Before your transaction closes, you’ll meet with your Real Estate Lawyer at a signing appointment to review and sign your closing documents. This is the time when you’ll sign the required documents to make your purchase, sale or refinance transaction official.
The excitement of getting to the finish line tends to make us all a little impatient or uninterested in the fine-print legal details. While your real estate lawyer will explain the purpose of each document and what it means in plain English, we put together some further insight into what to expect when you are at the signing table.
CHARGE (A FANCY NAME FOR A MORTGAGE)
If you are taking out a mortgage to buy your new home, the Charge/Mortgage is the document registered against your home in the Ontario land titles registry.
When reviewing the Charge/Mortgage, you may notice in the “Chargor(s)” section reference to whether or not you are a spouse. The reason for spousal information being includes, even if they might not be on title of the property is because a spouse must provide his/her consent to the mortgage.
CONSENT TO ALSO ACT FOR YOUR BANK
When your transaction involves a mortgage, your lawyer will generally act for both you and your mortgage lender (or lenders in some cases) to save you the cost of paying for two lawyers.
While this isn’t the norm to the rules in most other legal transactions, where each side retains their own representation, an exception to the rule permits a lawyer to act for both parties only if he/she is given permission from both parties to do so.
When signing legal documents for the purchase of your new home, you may come across a document called “Consent to Act…”. By signing this document, you give your lawyer permission to act for both you and your bank.
ACKNOWLEDGMENTS AND DIRECTIONS
Acknowledgments and directions are documents signed by you and used by your lawyer as written confirmation that you have reviewed certain documents and that the information is accurate. A direction states that you authorize and direct your lawyer to take certain action. Your lawyer may require you to review and sign an acknowledgment and direction before your mortgage or the transfer of title is registered. Your lawyer may also require you to review and sign a direction for the transfer of funds from your bank to be held in trust by him/her until the amount is paid to the home seller.
TRANSFER OF TITLE
The Transfer of Title is a document that is registered with the Ontario land titles registry. In a nutshell, this document directs the transfer of interest in the home.
JOINT TENANTS OR TENANTS IN COMMON
If you’re buying your home with other people such as a family member or a spouse, you may be asked if you’d like to be registered as “Joint Tenants” or “Tenants in Common”.
With joint tenancy, you co-own 100% of the home with the other people on title and no one person owns a specific share of the home. For example, spouses may purchase a home together as joint tenants because, in the event that one of the spouses passes away, 100% of the ownership of the home then automatically belongs to the surviving spouse.
On the other hand, with tenancy in common, you own a specified share of the home and may be able to transfer or sell that share to others. Upon death, the share of the home will pass to the tenant in common’s heirs. Often times in co-ownership or investment properties the owners are considered tenants in common.
STATEMENT OF ADJUSTMENTS
The statement of adjustments likely gets the most questions during the signing appointment. Put simply, a statement of adjustments summarizes the monies that will be exchanged, less any adjustments (deductions in the favor of the buyer or seller).
The statement of adjustments is similar to your monthly bank statement, as it has a list of various debits and credits with a balance at the end. In the buyer’s statement of adjustments, the debits represent amounts already paid, such as the deposit, while the credits include the purchase price of the home and any fees or utilities the seller has prepaid. The total amount in the credits column (purchase price + prepaid items) minus what’s in the debit column (the deposit) is what you owe to the seller on closing day.
If you are buying a home, you’ll likely see your purchase price, plus any additional fees, less any deposits you’ve put down and funds that are coming in from your lender. The balance of the statement is what you’ll need to pay at closing.
If you are selling your home, you’ll see items such as proceeds from your sale, property tax adjustments, deductions for real estate commissions, and a payout to your mortgage lender, as applicable.
The more you know, the smoother your transaction will. Now that you have a better idea of what documents to expect at your signing appointment, taking a few minutes to prepare questions or ask for clarifications is always a good idea.
At Deeded, we’re committed to making your Real Estate transaction seamless and smooth. We believe that consumers should be empowered and in control of the most significant purchase or sale they’ll likely make.
Important note: This article is not Legal Advice. No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.