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19 January 2022
Closing costs for refinancing your mortgage
With record low interest rates, more homeowners are refinancing their mortgage. One question we get very often is what the closing costs are for refinancing a mortgage.
Before we break it down further, you may be caught by surprise that you even need to “close” your mortgage refinance. You likely remember having to close your home purchase, but refinancing your mortgage? The short answer is, you have to close your mortgage refinances as well. Here's why.
Refinancing a mortgage means paying off an existing loan (mortgage) and replacing it with a new one. In most scenarios, your new lender may be a different institution than the one that holds your current mortgage and part of the amount you borrow may be used to pay off your existing loan to your current lender.
When you refinance your mortgage, your new lender approves your mortgage application and issues a mortgage commitment. At that point, the closing process kicks off and includes formalizing your new mortgage, while paying off your old mortgage from the proceeds of the refinance.
The mortgage refinancing closing process resembles some steps you may remember from purchasing your home.
Namely the title for the property is searched to verify your ownership, you will sign documents for your new mortgage, writs or court orders against the homeowners are searched, your current mortgage gets paid off and discharged and your new mortgage gets registered on title. Your lender may require a title insurance policy as well. When all these steps are done, the remaining funds are distributed as applicable.
At Deeded, we can help you close your mortgage refinance seamlessly from the comfort of your home. Get started by getting a free quote.
Completing these tasks is usually done by a lawyer, notary, or title company and the closing costs for refinancing your mortgage, in most cases, is paid for by the homeowner (or borrower).
The closing costs for refinancing your mortgage can vary from province to province and can depend on factors such as the number of mortgages on the property, lender conditions, government fees, registration costs and others. Depending on the circumstances, a mortgage refinance may also require Independent Legal Advice (or ILA for short), for one or more of the borrowing parties.
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1 November 2021
My seller won’t close. Now What?
We've all heard of buyer's remorse. But what if a seller won't close?
Finally. You signed an agreement last night to buy your dream home. You’re so excited that you can’t sleep. You think about all those other homes you saw and lost out on. All the bidding wars you’ve lost, and the emotional rollercoaster you went through.
At last, your dream home is within reach. You drop off your deposit the next day and start making a massive “to-do” list to prepare for your move.
Suddenly a call comes in from your lawyer. Your seller refuses to close. As you try to grasp what just happened and wait for someone to pinch you so you can wake up from this nightmare, reality sinks in.
Although most real estate transactions do close, there’s always a small percentage that may fall through. More common are situations where the buyer can’t or won’t close. Although this may happen for various reasons, in most cases, it is more likely that the buyer experiences remorse on their purchase and tries to back out of the deal.
But what if a seller won’t close or experiences seller’s remorse? This situation is becoming more common as the home prices continue to appreciate and a seller starts pondering if they’ve left too much money on “the table”.
For example, John agreed to sell his house to Martha for $500K. Both parties signed a binding agreement to close the transaction within 60 days. Two weeks later, John’s neighbour, who has a very similar property puts their house on the market and ends up selling for $600K. John starts feeling that he has missed out on the opportunity to get an additional $100K for his home. This is commonly called seller’s remorse. Seller’s remorse can be for a variety of other reasons such as sentimental value, or others. After all, selling your home is a highly emotional experience.
So parties can have remorse. What does it mean for the transaction?
A firm agreement of purchase and sale is a binding contract. When a seller won’t close or does not complete an agreement without cause the seller can be responsible for making the buyer “whole”.
This means that the buyer is entitled to be put in the same position as they would have been had the seller completed the transaction as promised and scheduled.
So, continuing with our example above, if John ends up backing out of the agreement to sell his house for $500K and Martha now has to buy another home and paid $600K due to the appreciating market conditions, John, as the seller may be liable to his Martha for the difference between the original contract price and the price that Martha will ultimately buy a comparable the home for, plus any related costs incurred by the buyer, such as legal, carrying, moving or accommodation costs etc.
As a buyer, your damages must be reasonable and foreseeable and you must do your best to mitigate the amount of damages suffered (so staying at Four Seasons while you're shopping for a new home, is not your best option).
As soon as you sense the seller won't close, speak to your lawyer and Realtor to discuss your options as there may still be a way to get the deal done.
Since every situation is different, you should, first-and-foremost, consult a lawyer to seek proper legal advice and understand your rights and remedies. It's best to do so at the earliest sign of issues. Your lawyer and Realtor can also help establish a line of communications with the seller, while removing the emotional aspects out of the equation. In many situations expensive litigation can be avoided by understanding the interests of both sides and figuring out a way to move forward.
If all sides are cooperating, then there is a good chance you might be able to reach a compromise solving the issue quickly and getting you into your new home.
But I Put Down a Deposit, What Happens To it?
If a seller backs out and decides to breach the agreement, you are generally entitled to a return of your deposit upon either signing a mutual release or a court order.
A mutual release is a document used in real estate when a deal falls through. It releases both parties from the Agreement of Purchase and Sale. The buyer gets their deposit back and the seller is free to sell their house to someone else or hang onto it. It also means that both the buyer and seller release each other from any future liabilities or damages.
As a buyer, while it may be tempting to just get you deposit back and move on, it is wise to seek legal advice prior to signing a release to understand your options.
If you have any further questions, rest assured that the Deeded team is here to support you in any way we can.
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.
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1 November 2021
What is a mutual release?
Congratulations. You signed on the dotted line last night and you’re so excited to become a homeowner.
In today’s dynamic real estate market, we all know it was quite the emotional rollercoaster to get to this point and while you should be excited, today’s topic is two words that no buyer or seller hope to intentionally encounter: mutual release.
If you’re reading this blog, odds are you might be considering signing or asking for a mutual release, so we’ll cut right to the chase.
What is a mutual release?
A mutual release is a document designed to be signed by both the buyers and sellers to cancel an agreement of purchase and sale. When executed, this document cancels the agreement and “releases” all parties from any future liabilities or claims.
The most important point to underscore is that a mutual release requires the agreement of both parties (buyer and seller) and cannot be executed without both parties agreeing to the terms.
When is a mutual release used in Real Estate?
A mutual release is used when both parties wish to nullify an agreement of purchase and sale. The two most common scenarios where a mutual release may be used are:
Conditional agreement - When a condition is not met
Buyers and sellers may set various conditions in their agreement of purchase and sale such as financing or inspection. If these conditions are not satisfied within the particular time frame set in the agreement, a mutual release signed by both buyers and sellers enables both parties to essentially “walk away” from the deal.
Despite the name, in almost all cases it is one side who wants to be released from the deal and who must convince the other side to let them out.
In a conditional deal that has fallen through, the seller often has little choice but to sign a Mutual Release. Given that conditions have short time frames, there may be an inconvenience to the seller, but it is rare to see a market shift where the seller can experience a significant loss if they needed to re-list and sell their property again.
Nonetheless, relisting the property and selling to someone else is an onerous task and most sellers may take some time to get over the fact that the deal is no longer and that they must move on.
On a firm agreement
In a today’s highly competitive seller’s market seeing conditions on an agreement of purchase and sale has become an exception rather than the norm, leaving buyers often making firm offers (without any conditions attached).
What if you gave or a “firm offer” and it got accepted by the sellers? Can a mutual release still be possible?
When a firm deal encounters problems, it is most often on the buyer’s side, although it is no longer uncommon to see sellers who are having “seller’s remorse”.
Whether changing their mind or a change in circumstances that makes the purchase not desirable or possible, when a buyer wants out of a firm deal it can be quite challenging.
In this case, the buyer must convince the seller to agree to release them from the deal. If you put yourself in the seller’s shoes for a moment, that is not an easy decision as they may have bought another home or made other plans whereas relying on their current home closing on a specific date. If a seller refuses to consider a mutual release, you may still be bound by the agreement unless you can negotiate some form of compensation that may get them agree.
This is where the discussion may focus on the alternatives, which could include the buyer walking away without a mutual release and the potential legal consequences as a result.
This is also a time where having the right professionals working for you becomes critical. Your real estate agent and lawyer can establish a line of communications between the buyer and seller to better understand their intentions and remove the emotional aspects from the situation.
Whether you’re the buyer or seller, it is important to speak with your lawyer to seek proper legal advice to understand your options prior to signing a mutual release.
If you have any further questions, The Deeded team is here to support you in any way we can.
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.
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27 August 2021
Deeded automates onboarding to dramatically speed up closings
The most anticipated part of a Real Estate or mortgage transaction is being done with it. Closing is by nature the most complicated part of buying a home or refinancing a mortgage.
Tying together every loose end and officially sealing the deal involves coordinating dozens of documents and data that come from various sources, often triggering numerous follow-ups and manual tasks.
Above all, when time comes to close a transaction, it is often the homebuyer or borrower that ends up becoming the “quarterback” for chasing down documents, many of which may have previously shared with other parties such as their Real Estate agent or Mortgage agent earlier in the process. Combined, these factors make for a slow, stressful, and highly inefficient closing experience.
“It’s unimaginable how much effort and manual coordination goes into gathering all the documents needed to close on a home or mortgage. Dozens of emails, documents and faxes are flying around for each transaction. It’s grossly inefficient, unsecure, slows things down to a crawl. It’s a huge divergence from what today’s consumer expects. It puts them in a stressful situation, at a moment when they should be happy and excited”. says Reuven Gorsht, Co-founder and CEO at Deeded
At Deeded, our vision is to make the closing experience seamless, transparent, and affordable for all those involved.
We are excited to introduce new onboarding technology within our robust platform that effectively automates the process of collecting the necessary documents and data needed for closing a transaction. Leveraging artificial intelligence and machine learning, we are dramatically speeding up the closing process and reducing the inefficiencies that previously burdened clients, lenders, and real estate professionals.
“Homebuyers are increasingly looking for frictionless ways to simplify the home buying process, all the while having access to expert advice” said Gorsht.
“By automating the most inefficient parts of the process, we divert our efforts to better serving our customers, ensuring they have a seamless experience while drastically simplifying the process for everyone involved in the transaction” added Gorsht.
Customers who have recently experienced our virtual closing process have noted the immediate benefits of the new onboarding technology. Recent Toronto homebuyer Neil said “Working with Deeded made purchasing a home easy. They have excellent online systems for intaking the request and the signing process. Their responsive and clear communication made the transaction easy and provided reassurance in what can otherwise seem like a complicated process.”
“While we’re already seeing tangible progress in making the architecting the Real Estate transaction of the future, we’re continuing to relentlessly focus on making the closing experience frictionless, transparent and affordable. This is just one of many game-changing innovations we plan to introduce as we reimagine the Real Estate transaction” added Gorsht.
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26 July 2021
Behind the scenes: What happens on closing day
One of the biggest questions during a Real Estate transaction is “when do we get our keys?”
Before getting your keys, there are several steps that need to be completed first and this all (believe it or not) happens behind the scenes on closing day.
What is Closing Day
Closing day is the day when you take legal possession and finally get to call your new house your home. Prior to closing day, the buyer will be signing and reviewing documents prepared by the lawyer with regards to their mortgage loan, down payment, closing costs & purchase price. They will also review a statement of adjustments, which outlines the final closing numbers. Lastly, the buyers must arrange for funds to be deposited in the lawyer's trust account, while the lawyer requests the remaining funds from the mortgage lender. The funds are then transferred to the seller's lawyer who releases the property to be registered in the buyer's name, along with a mortgage (also called charge) which will be registered in the favour of the lender.
When Should You Schedule Your Closing Day?
Picking a closing day may seem like a simple decision, however there are many factors to keep in mind to avoid major issues from arising. Picking a closing on a Friday may cause issues if you cannot get everything before 5:00pm, businesses and systems will close for the weekend leaving you unable to close which may cause you to pay extra costs. The same principal is recommended for avoiding closing days before long weekends.
In addition, you should also keep in mind, Real Estate transactions peak in month-end especially during the Spring. Be aware this means everything, and everyone will be busier, such as movers, lawyers, realtors, and lenders. Therefore, it may be more difficult to ensure all parties are available and able to attend your closing. Overall, it is recommended to avoid picking a closing day before Fridays, long weekends, and month-ends wherever possible.
What Happens on or near Closing Day?
On the actual day of closing there are a number of tasks that must be completed by each party before the keys can change hands.
- • The buyer will sign a variety of documents prepared by their lawyer relating to the mortgage loan, and the purchase of the home.
- • Your lender will send the mortgage funds to your lawyer.
- • You must provide the rest of the purchase price to your lawyer as well as the additional closing costs.
- • Your lawyer transfers the funds to the seller's lawyer.
- • Your lawyer will register the property in your name with the Land Title / Land Registry Office. If applicable, they will also register a mortgage (also commonly referred to as "charge") in favour of your lender.
- • You will receive a closing report, which includes a copy of the deed/transfer of title.
- • Your Lawyer will provide instructions on how and where you can get your keys. At Deeded, we will typically arrange for lockbox so you can easily access your new property.
- • Additionally, please make sure you contact all appropriate utilities to inform them you are the new owner (i.e., hydro, electricity, water, condo fees, taxes etc.) so they can update their billing information.
As you can see, there's a whole lot that happens on or near your closing day, with most steps happening behind the scenes. The goal is to have all these tasks completed by 4pm to 5pm which is when many agencies and lenders close for the day. If the deadline isn't met, the closing is typically extended to the next business day. Hence closing on a Friday or before a holiday weekend is not recommended.
Additional Closing Costs
- • Your Deposit- The deposit is a portion of the total home purchase price that will be paid out-of-pocket by the buyer. Typically, the down payment is between 5-20% of the total purchase price.
- • Land Transfer Taxes (LTT) – The LTT is calculated as a percentage of the purchase price of your home. The exact percentage varies from province to province and sometimes individual municipalities like Toronto have additional costs. Alberta does not have LTT.
- CMHC Insurance – Should you use less than 20% for your down payment, you will be required to obtain CMHC insurance. This is an insurance policy that protects your lender should your borrower default on your loan repayment.
This is not an exhaustive list, visit this blog for additional information on closing costs, however we always recommended speaking to your realtor and lawyer to ensure you know exactly what your circumstances will be at closing.
Can Deeded Help with My Closing?
Of Course! When it comes to purchasing a home, our team at Deeded strives to make the process as easy as possible so you can “close” and get your keys as quick as possible.
Our team helps you understand your obligations, help you navigate the legal documents that need to be signed before funds are released to you and can expedite the closing process, all to ensure you have a fantastic closing experience. Please feel free to contact us anytime.
Final Thoughts
The closing process is a complicated and high-stress event, not just for the buyers and sellers but the realtors, lawyers, and lenders as well. Although it is understandable that you want the closing process to be done as quickly as possible, being patient will help things go much more smoothly.
If you have any further questions our experienced team is ready and able to make your closing a simple, quick, and painless process. Feel free to contact our team if you have any questions on our closing procedure, and to obtain a quote, please click here.
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26 July 2021
Five most common title transfer issues
A title is a legal term that means registered owner of a property. A title transfer is assigning ownership, or part of the ownership to another party.
When purchasing a property, the title must be transferred from the seller to the new owner. However, it is not always as simple as signing a document, a large number of properties may require work to "clean up" issues with a title.
Here is a list of the five most common issues:
Property has a Lien
If any of the previous title holders had outstanding debt, such as unpaid property taxes, general contractor bills, or a judgement from the court to pay off a creditor, those companies may have placed a lien on the property.
A property lien is a legal claim on assets that allows the holder to obtain rights to the property if debts are not paid. If there is a lien on the property you are purchasing, you may inherited it upon closing.
This is an example of a very common issue that can be resolved by your lawyer on closing. Using a title search will identify if there is a lien on the property and you can work with your lawyer to address and resolve the issue.
Boundary Disputes
If you will not be getting a survey on your potential property before closing from the sellers you run the risk of having a boundary dispute with neighbouring properties. A boundary dispute is somewhat common and the only way to resolve this issue is through an up-to-date survey on the property.
Your Real Estate lawyer may recommend a property survey if there is evidence to suggest it would be beneficial. However, this is quite often not the case, few closings include property surveys because of the cost and length of time it takes to complete. Without taking proper protection, this potential issue could be a serious financial burden to resolve.
This is a case where title insurance is a great option to mitigate some of the unknowns and protect future interests in the property.
Illegal Past Deeds and Fraud
There are a number of illegal actions that may impact the sale of a property and the transfer of a title in the future. That could include deeds made by minors, people lying about their marital status, an undocumented immigrant. Illegal past deeds such as this may pose an issue to the transfer of a title and cost significant amounts to rectify.
In addition to the above illegal actions, fraud is another potential issue that may impact title transfers but is much more difficult to identify. When a lawyer conducts a title search you can identify anything that can be searchable through public documents and registrations. However, fraud is often undetectable through these available documents making it one of the most difficult of these common issues to protect against.
Undiscovered Encumbrances
When you purchased the property, you may not have been aware that a third-party may hold claim to part or all of the property from a previous event such as a lien. This may limit what you as the owner will be able to do with the property. These limits are known as encumbrances and are placed on the property itself, not the owner.
A real estate lawyer for title transfer will help discover if the property in question has unknown encumbrances. Some encumbrances are welcomed by owners, such as zoning laws that restrict properties in an area from being used for commercial purposes. Others can be more troublesome, like liens placed on a property that seek repayment of debt.
Almost all property, particularly in densely populated areas, is encumbered in one way or another. That is why it is important to have a knowledgeable real estate lawyer by you side when learning if there are encumbrances on a property
Public Record Errors
Whether it be adding an extra zero or misfiling a document, public record errors do happen. Unfortunately, when filing and clerical errors occur, they are often difficult to detect or notice because sometimes they blend in easily. Dealing with public record errors can cause serious financial stress on the title owner and be very time consuming to rectify.
How Can I Protect Myself?
Throughout this article we’ve listed all issues that may arise from a title transfer and likely caused you lots of anxiety. You're probably wondering now, what can I do to protect myself from all these problems. The answer is simple, get title insurance.
While every policy is different and we recommend checking your specific policy for the details, but in general, title insurance will cover you for all of the above title-related issues and more that can affect your ability to sell, mortgage, or lease your property in the future, or its value.
Final Thoughts
When conducting a title transfer on a property it’s wise to use an experienced real estate lawyer that can help you ensure you have proper protection and don’t ignore any serious issues. If you have any further questions, rest assured that the Deeded team is here to support you in any way we can.
Send us an email and we would be happy to answer any questions you have or provide recommendations for your situation.
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.
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