When an agreement of purchase and sale is negotiated, both parties will agree to a closing date that seems reasonable. Just as there is said to be a preferable day to book a flight or find an economical hotel room, when negotiating your closing date, the day or week of the month to close may have advantages and disadvantages. Closing on a Friday may have it’s disadvantages.
In Canada, the time span between the
offer being signed and the closing date is typically 30-90 days, although some
closings may be shorter or longer, depending on circumstances for the buyers
and sellers. This period is meant to
allow the buyer time to obtain a mortgage, search
the title, and plan their move.
Avoid closing on a Friday, if you can
Friday might sound like the ideal day
of the week to close on a purchase. Most
people are of the mindset that they can take the day off work, and have the
weekend to move in. However, Friday
closings can be the cause of major challenges and extra costs should something
not go according to plan.
That’s because mortgage lenders and
the electronic land registry are open until 5pm. During the day of closing a lot goes on
behind the scenes. Funds move between the
buyer, the buyer’s lender and the seller and their lender (and their respective
lawyers). After the funds arrive, the
transaction needs to get registered before keys can be released to the buyer.
Needless to say, even the slightest
delay or something not going according to plan can mean the difference between
meeting the 5pm registration deadline or missing it. If the 5pm deadline for registration is
missed for whatever reason, your transaction will likely not close till the
next business day. If your closing was
originally on a Friday, that means you won’t be able to close until Monday. If it is a long weekend, you’ll be closing on
Tuesday.
While there are implications to not closing on time, some of the most common ones are additional per-diem costs for interest incurred on a mortgage or bridge financing, delays in moving (remember, your seller also has plans to move out before closing), or other penalties. Above all, it is a stressful situation for everyone involved, despite best efforts.
Month-end closings
Due to the nature of Real Estate transactions,
law firms get particularly busy on the last few days of the month, especially during
peak Real Estate months such as May through to September.
Closing at month-end isn’t an issue,
but keep in mind that closing involves multiple parties that need to come together
to complete your transaction. With an
increased volume of transactions and all the players in the system working to
hit month-end deadlines, the chances of something slipping through the cracks will
simply increase.
When negotiating your closing date, picking a day other than Friday or on a month-end may be a good idea, despite the inconvenience. While your transaction may close without a hitch, even if on a Friday or the end of the month, picking the right closing date can decrease the chances of having closing issues.
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.
You’ve signed on the dotted line and your offer was accepted. Congratulations on your new home! As you start readying your finances for closing, one of the top items that first-time home buyers forget to budget for is the land transfer tax (LTT for short).
Buyers of houses and condos in Ontario pay LTT when they purchase a property. Buyers who are purchasing a property in the City of Toronto also get to pay the Toronto LTT, on top of the Ontario LTT amount.
With rising property pricing the LTT can be significant. To give you an idea, on a $1M property in the City of Toronto, you’d be paying $32,950 in LTT. This amount is due on closing and is collected by your lawyer and remitted to the government. The LTT applies to all properties: resale or new construction.
The land transfer tax amounts
are calculated on a sliding scale formula, but to make things easier, use our simple Land Transfer Tax calculator where you
can plug in your purchase price and save yourself the number crunching.
There is some good news for first-time buyers. You may qualify for a rebate equal to the full amount of your LTT, up to a maximum of $4,000.
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 a home before, and
If you have a spouse, they cannot have owned a home during the time they have been your spouse.
If you’re planning on buying a house or condo, make sure you’ve budgeted for land transfer tax.
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.
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.
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
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.
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.
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.
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.
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 costsbetween
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 canvary
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.
Costsvary 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.
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.
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.
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.
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)
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.
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
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.
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 bright, direct 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.
