will review and respond to your complaint.

    Disclaimer: This information is provided for information purposes only. Refer to the terms of your title insurance policy for the details of coverage and exclusions.






Land Transfer Tax Calculator

First Time Buyers

INTRODUCTION

This client information brochure for purchase transactions has been prepared to provide information with respect to several of the issues that you may encounter in a typical home purchase. If you have any questions, or require additional information, please do not hesitate to call.



BEFORE YOU SIGN

When you make an offer to purchase a house through a real estate agent, the agent will normally fill out and have you sign a “Standard” Real Estate Board “Offer to Purchase” form or a builder’s standard form of agreement. Your offer becomes a binding contract the moment it is accepted by the Vendor. Because it becomes binding on both you and the vendor, you should review it with your real estate lawyer before you sign so that you are aware of the effect of the provisions in the Agreement.

Items that we will discuss will include the ways of financing the purchase; the extras to be included; the money you will have to pay for such things as search costs, land transfer tax, registration fees, survey, costs of mortgages, searches other than Registry Office searches and the cost of title insurance and certain practical matters such as choice of closing date, inspection before closing, conditions to be included in the Agreement of Purchase and Sale, standard adjustments for either resale homes or for new homes and obligations which you would like performed by the Vendor.

ONCE THE AGREEMENT IS MADE

We will begin a thorough and complete series of investigations to check that you are really getting everything that is included in your agreement. All of the following things are checked:

  1. Title – this must be searched at the Registry Office to see if the Vendor owns the property and whether there are encumbrances, easements, subdivision agreements or restrictions which affect the property;
  2. Realty taxes;
  3. Hydro and other utility accounts;
  4. Particular requirements such as any warranties concerning the swimming pool, insulation, etc.;
  5. Zoning by-laws;
  6. Status of previous corporate owners(if applicable);
  7. Status of mortgages being assumed or discharged;
  8. Compliance with agreements and restrictions;
  9. And Documents prepared by the Vendor’s lawyer.


CONDITIONS IN THE AGREEMENT OF PURCHASE AND SALE

It is assumed that you and your real estate agent will be taking care of the conditions in the Agreement, so that if the condition is in your favour you will satisfy yourself that it is met and through your agent will notify the Vendor that the condition is satisfied, or conversely, that the condition has not been satisfied and the Agreement is at an end.

If the condition is in the Vendor’s favour, you will have the Vendor advise you either through your agent or through this office whether or not the condition has been satisfied and accordingly whether or not the Agreement becomes unconditional or terminated. Unless we are advised to the contrary, we will assume that all conditions have been met.

Please seek our advice before amending the Agreement of Purchase and Sale and provide us with copies of any amendments.

FINANCING

If you plan to finance part of the purchase by giving a mortgage, please arrange all the necessary details as soon as possible with your Mortgage Company and have the mortgage instructions forwarded to us at least 3-4 weeks prior to closing.

It is usual for one lawyer to act on behalf of both the Purchaser and the mortgage company. However, if we are acting on your behalf with respect to the purchase, and on behalf of the mortgage company with respect to the mortgage, there is a possibility that a conflict of interest may arise between yourself and the mortgage company. No information given by you to us can be treated as confidential as against the mortgage company.

If a conflict does arise, we cannot and will not continue to act on your behalf with respect to the transaction, or for the mortgage company. In such a situation, both parties must obtain an independent lawyer to act on their behalf. At our pre-closing meeting, we will request that you sign an Acknowledgement of Conflict authorizing us to act on your behalf with respect to the transaction notwithstanding the potential conflict of interest. This is a standard procedure in real estate transactions.

HOME INSURANCE

Please contact your insurance agent and give particulars of your purchase, together with the name and address of the mortgagee. You should insure the full value of the buildings on the property and you must insure the full amount of mortgages being placed on the property, so you should obtain coverage for the higher of the two amounts.

Please advise of the name, address and phone number of your insurance agent or broker as soon as possible so that we may confirm insurance coverage. Ask your insurance agent/broker to fax us the confirmation of insurance as soon as possible before the closing since this is a mandatory requirement of most lenders before advancing funds to us on your mortgage.

TITLE INSTRUCTIONS

If you have not already done so, please advice as to how you wish to take title to the property. Your deed to the property must include the full name and date of birth of all those who are to be shown on title.

If it is your intention that there are to be two owners to the property, please advise whether you wish the owners to hold as “joint tenants” or as “tenants in common”. Where title is held as joint tenants and one of the owners dies, the other owner automatically becomes the sole owner of the property. This is the manner of holding title most commonly used by spouses. However, where title is held as “tenants in common” and one of the owners die, the deceased owner’s interest passes to his beneficiary under his will or, if there is no will, to his heirs in accordance with the law.

SURVEY

While the title search reveals the chain of title leading to the current registered owner of the property, the survey depicts the extent of the title as it relates to the actual physical features of the parcel of land in question and its boundaries.

A survey is a diagram of the property signed by an Ontario Land Surveyor showing the boundaries of the property and the location of buildings, fences, etc. on the property, as of the date of the survey. It is a “snapshot in time”. We check the boundaries against the description on title and can advise you of any encroaching buildings, fences, etc. on your property and whether or not parts of your buildings, etc. encroach on neighbouring land. The survey is also checked to confirm that the house is located entirely within the lot lines and that the building complies with all local zoning by-laws. We also send a copy of the survey to the relevant Building Department, which may or may not provide information as to whether the property complies with the zoning by-laws. As you can see, if there is no survey of the property or if the survey is not up-to-date, we will not be able to check the items described above and our title opinion will be qualified by that fact. An up-to-date building location survey is required by institutional lenders, although this requirement may be waived if you purchase title insurance for the transaction.

ZONING/BY-LAWS/WORK ORDERS

The construction, use and occupancy of buildings including your new home is governed by municipal by-laws which usually limit the size and location of the buildings on the property and the types of uses that the structure can be put to (for example, single family dwelling, multiple dwelling units, commercial uses, etc.). Work orders or violations of applicable property standards by-laws generally arise where the property or the buildings located on the property are found to be below certain by-law standards. For example, the municipality could identify certain repairs that must be completed within a specified time period or financial penalties will be imposed. Sometimes if the infractions are very serious, continued use of the building(s) could be prohibited.

In acting for you on this transaction, and unless you instruct us to obtain title insurance with respect to this transaction, we intend to write a letter to the municipality to inquire about zoning matters, including the following:

  1. Whether the buildings as located on the survey which was provided to me complies with the provisions of the applicable building and zoning by-laws which were in effect at the time of construction;
  2. What uses were permitted under the by-laws which were in effect at the time of construction and whether these uses are permitted today;
  3. Were all occupancy requirements complied with as of the date that the premises were first occupied;
  4. Does the current use of the property comply with the official plan and the applicable zoning by-law;
  5. Are they aware of any applications to re-zone the property from the current zoning designation;
  6. Are there any outstanding orders or notices of violation that may result in work orders against the property.


Municipalities will respond to these inquiries for a fee with varying degrees of completeness and speed. The information that the municipality provides is not guaranteed and is often not complete. Also, without an up-to-date plan of survey which is legible, it is impossible to provide you with information concerning compliance with certain zoning by-laws concerning the proper location and construction of the building(s). Please note that we will report to you the information provided by the municipality in response to our letter inquiry only.



UTILITIES

We will obtain confirmation from the appropriate gas and hydro companies (if available) that these utilities have been paid up to date and that there are no outstanding arrears. We will also request that the meters be read as of the date of closing, and the final bill forwarded to the Vendor. The standard forms of Agreement of Purchase and Sale do not provide for a holdback to be made on closing to cover the final utility bills

You are responsible for making your own arrangements for hook ups and credit with the utility companies. You should also contact Bell Canada and the cable company to make arrangements for these services, if desired.



ADJUSTMENTS

The Statement of Adjustments is prepared by the Vendor’s lawyer and is sent to us a few days before closing. It shows the actual balance owing to the Vendor at closing in accordance with the Agreement of Purchase and Sale and how the Vendor would like to have the balance paid. Items adjusted may include the following: property taxes; water when it is billed for a set period of time and not metered; rents; and mortgage payments, if the mortgage is being assumed.

Adjustments ensure that the Vendor is compensated for amounts he or she has paid that are attributable to your period of ownership of the property and that you are compensated for amounts you will have to pay that are attributable to the vendor’s period of ownership. If you are buying a new home from a builder, there will be additional adjustments for such things as the Ontario New Home Warranty Program, boulevard tree planting, educational and development lot levies, the cost of installation of water and hydro meters and subdivision service damage deposits.



POSSESSION PRIOR TO CLOSING

It is unlikely that you will be allowed to take possession of the property or make any changes to the property before closing, and in fact, we recommend that you do not. If you do and damage occurs before you become the owner and for some reason the closing does not take place the Vendor would have to incur the cost of evicting you from the premises or eliminating the changes made to the property.

JUST BEFORE CLOSING

Shortly before closing we will meet to review the transaction and for you to sign the necessary documentation, including the mortgage documentation and Land Transfer Tax Affidavit, that is required for closing. When the meeting is arranged, we will advise of the funds required to close the transaction so that you may arrange to have the funds available at that time to complete the deal. Please note that these funds are to be payable to the solicitor’strust account, and must be made by way of certified cheque or bank draft in order to satisfy the requirements of the Law Society of Upper Canada.

Documents prepared by the Vendor’s lawyer, including the Statement of Adjustments, will be sent to and reviewed by us. If these documents are satisfactory, and if the Vendor’s lawyer has answered all of our requirements and questions, a final time on the closing date to complete the purchase is arranged.



CLOSING

The date that the transaction is completed is called the closing date. Transactions are completed in the registry office for the jurisdiction in which the property is located. You will not have to attend at the closing.

On the day of closing, and at the time your purchase is completed and closed, we will:



  1. Update the search of title;
  2. Check all the documents received from the Vendor’s lawyer;
  3. Check all the documents offered in support of adjustments made on the Statement of Adjustments, such as municipal taxes, insurance, fuel oil, etc.;
  4. Ensure that the house is vacant subject to any special arrangements;
  5. Deliver the cheques to the Vendor’s lawyer and, if included in the Agreement of Purchase and Sale, give the mortgage back to the Vendor;
  6. Get the keys and all necessary papers for completion of the contract, such as promises and instructions from the Vendor’s lawyer;
  7. In the case of homes covered by the Ontario New Home Warranty Plan, we will confirm that the builder has forwarded the Certificate of Completion of Possession completed by the buyer before closing;
  8. We will also make sure any money needed to discharge mortgages on the property which are not being assumed by you are paid;
  9. If everything is correct, we will then register your deed, pay the applicable Land Transfer Tax and the registration fees for the Deed and Mortgage.


MOVING

Vacant possession is given on closing unless the Agreement states otherwise. Keys are usually not available at our office until LATE AFTERNOON the day of closing.


AFTER THE CLOSING

After your purchase is completed and the deal is closed, we will confirm to you that the purchase has been completed and that the keys to your house are available. Soon after closing, we will also:



  1. Alert you to any tax payments or mortgage payments which will come due in the near future;
  2. Discuss with you any special parts of the transaction;
  3. Confirm the change of ownership to the Tax Department and any person whose mortgages you have assumed, and, where applicable, the Condominium Corporation;
  4. Arrange to get and have registered the discharges of the mortgages which were paid from the funds due on closing:
  5. Confirm the completion of any promises you or we have given on closing;
  6. And make sure, as far as possible, that the Vendor’s promises are completed.

Our written report to you will follow shortly thereafter.

AFTER YOU MOVE IN

You may discover that lighting fixtures, carpets or other items that the offer states were to remain on the property have been removed in error or otherwise by the Vendor.

You may also discover a month or two after closing that final utility bills based on a meter reading the day of closing or bills that the Vendor promised to pay in the Statement of Adjustments have not been paid or you may discover on closing that the fuel tank has not been filled.

Your first step is to inform our office of the same. We will thereafter write to the vendor’s solicitor to enforce the Vendor’s promise made on closing in the Statement of Adjustments and Undertaking to Readjust.



ONTARIO NEW HOME WARRANTY PROGRAM

Under the Ontario New Home Warranty Plan, builders of new homes must register with the Association. The buyer is responsible for paying the enrolment fee under the Plan. This would be included in the Statement of Adjustments provided to us at the time of the closing.



LAND TRANSFER TAX

Land Transfer Tax must be paid to The Minister of Finance on closing before the deed will be accepted for registration.

Land Transfer Tax is calculated as follows:

If the purchase price is less than $55,000.00
– Multiply the purchase price by .005

If the purchase price is between $55,000.00 and $250,000.00
– Multiply the purchase price by .01 and subtract $275.00

If the purchase price is between $250,000.00 and $400,000.00
– Multiply the purchase price by .015 and subtract $1,525.00

If the purchase price is over $400,000.00
– Multiply the purchase price by .02 and subtract $3,525.00

We will prepare a written statement, called a Land Transfer Tax Affidavit, which contains a statement as to the amount of consideration paid for the land and for any chattels that are included in the transaction. You will be asked to confirm the Land Transfer Tax Affidavit by taking an oath and by signing it. The amount of Land Transfer Tax is calculated based on this statement and retail sales tax is payable on the chattels. Please advise as to the amount to be assigned to the chattels.

P.S. For properties located in Toronto, there is an additional land transfer tax applicable on purchases apart from the Ontario Land Transfer Tax. It is called the Municipal Land Transfer Tax.



FIRST TIME HOME BUYERS

Land transfer tax applies to all conveyances of land in Ontario. First-time homebuyers are eligible for a rebate of all or part of the tax payable.

Amount of Rebate

The amount of the rebate claimed will offset the land transfer tax payable. The maximum amount of rebate is $2,000 for the Ontario Land Transfer Tax.

Examples:

Cost of Home Tax Payable Tax Refund Net Tax Payable
$100,000 $725 $725 $0
$200,000 $1,725 $1,725 $0
$300,000 $2,975 $2,000 $975

Similarly, for the Municipal Land Transfer Tax for properties located in Toronto, the maximum amount of tax rebate available to first time home buyers is $3,725.



LIMITATION ON REBATE

The rebate will be reduced if one or more of the purchasers are not a first-time home purchaser. The rebate will be proportionate to the interest acquired by the individuals who qualify for the rebate.



For example, where a parent who is not a first-time purchaser and a child who is a first-time purchaser, purchase a home with equal 50/50 interests, the child may claim 50% of the land transfer tax rebate. The child’s claim cannot exceed 50% of the maximum allowable rebate (i.e. 50% of $2,000).



A qualifying purchaser may also claim a rebate in proportion to his or her spouse’s interest if that purchaser’s spouse has owned a home before becoming the purchaser’s spouse, but not while being that purchaser’s spouse.



IMPORTANT REAL ESTATE INFORMATION FOR BUYERS, SELLERS AND AGENTS.

Why do you need a Real Estate Lawyer when you buy or sell your home?
Most people are aware of the need for a Real Estate Lawyer when buying or selling a home but are not sure what the lawyer does in the transaction. We hope to clarify this and help you make an informed decision when choosing a lawyer.




BLOG POSTS




How to choose your real estate lawyer

Choosing your Lawyer

The following factors are paramount in your decision to choose your lawyer:

1. Typically, when people buy a property for personal use, the endeavour is to choose the best property according to desired location, type of property preferred, budget, the exterior and interior of the property and the floor plan etc. For some, it is important to see how the kitchen looks or whether there is a family room in the property. In condominiums, people look for common area facilities, location, public transit nearby etc. When choosing the right mortgage product too, the endeavour is to get the best available interest rate, amortization etc. But unfortunately, when the time comes to choosing your lawyer to complete the closing for you, even the most reasonable minds sometimes tend to go with the lawyer quoting the cheapest price and to what end- just to save a couple of hundred bucks. Even as we want to save money, the cheapest price quote should not be the sole or even the main criterion to choose your lawyer. NO, NO, NO! The role of the real estate lawyer is very important, if not the most important one. The lawyer has to guide the client throughout the process while at the same time, the lawyer should not cut corners but should do in depth detailed due diligence in respect of the property to ensure that the client gets a good title to the property.

2. While choosing a lawyer, following is a good indicator of your having chosen the right lawyer:

  • When you called the office, did you get to speak to the lawyer or if you left a message, did the lawyer call you back;
  • Did the lawyer respond to your emails in a timely manner;
  • Does the lawyer have only ONE office or multiple offices? (Remember, it’s a law office, not a factory. A single lawyer can only be in one place at a given time); Does the lawyer’s staff copy the lawyer on any emails sent to you;
  • Will the lawyer or his/her staff meet you for signing documents and so on.

3. Remember, many a times, a dispute occurs in your real estate transaction, while buying or selling a property. You must be confidant of your lawyer being able to address the matter in a professional manner rather advising you to hire a specialist litigation lawyer even if the matter can be resolved by writing to the other side. A little initiative and foresight from your lawyer and personal attention to your transaction can save you a lot of money eventually.

4. Thus, no harm being price sensitive but do not blindly choose your lawyer based on a lower fee. There is more to a Real Estate Lawyer than that!.


Agreements of Purchase & Sale- what to include and what to leave out

Dear Readers,

Today I want to talk about the “additional visit/inspection” clauses that we see on the Agreement.

If you look at your Agreement of Purchase & Sale, you will most likely see that there is a clause by the buyer that they have the right to visit the property a certain number of times (usually 2) prior to closing.

When the negotiations are going on, the buyer and seller, through their agents decide whether or not to put this clause in and how many visits to limit it to. Though this clause is optional, it is quite standard and we rarely see an agreement come into our office that does not contain this clause.

Keep in mind that the Home Inspection visit does not count towards one of these visits and is over and above the number of visits agreed to.


Visits by buyer after the deal is “Firm”

Usually buyers and sellers are reasonable in regards to this topic. If the closing is a few months away, it is natural for the buyer to want to come in closer to the closing date to inspect the property to make sure no damage is done from the last time they were there. Buyers would like visits even for the purpose of measuring for their furniture or bringing in handy men to give an estimate a few days before closing.

These visits are done like any other “showings”- the purchaser’s real estate agent should be present during the visit. Also, the day and time of the visit is coordinated by the two parties’ brokerages.

Buyers and Sellers should try their best to accommodate each other in regards to schedules. Seller’s keep in mind that Buyers have a right to these visits prior to closing if provision for the same has been made in the agreement. Buyers, keep in mind that if you visit too close to the closing date, the sellers may be busy with packing and the home therefore may not be as immaculate as the day you first visited.

If both sides are considerate, these visits would go by very smoothly.


Structural Changes to your Condo Unit

When you are an owner of a Condominium, you want to be very careful not to add, alter or improve any parts of the common elements and/or your unit without prior written consent of the Board. This will make your life much easier when you sell that unit.

As most of you are aware, lawyer’s for purchasers of a condo always check the Status Certificate. Most status certificates would state that it is the purchaser’s responsibility to determine whether the vendor or any previous owner of the unit has carried out a structural or other change to the unit or has modified the common elements. Most lawyers would advice their purchaser clients to check for the same from the seller.

Any changes the seller makes to their unit or common elements must abide by the by-laws and Declaration of the Condo.

The most common example is flooring. If a condo owner wants to change the flooring of the unit, they typically will have to take a sample of the flooring to the Condo Corporation and get the consent of the Corporation before going forward with it. Most condo Declarations have specifications to the thickness and type of flooring and the corporation would need to make sure your flooring complies before giving you that consent.



Costs Associated with Selling your Home

Dear Readers,
I have a lot of potential sellers asking me about the typical costs associated with the sale of their home. In this post, I will attempt to list some of the most common costs associated with a sale of Ontario residential properties.

Every seller would incur legal fees, disbursements and real estate commission costs on closing. Legal fees and disbursements are usually the amount you negotiate with your lawyer and come to an agreement about. A lot of lawyers provide you with flat fees that would also include all the regular disbursements associated with the closing. This amount is easy to ascertain and budget for.

In Ontario, the seller pays the real estate commission. This is typically a percentage of the sale price- again, to some degree this percentage may be negotiable with your real estate agent. This amount may also be easy to ascertain and budget for. However, keep in mind that HST is charged on the amount of the commission and payable on closing.

You may also incur costs for any repairs to your home that the purchaser may require. For example if the home inspector finds certain things not up to par, typically an amendment to the agreement will be done whereby the seller will make those repairs prior to closing.


What to expect on closing day – Purchasers

Dear Readers,
A lot of home buyers and sellers do not know what exactly goes on behind the scenes on closing day. In this post I am only going to write about what to expect on closing day for purchasers – I will write another post about the same for sellers.

The closing day is usually hectic in the lawyer’s office. You and your agent have done everything you need to do and now your lawyer puts the complete transaction together in order to register the deed and mortgage. We try to leave nothing for the closing day except for the physical exchange of funds and keys in order to transfer title to you.

On the day of closing we receive your mortgage funds which usually go directly into our trust account. The receipt of mortgage funds by your lawyer plays a major role in determining whether the transaction will close on time. Most of the big banks direct deposit mortgage funds directly into the lawyer’s trust account and this is usually done first thing in the morning. The smaller banks or trust companies typically don’t provide funds to the lawyer early in the day as they sometimes have procedures where they would need to go over their file on the day of closing and then wire funds- this obviously could delay your closing as your lawyer cannot proceed if they don’t have funds.

Once funds are received your lawyer will start putting your transaction together- executions searches are done, checks are certified as per the seller’s redirection, closing documents that you signed a day or so before closing are put together and the complete package is couriered to the seller’s lawyer.


What to expect on closing date- Sellers

Dear Readers,
A normal sale transaction has a much “relaxed” closing day in the law office as compared to a purchase. When I say “normal”, I mean that your lawyer has completed his file and sent over the keys with the closing documents first thing on closing day or a couple of days before to the purchaser’s office.

If the above has been done, then your lawyer is only just waiting for the closing package from the purchaser. Once your lawyer reviews the purchaser’s closing package and makes sure all funds have been received as per his/her direction he will release the deed of the property for the purchaser’s lawyer to register.

Keep in mind that it is usually afternoon by the time your lawyer will receive the funds and closing package. Once the purchaser’s lawyer finishes registration, your lawyer can now release funds and they will call you to let you know that the transaction is complete. Your lawyer now has to work towards discharging your mortgage by paying your lender and paying out all real estate commissions, liens (if any), judgments (if any) and legal fees. They will have the balance of the funds waiting for you in the form of a certified check/bank draft.

As the seller you want to try to be out of the property as early as possible on closing day. Usually, by 3:00pm the transaction will be complete, however, it can take more or less time to close. If the transaction closes early and the purchaser shows up to move in, it is always a good idea to try and work with them in a manner that you can finish moving out and at the same time they can start moving in. As you can imagine, buying and selling on the same day can become a tricky situation.

Details on that in another post.


Buying a Home/Condo from a builder- The Agreement of Purchase & Sale

Dear Readers,
Today I want to talk about buying a residential property directly from a builder. These transactions are a little different from the ordinary resale transactions in terms of process, procedure and paperwork.

One major difference is in the Agreement itself. Typically, when you sign an Agreement of Purchase and Sale for a builder home/condo- the document will be long and detailed and in form and substance very different from an Agreement that you sign when you buy a resale property. A builder’s agreement is more geared towards protecting the builder and will have various clauses that the resale agreement doesn’t. You always have a 10 day cooling off period whereby if you change your mind within 10 days of signing the agreement you can rescind and get your deposit back.

It is always a good idea to show the agreement to a lawyer so that you understand properly the clauses in the agreement before your 10 days are up.

When you buy brand new from builder you will, depending on the phase of construction you bought in, have a few months to a few years before the transaction closes. In a lot of ways this is a good thing as it gives you time to save for your down payments- which are taken by the builder at regular intervals stipulated in your agreement. However, there is always some uncertainty as the builder reserves the right to extend the closing- this information will also be in your Agreement and its Addendum.



Important factors in making the right decision

Choosing your Lawyer

The following factors are paramount in your decision to choose your lawyer:

1. Typically, when people buy a property for personal use, the endeavour is to choose the best property according to desired location, type of property preferred, budget, the exterior and interior of the property and the floor plan etc. For some, it is important to see how the kitchen looks or whether there is a family room in the property. In condominiums, people look for common area facilities, location, public transit nearby etc. When choosing the right mortgage product too, the endeavour is to get the best available interest rate, amortization etc. But unfortunately, when the time comes to choosing your lawyer to complete the closing for you, even the most reasonable minds sometimes tend to go with the lawyer quoting the cheapest price and to what end- just to save a couple of hundred bucks. Even as we want to save money, the cheapest price quote should not be the sole or even the main criterion to choose your lawyer. NO, NO, NO! The role of the real estate lawyer is very important, if not the most important one. The lawyer has to guide the client throughout the process while at the same time, the lawyer should not cut corners but should do in depth detailed due diligence in respect of the property to ensure that the client gets a good title to the property.

2. While choosing a lawyer, following is a good indicator of your having chosen the right lawyer:

  • When you called the office, did you get to speak to the lawyer or if you left a message, did the lawyer call you back;
  • Did the lawyer respond to your emails in a timely manner;
  • Does the lawyer have only ONE office or multiple offices? (Remember, it’s a law office, not a factory. A single lawyer can only be in one place at a given time); Does the lawyer’s staff copy the lawyer on any emails sent to you;
  • Will the lawyer or his/her staff meet you for signing documents and so on.

3. Remember, many a times, a dispute occurs in your real estate transaction, while buying or selling a property. You must be confidant of your lawyer being able to address the matter in a professional manner rather advising you to hire a specialist litigation lawyer even if the matter can be resolved by writing to the other side. A little initiative and foresight from your lawyer and personal attention to your transaction can save you a lot of money eventually.

4. Thus, no harm being price sensitive but do not blindly choose your lawyer based on a lower fee. There is more to a Real Estate Lawyer than that!.


What is “Occupancy Closing” when you buy a brand new Condo?

Dear Friends,
Today I want to talk about Occupancy Closings and what they mean when you purchase a condo from a builder.

The Occupancy Closing is often also called the Interim Closing or Possession Date. When you buy a brand new condo from a builder there are, almost always, two closings- the first closing is the Occupancy Closing and then comes the Final Closing. The reason for this is that the Condominium Act requires the condominium to be substantially complete before the registration of the Condominium Plan. Units cannot be transferred to purchasers until the Condominium Plan is registered and so they let purchasers “occupy” the units till title can actually be transferred to them.

At the Occupancy Closing stage, you are allowed to occupy or live in your condo unit, however, the title to the condominium is not transferred to you. This means that though you are living in the unit, you do not technically own it at this point and as such you do not need a mortgage at the occupancy closing date.

The Agreement of Purchase and Sale will clearly set out the terms of the occupancy closing- this is most often referred to as the Occupancy Agreement. The Occupancy Agreement, in addition to other terms, will also state that you will be paying something called an “occupancy fee”- think of this fee as rent. It does not go towards your purchase price and is payable to the builder till the final closing date. The Occupancy fee typically consists of the following components:

  1. Interest calculated on the unpaid portion of the purchase price
  2. Monthly common expenses contribution for your unit
  3. A proportionate portion of the property taxes.

Keep in mind that if you want to rent the unit, you may wish to check your agreement first to see if it allows you to tenant your property during the Occupancy period. Most builders do not allow it or if they do there will be a fee associated with it.

As discussed in a previous post, it is always recommended that you review the Agreement of Purchase & Sale with a lawyer within your “cooling off period”. Based on your intention of the use of the unit, your lawyer will be able to advice you of any extra steps you need to take or questions you need to ask the Builder about “Occupancy” before you irrevocably commit to the terms of the Agreement.


Buying and Selling on the Same Day

Dear Readers,
Today I want to talk about closing your purchase and sale transaction on the same day and the challenges it comes with.

A lot of people prefer that their purchase and sale transactions close on the same day so that they move from one property into another- a big advantage is that this is convenient and cost effective to most. However, at the transactional end of things, such an arrangement can increase the risk of one transaction (usually the purchase) not closing.

This is why:
You will, most likely, need the proceeds of your sale to put towards the purchase. As such, your lawyer will have to close your sale transaction first. The sooner your lawyer receives, funds on your sale, the sooner he/she can start working on your purchase. Typically, a real estate transaction closes in the afternoon. If your sale closes by 2:00pm or 3:00pm, this gives your lawyer only 2 or 3 hours to work on your purchase. Therefore, your lawyer has a couple of hours to close a transaction that typically takes almost a full day.

Also consider things that are outside the scope of you and your lawyer’s control. Take for instance the purchaser who is buying your property, if their mortgage funds are delayed then your sale transaction gets delayed as your lawyer cannot close your sale without making sure that your closing funds have been received by them.

Also consider a situation in which the purchaser of your property is doing the same thing you are- buying and selling on the same day. In such an instance, the purchaser of your property would have to complete his sale first so that he has the money that completes the amount owed to you. In such a scenario your sale will be completed quite late in the afternoon and may not leave any time for your purchase transaction to close.

There are also time constraints, the electronic registration system closes at 5:00pm and as such lawyers cannot register deeds and mortgages after that time. Also, most banks close early and that may pose a challenge for a lawyer to certify checks and verify funds. When you are buying and selling on the same day, there is a potential for 3 or 4 banks being involved and not all of them may have “late hours” on the particular day.


Importance of the Status Certificate

Dear Readers,
Today I want to discuss the importance of getting a status certificate reviewed when you are purchasing a condominium. You should make sure that your Agreement of Purchase and Sale is conditional upon the review of the status certificate by your lawyer.

All of the information of the condominium corporation is included in the Status Certificate. It reveals the “health” of the Condominium Corporation. This document will have important details specific to the unit you are buying as well as specific to the Condominium Corporation. Among other things, the status will include whether the unit is in arrears of maintenance fees, whether there are any legal proceeding against the Condominium Corporation, whether there are any special assessments levied against the unit or any major repairs that need to be taken up. The document will also reveal if there is any expectancy of the common expenses will increase due to special assessments or inadequacy of the reserve fund. Such information will play a big factor in whether or not you want to buy a unit in that Condominium building/ townhouse complex.

The Status package includes the Condominiums financial statements, declaration and by-laws. The financial statements give a good indication of the Condo’s financial stability. The by-laws state procedures by which the condo will function and the declaration will typically consist of the rules and regulations of the condo that may affect you.

Your lawyer will review the complete package and should discuss it with you in detail so that you can make an informed decision about purchasing a property.

It is normal for the Agreement to be condition upon review of the Status Certificate and this condition should not be waived it has been looked over by your lawyer.

LOCATED IN TORONTO, ON.

178 Willowdale Avenue

+1 416 222 1 LAW (529)


Contact Information

178 Willowdale Ave. Toronto, ON.
+1 416 222 1 LAW (529)
(FAX) +1 416 221 FAX 1 (3291)
(FAX) +1 855 221 2157
db@madamser.com

ONLINE FORM HERE

Dheeraj Bhatia - Copyright 2016