Real Estate SolutionsThank you for coming to Campbell Lea for the legal services needed in your property purchase. Here's some information to help you make decisions and take the necessary steps. We will discuss these matters with you when you come in to sign documents, but if you have any concerns before then, please call.
For information on [ COSTS ASSOCIATED WITH BUYING A HOME ]
Your choice about how to hold title to your property
Since there may be more than one name on the title to the property as owners, you can choose to hold the title either as joint tenants or as tenants in common. Many married couples choose joint tenancy because with a joint tenancy each person owns a whole interest in the property, so if either person dies, the property belongs entirely to the other person. The property does not form a part of the dying person's estate and does not pass under his or her will. The property is transferred automatically to the survivor on death. With a tenancy in common, on the other hand, each person owns a designated interest in the property. For example, each might own a half interest, or one might own 20% and the other 80%. Each person can pass their interest to any other person by sale or under their will.
Dealing with the mortgage
1. In some circumstances, you may be assuming an existing mortgage registered against the property. We will confirm the amounts of any mortgage you will assume and attend to mortgage adjustments, taxes and any other financial adjustments. We will notify the mortgage company of the change of ownership. However, you should make suitable arrangements with the mortgage company regarding your payments as soon as possible after completion of the transaction.>
2. In other circumstances, your mortgage may be insured by Canada Mortgage and Housing Corporation (CMHC) under the National Housing Act. If you allow the mortgage to go into default and foreclosure proceedings result, you could be personally liable to CMHC for any deficiency should the value of the property be less than the total amount of principal, interest, and costs ultimately determined to be owing under the mortgage. You will remain potentially personally liable to CMHC for so long as the mortgage is in existence (that is, until it has been repaid in full). This is so even if you sell the property to someone who assumes the mortgage from you. Accordingly, if you should consider selling the property under those circumstances, we strongly recommend that you obtain legal advice before you do so. Should you ever be served with foreclosure documents in connection with this property, you should seek legal advice immediately, as there may be steps available to lessen your exposure. To confirm our advice, we ask that you sign a separate letter of acknowledgement.
3. In most circumstances, you will be purchasing with the assistance of a new mortgage. We will review the mortgage with you and help you through the whole process.
Financial adjustments we make
When a property changes hands, several financial adjustments occur besides payment of the purchase price. These adjustments determine exactly how much money you will have to pay to complete the deal (the cash to close). Before the possession date, we'll prepare a statement of these adjustments, which will include items such as the following:
Property taxes. The seller and buyer split the property taxes for the year of purchase in proportion to the number of days each owned the property. If the seller has been paying these taxes monthly, the adjustment needed will likely be small. However, if no taxes for the year have yet been paid, you will receive a credit in the statement of adjustments for the seller's share, but you will then be responsible for paying the full year's taxes to the municipality when they come due. (The Registry Office notifies the municipal taxing authority that title has transferred to you.)
Mortgage. If you are assuming the seller's mortgage on the property, the statement of adjustments will show the exact amount of principal still left to pay on that mortgage. If you are placing a new mortgage, the principal amount of that mortgage will be incorporated into the cash to close.
Other adjustments. The statement of adjustments will include a credit for the deposit you have already paid, and may include adjustments for other items such as water and sewer, fuel oil, propane and credits for any tenants' rent and damage deposits (if the property is a rental property).
Adjustment date. We ordinarily use the possession date in the purchase contract as the date on which to make these adjustments. But if you and the seller agree on a different possession date, please tell us well in advance so that we can make adjustments accordingly.
Other steps we will take
1. We will discuss all of the above matters with you, clarify any concerns, and record your decisions.
2. We will examine the title to the property and explain any registrations against the title that will remain after the property goes into your name[s].
3. We will register the deed which transfers title into your name, together with any mortgage you are placing on the property.
4. When you come in to sign documents, we will review with you all of the documents which you will be signing and any conditions or unusual elements of the transaction. Now is your time to ask any questions which haven’t already been answered.
Items we do not deal with
We point out that we do not:
a) Check the dimensions of the building or property.
b) Determine the quality of the building or property, its suitability for your purposes, or the state of repair of the building or other items like appliances or furniture.
c) Guarantee that any rental suite is legal.
d) Attend to the adjustments regarding electricity, phone, cable or other similar services.
Because the above items are not included in our services, we won't be liable for any related losses, nor can we hold back any purchase money for related problems.
Steps you should take
Check the real property agreement. Some real estate purchase contracts require the seller to provide a current survey or plot plan to the buyer. If your contract does not, then you should carefully examine any survey certificate to ensure it shows the correct location of all buildings and other improvements. If buildings or improvements (such as decks, garages, sheds, fences, etc.) are not shown, please speak to us as early as possible to determine whether you'll need a new survey – many mortgage lenders want to have them, but they are also very useful for your own needs.
Place insurance on the property. Your mortgage company will require that you place fire insurance on the building with first loss payable to the mortgage company. We recommend that you insure the buildings for their full insurable value on a replacement cost basis. For condominium buyers, your insurance should cover your own unit and its contents, separately from the Corporation’s insurance.
Transfer utilities to your name. You should ensure that utilities are read on a date as near as possible to the date of possession and that utility accounts are placed in your name[s].
Be prepared to sign documents and pay the cash to close before the possession date. We normally ask you to come to our office to sign the documents and pay the cash to close to us by bank draft a day before the closing date. Please note that if you are selling one property to buy another, with both deals closing on the same date, you may experience a delay, which is out of our control, with the closing of your purchase. This can arise due to financing issues of the buyer of your existing home or other issues, then delays in getting funds to the bank in order to be able to draw on them for your purchase. We will do everything that we can to ensure the smoothest possible closing experience with the fewest delays – but there are any number of issues that arise for any of the parties involved in your transactions or in other transactions which must close before yours can close.
When calculating the amount required, you should include land transfer tax and registration costs, as well as the cost of our services. We will work with you to give you an accurate figure as quickly as we can so that you have the opportunity to get your funds to us in timely fashion.