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Buying Your Home - What You Should Know

Buying Your Home – What You Should Know

The purchase of a home is a large and complex undertaking. Before you take the plunge and make an offer to purchase there are a few things you can put in place to ensure the process goes as smoothly as possible.

The Closing Checklist walks you through the process from beginning to end. You will know what to expect and what to have in place at each step along the way.

The Information Required by Your Lawyer is an additional checklist that outlines the documents and information you will need to have when you meet with your lawyer. Nothing is more frustrating than having a transaction delayed or voided because the required information was not in place.

A deposit is a good faith payment to ensure that the buyer will go through with the purchase. It is often 5% of the purchase price and represents a significant amount money. As a buyer it is important to know the terms under which the deposit is released to the seller or when there is a possibility for the buyer to recoup the deposit if the deal is not consummated.  These conditions are outlined in Terms of Your Deposit.

Closing Checklist

  • It is a good idea to get pre-approved for a mortgage before you begin you serious house hunting. Taking this step can save delays later on and give you an idea of the price range you can afford.
  • Determine all of the costs that are involved in the purchase of your home. The MortgagePlanner can provide you with an estimate.
  • Before making an offer to purchase on a home consult a real estate agent who is not acting as the selling agent or contact a lawyer if you are not using a real estate agent. If you are using an agent, ask them to fax your Agreement of Purchase and Sale to your lawyer as soon as possible.
    • A good faith deposit is almost always offered - but not paid immediately! - when a buyer submits an offer or Contract of Purchase and Sale. The deposit is usually paid 7 days after acceptance of the offer, once the buyer removes their subject conditions (making the contract legally binding)
    • The deposit has to be in the form of a certified cheque or bank draft made out to the buyer’s agent’s office followed with the words “In Trust”.
    • A typical deposit can be 5% of the property value.
  • Ask your lender to send all mortgage documents to your lawyer at least 3 weeks ahead of closing date. Sometimes that time frame is not possible. In that case, have them send the documents as soon as possible.
  • Inform your lawyer as to the names and dates of birth of the persons buying the home.
  • Obtain fire insurance on your new home and have it in place 2 weeks before the closing date. As your insurer to send the documents to your lawyer confirming that your insurance is in place.
  • Contact your phone/cable company 3 to 4 weeks before closing to schedule a setup in your home.
  • Contact the city/municipality 3 to 4 weeks before closing regarding home ownership change so there is no disruption in utilities such as power, gas or water.
  • If you are using movers book them preferably for the day following closing. There is no guarantee that you will get the house until late on closing day.
  • Calculate the amount of money you need to bring to your lawyer for closing. The lawyer can provide you with an estimate or you can use the MortgagePlanner for an approximation of these costs. Ensure these funds are in place and available.
  • Contact your lawyer for the exact amount of closing and meet with him/her 1 or 2 days before closing. Bring 2 pieces of ID and a bank draft or certified cheque for the amount of the closing to the meeting
  • The home is typically transferred to you between noon and 5 PM on closing day. When your lawyer notifies you that the home has been transferred to you, pick up the keys at their office.

Information Required by Your Lawyer

  • A copy of the Agreement of Purchase and Sale
  • Name of the Mortgage Lender (if applicable)
  • Inspection Report - A copy of any building inspection report that the purchaser may have received if required as a condition of your title insurance policy.
  • Photo Identification - Copies of two pieces of photo ID is required for each purchaser listed in the agreement. The most common forms of photo ID are a passport and a driver’s license.
  • Date of birth of all purchasers.
  • Address for Service – The address that will be registered on the deed for future contact.
  • Title – The purchasers need to instruct the lawyer whether the title will be taken as joint title or tenant-in-common if there is more than one name on the title.
  • Property Insurance – As a condition of mortgage the purchaser’s insurance agent must send to the lawyer a certificate of insurance showing that the insurance is in place and that the lender’s interest is noted on the property as of closing date.
  • Closing Funds - The purchaser will need to provide the lawyer with sufficient funds to complete the purchase on or before the date of purchase. This must be in the form of a certified cheque, bank draft or money order. 
    • These funds include the balance owing to the vendor as well as land transfer tax and any other required adjustments such as property taxes or fuel oil. 
    • The lawyer will contact the purchaser prior to closing to provide the exact amount required.

Terms of Your Deposit

If the buyer removes their conditions and does not complete the transaction or move forward with the deal, there may be a chance the seller could keep the buyer’s deposit. Consult with your lawyer before making a deposit to confirm the terms of the deposit.

The deposit money is held by the Real Estate office of the buyer’s agent in their Trust Account. This money can only be released under three circumstances:

  • The Contract of Purchase and Sale Completes at the land titles office and the property in question is sold to the buyer. The deposit money held in the Trust Account will be released to the seller along with the remainder of the purchase price.
  • The Contract of Purchase and Sale does NOT complete due to the fault of the seller. The buyer may be able to get their deposit back. Consult with your lawyer before making a deposit to confirm the terms of the deposit.
  • If there is a legal dispute that goes to court between buyer and seller the Deposit can be paid into court.
     
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