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 ON PEI ]
Your choice about how to hold title to your property
Since there may be more than one titleholder, you can choose to take the title either as joint tenants or as tenants in common. Many married couples choose joint tenancy so that each person owns a whole interest in the property. If either person dies, the property belongs entirely to survivor. The property does not form a part of the dying person's estate and does not pass under his or her will. With a tenancy in common 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
- 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 the case even if you sell the property to someone who assumes the mortgage from you. Accordingly, should you consider selling the property under those circumstances, we strongly recommend that you obtain legal advice. Should you 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.
- In most circumstances, you will be purchasing with the assistance of a new mortgage. We will review the mortgage documents with you and help guide you through the process.
Financial adjustments we make
When a property changes hands there can be several adjustments to the purchase price. These adjustments determine how much additional funds will be required to close the transaction. Before the closing date, we will prepare a Statement of Adjustments, which will include items such as the following:
Other steps we will take
- Property taxes. The seller is responsible for all property taxes due until the day of closing. If the seller has paid taxes in advance, the purchaser must reimburse the seller for additional taxes paid. The purchaser will be responsible for all tax payments after the date of closing. The Registry Office notifies the municipal taxing authority that title has transferred to the purchaser.
- Mortgage. If you are placing a new mortgage on the property, the mortgage funds advanced by your lender will form part of the total cost of your purchase.
- 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 closing date in the purchase contract as the date on which to make these adjustments. But if you and the seller agree on a different closing date, please tell us well in advance so that we can make adjustments accordingly.
Other steps we will take
- We will discuss all of the above matters with you, clarify any concerns, and record your decisions.
- We will conduct a title search of the property and explain any registrations against the title that will remain after the property goes into your name[s].
- We will register the deed which transfers title into your name, together with any mortgage you are placing on the property.
- We will review with you all of the documents you will be signing and any conditions or unusual elements of the transaction. Now is your time to ask any questions which have not already been answered.
Items we do not deal with
We point out that we do not:
- Check the dimensions of the building or property.
- 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.
- Guarantee that any rental suite is legal.
- Attend to the adjustments regarding electricity, phone, cable or other similar services.
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. You should carefully examine any survey certificate you are provided 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 inform us as early as possible to determine whether you will need a new survey or title insurance.
- 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 closing date and that utility accounts are placed in your name[s].
- Be prepared to sign documents and provide funds required to close before the closing date. We normally ask you to come to our office to sign the documents and pay the funds required to close by bank draft three to five days before the closing date. If you are buying and selling on the same day please be aware that will multiple transactions there can be unanticipated delays in closing one or both of the transactions. We will do everything we can to ensure the smoothest possible closing experience but be aware that closings are often delayed to the end of the closing day. Anticipating these delays will allow you to have a smoother moving day.