fbpx

Author: admin

Six most common post-closing issues and how you can avoid them

There are few things that are more exciting than getting the keys to your new home.  What you typically picture as a happy and exciting moment, can quickly turn into a stressful and frustrating mess thanks to a variety of situations that can transpire after closing.  In “industry-speak” we call these post-closing issues.

As much as we are optimists, we’d like to set the stage with both buyers and sellers.  Something willgo wrong upon closing.  Something willundoubtedly bother you when you close.  Whether it’s garbage that the seller failed to dispose of and left behind, or the dirty toilet in the main floor powder room.  Our best advice is just be prepared, put it all in perspective, and realize that not everyone see things that same that you do.

While there may be thousands of different ‘post closing’ situations, here are the top six we’ve encountered with our buyers or sellers.  The good news is that some of these can be avoided through proactive communications and some due diligence.

Damage to Property

You get your keys and arrive at your new home.  While the place looked spectacular during showings, now that the seller’s furniture and possessions are gone, you notice damage to the drywall.  Maybe you go to the basement and see a big puddle beside the hot water tank.

These things are unfortunately common.   As a typical closing takes 60-90 days from signing the purchase agreement, a lot can change in the condition of a property.  Damages that may not have been visible during showings all of a sudden appear now that the property is vacant.  Sometimes even minor things like removing artwork from the walls can leave nail holes and damages that may require repairs after closing.

post-closing damage

How to handle:

First, you need to know that these types of things are expected, and damages can occur intentionally or unintentionally.   It is important to put things in perspective as to how significant these damages are before you put your time and stress into rectifying them.

When you take possession of a property, make detailed note of any unexpected damages and if possible, take clear photos of the damaged area(s).   Submit the notes and photos to your lawyer and real estate agent.  Please note that submitting these photos doesn’t guarantee that the damages will be rectified, but at the very least, you’d be starting a process where the seller’s lawyer will be notified, and the seller be given the opportunity to respond to your claims.

Surprise!  You’ve got Rented Items

You move in and a month later, you receive a bill to pay for your hot water tank rental.  Problem is, you had no idea it was rented.  You didn’t sign a rental contract or even consider the possibility when you bought the place.  Now you’re stuck with monthly bills you did not plan on having.

It is the job of the seller, and the listing agent, to disclose if there are any items in being sold with the home that are rented such as a hot water tank (or in some cases, air conditioners, furnaces and other appliances).

There is a section within the standard Agreement of Purchase & Sale that specifies which items, if any, are rentals.  Barring the inclusion of a rental item in this section, then all items and equipment are deemed to be free and clear of any encumbrances.

So, what happens when you take possession of your new home, and find out that the hot water tank is rented?  Or the furnace?  Or the air conditioner?

Well, the seller is on the hook for the contract, but will the seller now buy out the contract after the fact? What if they refuse or blame their real estate agent for not including it in the listing and/or the agreement of purchase and sale?

How to handle:

Before you sign an agreement of purchase and sale, ask your real estate agent to verify any rental items with the seller’s agent (who should double-check with their seller).  While there isn’t a sure-fire way to avoid misrepresentation, it never hurts to double check.   If there are rental items, you can request to see those agreements and/or contracts and can require the seller to pay off any contracts prior to the closing date.

During the closing process, your lawyer typically also double-checks with the sellers’ lawyer to see if there are any rental items or contracts, however, the reliance is still on the seller to represent the facts as sometimes rental items may not be registered on title.

If you find out about a rental item that was not disclosed after your closing, reach out to your lawyer immediately.  Your lawyer will likely reach out to the seller’s lawyer and advise of possible next steps.

Appliances not working

You can’t wait to cook your first meal on your new home’s gorgeous stainless-steel stove.  You flip the switch and nothing happens.  The stove won’t even turn on.

Before you get frustrated and opt out for take-out food instead, remember that this happens all the time and could just be a matter of poor timing.  It can also be an appliance that wasn’t in good repair to begin with.

The agreement of purchase and sale will typically include a condition where the seller warrant’s that appliances and home systems will be in good working order upon closing.  This clause can vary in cases where you are buying a property as-is or the seller is aware of an appliance not working or excludes it from the agreement at the time of negotiation. 

How to handle:

Your purchase and sale agreement should include a condition that allows you to revisit the property a certain number of times prior to closing (usually 2-3 times is the norm we see).  We suggest booking the last revisit within a couple of days of closing and using that revisit as an opportunity to briefly inspect the property, including the operations of major appliances. Also, if you had your home inspected, check the inspector’s report for that appliances.

If you notice anything out of the ordinary such as an appliance not working, inform your lawyer as soon as possible.

Another option to protect yourself at closing and after closing is purchasing a home warranty policy.   There are several affordable options on the market that will protect your appliances and home systems in case of breakdown or replacement, giving you peace of mind.

Sellers still on the property after closing

Yes, it happens.  You open the door to your new home only to discover the seller is still in the midst of packing their belongings.  In the meantime, you might have your moving truck outside, charging you by the hour.

Whether an honest mistake or just poor planning by the seller, in these situations, both lawyers must be made aware so that the property gets vacated as soon as possible.

How to handle:

Closings typically happen between 3-5pm in the afternoon.   Once funds have been exchanged and the property’s title is in your name, your lawyer will release the keys.   Sellers are notified to plan to vacate their properties by the afternoon, but things like forgetting to book the elevator or your seller’s moving truck not showing up sometimes do happen. 

If you do find yourself in a situation where the seller has not left the property, keep your cool and try sorting out the situation with them.  They can also be in the same stressful situation that you are in.  While the situation wasn’t what you expected, having a calm and rational discussion may be the best way to deescalate a situation.

The case of the missing chattels

You move in and notice the seller removed all the curtains and curtain rods.  You are in total shock as you were under the impression that the curtains and rods come with your home.

When negotiating your agreement to purchase, it is important to understand the difference between a chattel and a fixture.   A chattel is an item of tangible movable or immovable property except real estate and things (such as buildings) connected with real property.  An example of a chattel is a stove, fridge or a laundry machine.

A fixture in real estate is an item that is fastened or attached to the property like a curtain rod, a light fixture, or even a bathtub (to be extreme). Fixtures are part of the property and should come with it when the buyer takes possession.

There is a section on the agreement of purchase and sale that says “chattels included.”  That’s because all chattels are deemed to be “excluded” unless specifically included.

There is a section on the Agreement that says “fixtures excluded.”  That’s because all fixtures are deemed to be “included” unless specifically excluded.  It is excluded unless it is specifically included in the Agreement.

A curtain rod is a fixture.  It is screwed to the wall.  It is affixed.  It meets the rudimentary test of “nailed, screwed, or glued.  This curtain rod is included unless it is specifically excluded in the Agreement.

How to handle:

Keep in mind that your agreement needs to be as specific as it can and you need to pay special attention to the chattels and fixtures sections before you sign.  If you negotiate for certain chattels to be included, list them out and be specific down to the location (for example: upright freezer in basement, shelving unit on the first floor family room, etc.). 

If you take possession and notice a chattel or fixture missing, consider its importance (it may not be worth the effort or stress to chase down a $20 lighting sconce that was removed) and inform your lawyer as soon as you can.

Garbage and/or junk left on property

post-closing damage

This is the number one complaint we get from buyers by far.  The sellers may have left some of their possessions, garbage or junk inside or outside the property.

As a general rule, the buyer expects the seller to leave the property free and clear of any possessions or garbage.  However, it happens all the time.  Whether it is garbage left on the lawn days ahead of scheduled garbage pickup or the seller leaves some possessions behind.

How to handle:

Consider the severity of the situation and inform your lawyer if necessary.  Your lawyer will work with the seller’s lawyer to potentially rectify.

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.

Status Certificates. What are they and why you should care.

If you are buying a condo, you will probably encounter the term “status certificate”.  What exactly is a status certificate and why is a status certificate important?

Think of a status certificate as a comprehensive document that provides information about the current state of a condominium property.  The purpose of it is to give potential buyers as much information as possible about their unit and the overall health of the operations of the condo complex.

A condo unit is typically subject to additional rules and regulations compared to a (freehold) house because it’s managed by a Board of Directors and often a property manager. 

The condo board is responsible for managing the budget for the overall condo, which includes upkeep, repairs and improvements to the common elements on the property.  Common elements are typically anything outside of your unit such as elevators, lobby, amenity facilities, etc. For this reason, you’ll want to make sure that the condo board is fiscally responsible and can handle necessary repairs that come up now and in the future.

That’s where the status certificate comes in.  The status certificate is a recent collection of relevant information such as the condos by-laws (rules about things like pets, fitness facilities, swimming pools, barbecues, smoking, etc.), a current budget for the condominium, a recent reserve study (we’ll talk about that in a moment), and whether any lawsuits may be pending against the condo.

With this information at-hand, a status certificate can help you make your purchase decision and anticipate any issues such as:

  • Anticipated increases in maintenance fees
  • Any major future repairs you may be liable for a share of
  • The overall financial health of the condo
  • Any special assessments that may be costly down the road

Where do I get a status certificate?

You or your Real Estate agent can order a condo corporation’s status certificate. All you have to do is submit a written request and pay the $100 fee (plus HST) to management or the condo corporation.

It takes about 10 days, although it can be rushed for an additional fee.

Is it mandatory to get a status certificate?

Typically, when buying a resale condo, your real estate agent will recommend that you obtain a copy of the status certificate and thoroughly review it with your real estate lawyer before you commit to a purchase.

Most offers on resale condos are conditional upon review of the condo status certificate, so that buyers can ensure everything is in order.

If you are getting a mortgage or refinancing your mortgage on a condo property, your lender will require a status certificate be obtained and reviewed by a lawyer as a condition of the mortgage.

How do I review the status certificate?

As the status certificate can often be complex and contain key information within dozens of pages, we recommend having an experienced Real Estate lawyer review the status certificate for you.  A lawyer will know the key information to look for, how to interpret the information and will typically summarize the key points and what you should be aware of.  

What is a typical ‘deal breaker’ that can be found in a status certificate?

Condos carry a monthly maintenance fee to pay for common expenses are shared between all owners. If the condo corporation is running short of funds to pay operation expenses, you will notice an increase to your maintenance fees.  While some increases may be reasonable, in some circumstances, when reviewing the status certificate is a condition of your offer to purchase, a sharp increase to maintenance fees may not be within your budget and you may decide to not proceed with buying the unit. 

Another major item that can be found by reviewing the status certificate is called a special assessment.  A special assessment is an additional charge that condominium owners are required to pay on top of their regular monthly maintenance fees. While all owners are responsible for paying a special assessment, it’s important to realize that the condo board of directors does not need to get the approval of individual owners to add a special assessment.  For example, if the condo has an urgent requirement to repair the roof at a cost of $500K and does not have sufficient funds in the reserve to cover the cost, each unit may have a special assessment put against it, which means you and other unit owners are liable for your share of the cost of repairs. 

Under Ontario law, there’s very little owners can do if they can’t pay or disagree with a special assessment. If an owner can’t pay, the condominium corporation can put a lean on the property. 

Keep in mind that reviewing the status certificate will only highlight any issues at the current time but does not guarantee against having condo fee increases or special assessments in the future.

Can Deeded help with my status certificate?

Of course!  As you are shopping for a condo unit, we’d be happy to review the status certificate for your property and provide you with a comprehensive, yet understandable summary.  If you are in a bidding war situation, we’d be happy to turn around a status certificate review within 48-72 hours.   Please feel free to contact us anytime.

How Can I Protect My Home With a Will?

Prepared by Willful for Deeded

Owning a home is so exciting! You’ve likely been preparing for this purchase for a long time. You’ve just closed and you just can’t wait to move in and settle down. 

We’re not here to bring down the mood, but have you thought about what happens to your home if you were to die unexpectedly? 

A recent study commissioned by online estate planning platform, Willful, shows that 49% of Canadian homeowners don’t have an up-to-date will, and 1 in 4 Canadians don’t know what happens to their home if they pass away. For many individuals, property is one of the biggest assets they own. So while no one wants to think about their own death, it’s important to make plans to protect your property in the event of your death. 

What is a will?

Your last will and testament is a legal document that outlines how you wish to distribute your assets such as property and money when you pass away. Your will is also where you name guardians for any minor children and an executor who will be in charge of settling your affairs on your behalf.

In the context of a home, you can think about it like home insurance. In the event of an emergency, having a will makes sure that your home will be left to the beneficiary or beneficiaries of your choice if you were to pass away.

What happens to my home if I die without a will?

When a person dies without a will, they are considered to have died “intestate”. No, this does not mean the government will get your house. But it does mean a provincial formula will decide how your home will be distributed. The rules vary from province to province, and in many cases, it means your home and other assets will not be distributed to the individuals you would have liked.

It’s important to note that most provincial formulas don’t account for common law spouses, so it’s even more important to plan in a will if you’re in a common law relationship.

Does the type of ownership affect if the property in my will?

How you own your home can significantly affect how your property is distributed in your will. Depending on how you own your home, there are a few ways the home can be distributed upon your death. 

Owning property on your own 

This is when you own property solely under your name. In this situation, your property is covered by your will when you pass away. Like any other assets you may own, you can leave it as a specific gift or it can be distributed to your beneficiaries as part of your residual estate.

Property owned jointly with rights of survivorship 

This is when you own a property jointly with rights of survivorship with a spouse or someone else. In this situation, property passes directly to the other person who co-owns the home, along with any associated mortgages/debt. As a result, this property does not become part of your estate and what happens to it is not governed by your will.

Property owned jointly with tenancy in common

If you own property as joint tenants in common, you and the co-owner each own a share of the property. In this situation, the property will not automatically be passed to the other owner. As a result, your share is included in your estate and can be gifted through your will.

Depending on how the home is owned, this may also affect taxes at the time of your passing

Do I need to update my will every time I move?

It’s important to review your estate plan regularly to ensure that it is up to date, and moving is a great time to do that!  Any time to sell or acquire an asset, you will want to make changes to any specific gifts in your will. For example, If you’ve left a property at a specific address to someone, you’ll need to update it to the new address.  Having the correct information is crucial to ensure your gifts are honoured. 

If you’ve moved to a different province (or country!), you will also be subject to local wills and estates laws in that market. While most Canadian provinces recognize wills made in other provinces, it’s always best practice to update your will to adhere to provincial legislation. It’s also important to ensure your selected executors and guardians still make sense in your new location.

The important takeaway?

If you own a home, you need a will. While it may sound like a lot of work – creating your will is actually one of the easiest things you can do to protect your home and loved-ones. There are many ways to make a will, but online estate planning platforms, like Willful, make it easy for you to make your will in 20 minutes, all from the comfort of your home!

Willful is an online estate planning platform that makes it affordable, easy, and convenient to create your will and power of attorney documents online in less than 20 minutes. Learn more about Willful here.

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. This article was written by Willful. Deeded Law Professional Corporation and Willful are independent entities. Deeded Law Professional Corporation does not assume any liability for the accuracy of the content or any services that may be provided by Willful.

Insurance: What you need to know when closing your home or mortgage

Whether you’re closing on a home or refinancing your mortgage, you are going to need to look into various insurance products.  Some of these are going to be mandatory, others are optional, and some are just common sense to have or look into.

Here are the various types of insurance products you will encounter when closing your home or mortgage transaction:

HOME INSURANCE

A home insurance policy covers your home and its contents in various situations such as floods, fires, break-ins and personal liability if someone gets hurt on your property.

If your property has a mortgage, your lender will likely require that you have the appropriate coverage and that you submit proof of your coverage prior to closing your transaction.

While home insurance costs can add up, there’s really no good reason to leave your biggest asset unprotected.

When shopping for home insurance, you can use an insurance broker who would typically shop around for the best rates with the insurers they work with, or you can obtain a policy directly from an insurance company.

Be sure to read the fine print before you purchase a policy as they are not all the same and coverages of certain items and situations can vary among insurers.  Your mortgage lender may also have requirements for minimum coverage levels which you’ll need to consider when shopping around for a policy.

Home insurance costs vary depending on coverage, home value and additional factors

CONDO INSURANCE

Your condo corporation will typically carry commercial condo insurance to cover common areas and the shared exterior and interior aspects of the condo.  In most cases, this policy does not cover your individual unit and your contents.  You’ll need a personal condo policy to protect your unit.

For example, if a homeowner in a unit above you has a flood and the water causes damage to your unit and belongings, the home insurance policy of both parties will likely cover the claim.

Like home insurance, most mortgage lenders will consider having an insurance policy for your unit as mandatory and you will require to produce proof of coverage prior to closing (often referred to as an “insurance binder”).

The cost of condo unit insurance varies depending on coverage, condo value and additional factors

RENTER’S OR TENANT’S INSURANCE

If you plan to rent your property or rent part of it, your tenant’s contents and liabilities may not be covered, even if you have a homeowner’s policy in place on the property.  

For example, if your property is tenanted and there’s a flood, your home insurance may cover the cost of repairing your property, but if your tenant’s possessions such as their TV or couch suffers damages as a result, your insurance company will likely not cover these items.

While tenant insurance is not mandatory in Ontario, as a landlord, it is a good idea to require your tenants to obtain their own insurance to cover their possessions and personal liability while living in your unit.  Landlords typically incorporate such requirements as part of the lease agreement.

The cost of tenants insurance may vary with the level of coverage needed, but in most cases, it is an affordable monthly payment.  

TITLE INSURANCE

Your property’s title is legal proof that you are its owner. It describes your rights to the land and any limitations like giving your local phone and power companies legal right to construct, repair, replace and operate wires on a section of your property.

Title insurance is a policy that protects the homeowner and lender against future issues that may arise with the title of the property.

For example, you purchased a property with a shed that was built by the previous owners.  It is later discovered that the shed partially sits on the neighbour’s property.  In this case, a title insurance claim can be made to correct the situation.

Title insurance also protects against 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), title fraud, and errors in surveys and public records.

Most lenders will require a title insurance policy be purchased as the policy also protects the lender’s interests in having a marketable property.  Learn more about title insurance here.

Unlike usual insurance premiums that are paid monthly or annually, Title insurance is a one-time premium based on the value and location of the property.

MORTGAGE DEFAULT INSURANCE

Mortgage default insurance (also known as “mortgage insurance”) is mandatory on all mortgages with a down payment of less than 20 percent of a home’s purchase price.

This insurance protects lenders, but also allows qualifying buyers purchase a property with as little as 5% down payment.   

Mortgage default insurance costs between 2.8% to 4% of the mortgage amount. This cost can be rolled onto the mortgage so it’s not an out-of-pocket expense.

LIFE, DISABILITY AND CRITICAL ILLNESS INSURANCE

While it is difficult to imagine, when taking on a mortgage, it is a good time to consider unfortunate scenarios whereas you may not be able to pay your lender and may put your home at the risk of foreclosure.

While life or disability insurance may not have been a topic you thought about in the past, it may be worthwhile considering a policy to protect you and your family in a worst-case scenario. 

Life insurance is not mandatory, but a good idea to look into.  Disability and critical illness insurance are also options that would supplement your income should you not be able to work due to a disability or a critical illness.  These products are also typically offered through your employer’s benefit plans.

Costs can vary depending on life insurance type, coverage, and personal factors. 

HOME SYSTEMS WARRANTY

You moved into your new home in the summer.  Come fall, you turn on the furnace and discover it isn’t working.  You’re devastated when find out that you need a new furnace at a cost of $4500.  

In reality, the systems in your home are complex and can be expensive to repair or replace.  There are several insurance options that will cover major home systems and even appliances should they break down or require repair. 

While absolutely optional, if you are looking to reduce the risk of expensive repair bills during the course of your home ownership.  There are various options that will have you covered and sleeping well at night.

Costs vary depending on the coverage you are looking to get and the home’s age.

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.

Why skipping the home inspection can be a bad idea

Your heart is beating fast.  You just submitted an offer to buy the home of your dreams.  You sign the offer, and your agent submits it.  Now the waiting game begins and your emotions are entering “rollercoaster mode”.

Your agent calls you back 2 hours later with some bad news.  The property you made an offer on has 12 other registered offers and it is an all-out bidding war.  The seller agreed to review offers on Sunday night and will choose the best one.

While one of the tactics to “sweeten up” your offer is to raise the amount of money you’re offering, it may also be tempting to waive certain (or sometimes all) conditions in order to provide the seller with more certainty.  If you haven’t negotiated for a home before, conditions are clauses that are inserted into an offer of purchase and sale that make the transaction conditional on certain terms or obligations that are to be fulfilled by either parties.

Some examples of most common conditions are financing (or the buyer’s ability to secure a mortgage), a home inspection or a lawyer’s review of the agreement.  There are dozens of other conditions that may be inserted into an agreement and in theory, you can make your purchase contingent on anything you can imagine, however, the more conditions you have, the less likely the seller will have certainty that you are serious and will see the transaction through.  

This is especially true if a seller is reviewing multiple offers.   An offer with less (or without) conditions, will likely be seen as more attractive by a seller.  As tempting as it may sound to go “all in” and waive all conditions when you’re competing to buy a property in a hot market, it can turn out to be a really bad idea.

One key example is an inspection condition.  It is common to have a condition in the agreement of purchase and sale that allows the buyer to have the home or condo inspected by a professional home inspector within a few days of the seller accepting their offer.  Depending on the inspector’s findings and report, buyers can identify potential issues with the home or at the very least, be made aware of existing and future issues.

Waiving, or not including the home inspection condition essentially puts the risk on the buyer.  If the home has any issues after closing, the recourse against the seller may be very limited. 

While it may be tempting to skip the inspection in order to make your offer more competitive, keep in mind that no matter the property’s age and appearance, there may be underlying issues that were not visible during showings. 

There have been situations where hundreds of thousands of dollars of repairs were needed in a property.  From remediating mold caused by previous leaks, all the way down to structural issues that needed serious repairs.  As a buyer, skipping on an inspection or not hiring a reputable home inspector, means taking a chance that can add up to huge liabilities down the road and turn your dream home into a nightmare.

Keep in mind that pre-existing issues will likely not be covered by your home insurance or title insurance and proving that the seller knowingly hid defects or damages may be tough to explain in court given that you’ve knowingly waived the opportunity to have the property inspected.

As tempting as it may be to waive an inspection condition to have your offer accepted, it can turn into a very expensive gamble.  Just as important is hiring a qualified home inspector perform a detailed inspection and provide you with a comprehensive report of their findings. 

While you may have an uncle who is a plumber, or maybe you consider yourself pretty handy, a professional home inspector will go through a very detailed checklist of all the structural, finishes and systems of a home.  An inspection can cost $250 – $1000 depending on the property and area.   It may be an additional expense, but it is a worthwhile investment.

In addition to having an inspection condition and conducting the inspection, there may be a few weeks from the time you complete the inspection until you close and move in.  During that time period, appliances can break, and other damages may be caused while the seller still occupies the home.

One way to reduce such risks is to request a reasonable amount of re-visits to the property prior to closing as one of your conditions.  Use your last allotted visit to the property to perform your own visual inspection a few days prior to closing, or if you choose, you may bring an inspector or professional with you to the final visit prior to closing.  

Have a quick look for damages that you may not have noticed before inside and outside the home.   Ask the seller if it is possible to turn on all the appliances (if they are included in the sale) to ensure they are in good working order.  Turn on taps, showers and lights and note any issues.

If anything is amiss on your final walk-through, document it and contact your lawyer as soon as possible.

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.

Interim Occupancy – What is it and what you need to know

When you buy a pre-construction condo, it may take a few years before the building is ready and you get to move in.

When it’s time to move in, you might be surprised to learn that you still might not actually own your condo unit (or at least not just yet).

The period between the occupancy date (when you move in) and when the condo the condo’s ownership transfers to you, is known as the “interim occupancy period.”

During this time, you will pay the builder a fee known as the “interim occupancy fee.”

Why Is There an Interim Occupancy Period?

When a condominium is built, ownership in the condo units can’t transfer from the builder to the condo buyers until the building is registered with the local municipality.

This process typically takes a while (The average is 6 months, but for some buildings it has taken up to 2 years).  Also, since units on the lower floors will be completed months before units on the higher floors, if you are buying a unit on a lower floor, it may take time before the building is fully complete, thus making the interim occupancy period longer for you.

As the building nears completion, the developer will notify owners of the “interim occupancy date” for each unit. The lower the floor your unit is on, the earlier your interim occupancy date will be, and as a result, the longer your interim occupancy period will be.

How much is the interim occupancy fee?

The interim occupancy fee is generally lower than your monthly costs would be after closing, however, if you are currently renting your home or will not be selling your current home, you will have to carry the cost of two homes.  This necessitates planning for your cashflow considerations.

The interim occupancy fee will vary with every building and the type, size and price of the unit, but will generally be calculated as:

  • Interest (calculated on a monthly basis) on the unpaid balance of the purchase price at the prescribed interest rate
  • estimated monthly municipal taxes for the unit
  • Projected common expense fees for the unit.

Am I paying interim occupancy fees if I choose not to move in?

During the interim occupancy period, you’ll need to pay the builder an interim occupancy fee regardless of whether you’ve actually already moved into the unit or not.

Can I rent my unit to someone during interim occupancy?

During the interim occupancy period, you technically do not “own” the unit. Therefore, if you wish to lease during this stage, you’ll need authorization from your builder (in writing) to do so.

If you are planning to rent your unit, the best time to negotiate the right to rent it during interim occupancy is when you’re first purchasing the condo.

Permission to rent during interim occupancy can be included in your Agreement of Purchase and Sale, if your developer agrees.

Does the interim occupancy fee count towards paying down my mortgage?

No it doesn’t.  You will only start paying down your mortgage after the interim occupancy period.

Will I incur further fees when closing my new construction condo?

Since new construction condos typically involve two closings (an interim closing and a final closing), your legal fees will likely increase due to the additional work required.  

What can I do to better plan for interim closing?

The best way to plan is to get educated (if you’ve read this far, you already met that goal!)

Second, remember to set aside funds to cover your interim occupancy period.  While it is hard to predict how long the interim occupancy period will last, planning for at least 12-months of cash flow to cover interim occupancy expenses (especially if you cannot rent the unit), is ideal.

Third, and most importantly, having your purchase and sale agreement reviewed by a lawyer prior to signing is always a good idea and can potentially save you thousands.   We offer a comprehensive review of purchase agreements with a quick turnaround.   Simply email us your agreement at docs@deeded.ca to get started.

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.

The Ultimate Guide to Programs and Rebates for First-Time Home Buyers

As a first-time home buyer, you may qualify for several government programs that can help you offset the costs of buying your home and use your RRSP savings as part of your down payment.

We’ve assembled information on the most relevant programs but as regulations and programs are subject to change, we recommend checking with us or your accountant when it comes to your eligibility for these programs.

First-time Home Buyer Incentive

The First-Time Home Buyer Incentive helps qualified first-time homebuyers reduce their monthly mortgage payments without adding to their financial burdens.

The First-Time Home Buyer Incentive is a shared-equity mortgage with the Government of Canada where the government has a shared investment in the home.  It offers:

5% or 10% for a first-time buyer’s purchase of a newly constructed home

5% for a first-time buyer’s purchase of a resale (existing) home

5% for a first-time buyer’s purchase of a new or resale mobile/manufactured home

If you participate in this program, the government, as an equity owner, shares in both the upside and downside of the property value.

You will have to repay the Incentive based on the property’s fair market value at the time of repayment. If a homebuyer received a 10% Incentive, they would repay 10% of the home’s value at the time of repayment. For example, you purchased a home at $350K and received $35K from the program.  If you sell it a few years down the road for $500K, you would repay the government $50K for their equity stake. 

The homebuyer must repay the Incentive after 25 years, or when the property is sold, whichever comes first. The homebuyer can also repay the Incentive in full any time before, without a pre-payment penalty.

These are a few criteria to determine your eligibility for the First-Time Home Buyer Incentive:

Your total annual qualifying income doesn’t exceed $120,000

Your total borrowing is no more than 4 times your qualifying income

You or your partner are a first-time homebuyer

You are a Canadian citizen, permanent resident or non-permanent resident authorized to work in Canada

You meet the minimum down payment requirements with traditional funds (savings, withdrawal/collapse of a Registered Retirement Savings Plan (RRSP), or a non-repayable financial gift from a relative/immediate family member)

First-time Home Buyer Tax Credit

The Government of Canada provides a tax credit for first-time home buyers.  After you purchase your first home and submit your tax return, you can access this tax credit.  If you are an eligible homebuyer, you can apply for the First-Time Home Buyer’s Tax Credit, which equates to a total tax rebate of approximately $750.  

which equates to a total tax rebate of approximately $750.  

To be eligible for the Home Buyers’ Tax Credit, you must meet both of these criteria:You or your spouse or common-law partner purchased a qualifying home.

You are a first-time home buyer, which means that you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.

A qualifying home is almost any type of home as long as it is located in Canada and registered in your or your spouse or common-law partner’s name. This includes existing homes and homes under construction.

If you are eligible, you can claim a tax credit of $5000 on line 31270 of your tax return, however, we highly encourage speaking with your accountant to ensure you meet all qualification criteria.

RRSP Home Buyers’ Plan

One great source of funding for your mortgage down payment is a Registered Retirement Savings Plan (RRSP). The Canadian government’s Home Buyers’ Plan (HBP) allows first time home buyers to borrow up to $35,000 from your RRSP for a down payment, tax-free.

If you’re purchasing with someone who is also a first-time homebuyer, you can both access up to $35,000 from your RRSP for a combined total of up to $70,000. Think of the HBP as a tax-free loan to yourself to fund your down payment.  The only catch is that it must be repaid within 15 years.   Repayment is as simple as designating an HBP repayment amount on your annual tax return, but please beware that there will be a minimum amount required to be repaid each year, so budget accordingly.

In order to be eligible for the HBP as a first-time homebuyer, you must meet the following criteria:

You must be considered a first-time home buyer.  You are considered a first-time home buyer if, in the four-year period (that Begins on January 1st of the fourth year before the year you withdraw the funds) , you did not occupy a home that you or your current spouse or common-law partner owned.

You must have a written agreement to buy or build a qualifying home, either for yourself or for a related person with a disability

You intend to live in the home within one year of purchase as your primary residence

The RRSP funds you borrow must have been in your registered (RRSP) account for at least 90 days prior to withdrawal

You must make the withdrawal from your RRSP within 30 days of taking title of the home

You must be a Canadian resident

Land Transfer Tax Rebate for First-time homebuyers

Land transfer taxes are paid to the government at closing.  To calculate what you may owe on closing, click here for our calculator.

First-time homebuyers in Ontario can qualify for a rebate equal to the full amount of their land transfer tax, up to a maximum of $4,000.

To qualify for the Ontario Land Transfer Tax Refund for First-Time Homebuyers, you must meet the following criteria:

You must be a Canadian citizen or permanent resident of Canada,

You must be 18 years of age or older,

You must live in the home within 9 months of purchasing it,

You cannot have owned/had a financial interest in a home before, and

If you have a spouse, they cannot have owned a home during the time they have been your spouse.

Based on the Ontario land transfer tax rates, the rebate will cover the full tax amount up to a maximum home purchase price of $368,333.  For homes with purchase prices over $368,333, homebuyers will qualify for the maximum rebate, but will still owe the remainder of their land transfer tax. If you are buying your home with your spouse, but only one of you qualifies for this rebate, you can still receive 50% of the rebate.

If you qualify, Deeded can help you file the necessary paperwork to get the rebate.

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.

How to scan documents like a pro, using your mobile phone

During the closing process, a variety of documents may be exchanged between you and several other parties such as your Lawyer, Realtor, Lender, or Mortgage Broker. Some of these documents may already be in digital format (also known as “soft copies”), while some documents may still be in paper formats.

Scanning documents the traditional way has always been a cumbersome experience that requires scanning equipment, specialized software and know-how (not to mention paper jams!)

Thankfully, the mobile phone has become the modern day Swiss Army knife for most of us. With advanced cameras on most mobile devices, you can take pictures of documents and upload them in minutes.

To successfully scan documents with a cell phone, you need to know the best way to photograph different types of documents.

Here are tips for taking pictures with a phone:

  • Check your camera phone settings. If possible, select the “macro” or “document” mode. Also make sure that the camera’s autofocus setting is on. Macro/document mode is particularly important for scanning smaller documents like letter-size pieces of paper or business cards.

  • If you don’t have macro/document mode, make sure the camera is set to its highest resolution. This’ll generate the largest image.
  • Turn off your flash. Flashes tend to reflect harshly off of white surfaces like paper. The result is a washed-out image.

  • Find the best lighting. Since you can’t use a flash, the document needs to have ample natural light. Position the document near a window or directly under a lamp. Use brightdirect lighting on your document. Shadows and indirect light may cause certain parts of the document to be unreadable after scanning.

  • Hold the device directly above the document to avoid distorting the scan. Try to fill the camera frame with as much of the document as possible so that it is not cut-off. If you’re photographing a business card, you’ll need to get in nice and close so that the card fills almost the entire screen.

  • For letter-size pieces of paper and business cards, you may want to rotate your camera 90 degrees so that the document fills even more of the screen.

  • Hold the camera phone with both hands to keep it steady. Slight movements can produce a blurry image, especially in low-light situations.

  • Most importantly, preview your picture on your screen to ensure it is legible and in focus prior to sharing it. Will the person receiving the document be able to read it? If not, it is best to take the photo again.

Should You Consider Taking Advantage of the Home Buyers’ Plan (HBP)?

Are you actively contributing to a Registered Retirement Savings Plan (RRSP)? If so, the Home Buyers’ Plan (HBP) can help you increase your down payment amount and purchase the home you want. The HBP allows you to withdraw from your RRSP account so you can build or buy a home for yourself or someone with a disability that’s related to you (by marriage, common-law, blood, etc.)

As of March 2019, the Canadian HBP withdrawal limit is $35,000. That can go a long way toward buying or building your home. That said, it’s important to fully understand how the HBP works before you decide if it’s right for you.

How Does The RRSP Home Buyer’s Plan Work?

To withdraw from your RRSP account for the Home Buyers’ Plan, you’ll have to inform the Canada Revenue Agency and apply through your financial institution. As mentioned, if you qualify, you can extract up to $35,000 tax-free to use as a down payment for the purchase or construction of a home. Here’s what you’ll have to do to get started:

  • Contribute to an RRSP – You can only qualify for the HBP if you have enough money in an active RRSP account, for at least 90 days prior to withdrawal. While you normally cannot withdraw from this type of account (penalty-free) until you’re of retirement age, the CRA makes an exception for qualified homebuyers.

  • Be a Canadian first-time homebuyer – Only permanent residents who are buying or building their primary residence (or doing so for a disabled person) can qualify. If you’ve already used the HBP for yourself and want to do the same for someone else, you must have a zero balance on your original account.

  • Submit the right forms – You must also visit the CRA website, fill out Section 1 of Form T1036 and bring it to the financial institution that holds your RRSP account. They will then complete Section 2 and, if you qualify, will send you the form T4RSP, which confirms how much you have borrowed from the account.

  • Buy the home and withdraw – Once you meet all the criteria, you must withdraw the appropriate funds within 30 days of purchasing the home’s title, using a loan from your financial institution. If you wait more than 30 days, you will no longer qualify for the HBP and any money you withdraw will be subject to tax.

Declaring Your HBP Withdrawal and Repaying Your Debt

Once you’ve purchased your home, you must declare your T4RSP form on your income tax return for the same year the withdrawal was made from your RRSP account. Afterward, your annual CRA Notice of Assessment will display the amount you have repaid, what you have left to pay, and how much your next payment will be.

You will then have 2 years before you must start paying back what you’ve borrowed. Typically, this is done in yearly installments to your RRSP through your financial institution, over a maximum period of 15 years. Each payment must be made within the same year it’s due or within the first 60 days of the following year.

Other Requirements to Qualify for the Home Buyers’ Plan

  • You cannot have owned another home within the 4 calendar years prior to applying for the HBP
  • You must first enter a written agreement to purchase or construct the home
  • You have to start living in the home within 1-year of its purchase
  • If you’re buying a home with common-law partner or spouse who isn’t a first-time homebuyer, you can’t have lived in their primary residence for more than 4 years

Benefits and Drawbacks of The Home Buyer’s Plan

Now that you know what the RRSP Home Buyer’s Plan is and how you can withdraw from it, here’s a list of some of the main pros and cons of the process:

Benefits

  • The loan will be tax and interest-free
  • Your taxable income will decrease when you claim your RRSP contributions
  • Two first-time homebuyers can combine their plans for a total of $70,000
  • A larger downpayment means you’ll need to borrow less
  • You only have to start paying it back after 2 years (total of 17 years to repay)

Drawbacks

  • You won’t gain any interest on your funds like you would if they were invested
  • Contributions you pay back from your HBP won’t count toward your deductions
  • Being a homeowner with other expenses can make it difficult to repay your debt
  • You must declare any missed RRSP payments on your taxes (and pay for them)

Do I Still Need a Down Payment If I Take Advantage of the HBP?

These days, it’s nearly impossible to find a home that doesn’t require a down payment. In fact, if your home costs $500,000 or under, your mortgage provider will require a minimum down payment of 5% of the home’s asking price. If your home is between $500,000 and $1,000,000, you can expect to pay at least 15% down (5% on the first $500,000 and 10% on anything over that, up to $1,000,000).

So, if the money you withdraw from your RRSP Home Buyers’ Plan doesn’t sufficiently cover your minimum down payment, you may not qualify for a mortgage and the rest of the funds will have to come from your own pocket.

Can You Purchase a Second Home Using The Home Buyers’ Plan?

Fortunately, you can be eligible for the Home Buyers’ Plan a second time, as long as you haven’t owned a home within the past 4 years. So, if you want to sell your first home and live in an apartment to save money, you can reapply as a “new” homebuyer 4 years later.

As mentioned, whatever balance remains on your previous HBP account must also be fully repaid before you can qualify a second time. The same sort of rules apply if you’re buying a home for a disabled relative.

What If My Spouse Owned a House Less Than 4 Years Ago?

If you’re purchasing a home with a spouse who owned a house less than 4 years ago, but you did not live in that house with them, you are still eligible to use the HBP. Just keep in mind that only you will be able to withdraw $35,000 from your RRSP, not your spouse.

How to Decide if The Home Buyers’ Plan is Right For You

Although the RRSP Home Buyers’ Plan can be the perfect solution for first-time homebuyers, it can also be an expensive and lengthy debt to take on, particularly when you consider all the other costs that come with being a homeowner in Canada. In fact, there are cases where you should and shouldn’t take advantage of the HBP:

The Home Buyers’ Plan Could Be Right For You When…

  • You’re a first-time homebuyer or haven’t owned a home in at least 4 years
  • You and your spouse/partner can combine your HBP funds
  • You’re trying to purchase a home for someone with a disability
  • You have automatic RRSP contributions set up with your financial institution
  • You still have enough money in your RRSP to keep your retirement on track
  • You don’t have enough for a 20% down payment (which would help you avoid having to pay mortgage default insurance)

The Home Buyers’ Plan Could Be Wrong For You When…

  • You have owned a home within the past 4 years
  • You already have enough for a 20% down payment
  • Your retirement would be greatly delayed due to your withdrawal
  • You would be withdrawing all of your RRSP funds (no interest gained)
  • Would not be able to afford your annual payments
  • You have an unsteady income, bad credit, or a lot of existing debt

 This is a Guest Post from our friends at Loanscanada.ca.  

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.

Title search. What is it and why do you need it.

Before we explain what a title search is, it is important to understand what title means.

Title is a legal term that means registered owner of a property.  Records associated with the title of a particular property are usually kept in a land registry office, which is responsible for record keeping.  These records include deeds, court records, property and name indexes, and other documents related to the property.

Before you purchase a property, your lawyer conducts a title search to examine the property’s title history and ensure that the seller has the legal right to sell the property, and that there are no other encumbrances (such as liens, title claims, judgements, mortgages etc.) or property line issues that could prevent the buyer from taking full possession.

What does a title search show?

A title search clarifies the legal owner(s) of the property, any existing easements, leases, or restrictions that affect the property, any mortgages, judgements against the property, liens, or unpaid rental contracts (such as hot water tanks) that will need to be dealt with before the property can be sold to a buyer.

What if there are issues found with the title?

If title issues arise with the property you are purchasing, your lawyer will work with your seller’s lawyer to try to resolve.  Often times, issues can be corrected prior to closing

What if there are issues found with the title?

If title issues arise with the property you are purchasing, your lawyer will work with your seller’s lawyer to try to resolve.  Often times, issues can be corrected prior to closing

What if a title issue is discovered after closing?

In case an issue is discovered on your title after you have closed your transaction, title insurance covers several situations and is meant to protect you against the unforeseen.   For more information on title insurance, click here.

How much is a title search?

Our transparent fees include a title search for purchases and refinances of properties.  Depending on the extent of the searches required, you may incur some disbursements for service fees incurred for the searching the land registry.

I’m refinancing, why do I need a title search?

Your lender will likely require a new title search as a condition of refinancing.  Lenders typically will need to see if there are any issues standing in the way of your property being fit to sell when approving refinancing transactions.  

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.