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Tag: closing cost

  • What is a trust agreement in Real Estate?

    What is a trust agreement in Real Estate?

    In most cases, the beneficial and legal owners of a property are one and the same, but they can be separate individuals through a “trust agreement”.  Simply put, a trust agreement is a legal tool to separate the legal and beneficial owners of the property.

    What are “legal owners”?

    The legal owners are the persons named in the deed/transfer when the property is transferred and registered with the land registry. If there is a mortgage taken out for the transaction, it would be under the legal owner’s name.

    What are “beneficial owners”?

    The beneficial owners are persons who receive the profits from the property, whether that be rents or funds from the sale of the property.

    Why separate legal and beneficial owners?

    On occasion, a property may have separate legal and beneficial owners.

    For example, a member of the family may want to ensure they are entitled to the proceeds of the property, but don’t want to be named in the mortgage. This can occur for various reasons. 

    Perhaps they don’t qualify for a mortgage, or their inclusion would lead to adverse effects with respect to the mortgage.  In other cases, an individual may want to ensure that their common-law partner would be entitled to the proceeds of a property he/she purchased prior to their relationship. 

    What are some important facts to consider with respect to a trust agreement? 

    A trust agreement can be drafted by a real estate lawyer, but on most occasions, you may need to retain a separate lawyer then the lawyer who handled your transaction.  Reason being is that most real estate lawyers who close your property transaction also represent the lender/bank in the transaction.  This can put the lawyer in conflict since a trust agreement may be detrimental to the lender’s claims to the property.

    A trust agreement does not override any family law statutory obligations. This means that if the legal owner is liable for any spousal/child support or any other family law obligations, they have the right-of-way to the proceeds of the property, no matter who the beneficial owner is.   

    Lastly is whether the property is jointly owned or through tenants-in-common. If the property is jointly owned, the trust agreement must be accepted and signed by all joint tenants. However if it is owned by tenants-in-common, an owner can form a trust agreement outlining the terms specifically for his/her share of the property.

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  • Can you close your Alberta property from out-of-province?

    Can you close your Alberta property from out-of-province?

    Compared to Real Estate markets like Ontario and British Columbia who have seen overwhelming increases in home prices in recent years, Alberta’s Real Estate market remains relatively affordable for Canadians.  With a lower average home price, Alberta Real Estate also generates plenty of investment opportunities with positive cashflow and has become a popular destination amongst Real Estate investors.

    When it comes to closing your Alberta property, you’ll need to use an Alberta-licensed Real Estate Lawyer to close your transaction.  If you are out-of-province aren’t physically located in Alberta yet (perhaps you’re still in the process of moving or buying an investment property and reside in another province), your closing may either involve travelling to Alberta to sign your closing documents or hiring an additional lawyer or notary that is local to you, to witness the signing of your documents.

    Alberta saw more new residents and Real Estate investors in 2021 than any other province in the country.  If you are one of the many people who are considering relocating to Alberta or buying an Alberta investment property, here are some key things that you need to know about the closing process in Alberta and how our team at Deeded can make your Alberta property closing seamless and affordable.

    Both travelling to Alberta and hiring an additional lawyer can add to the costs, and complexity of closing your Alberta Real Estate transaction.  At Deeded, our virtual closing process helps you avoid both travel and the additional costs.   Here’s how it works:

    1. Initiate your closing by getting a quote through our website and uploading your Alberta purchase contract.
    2. Our friendly team will get in touch to explain the closing process and answer any questions you may have.
    3. An Alberta Real Estate Lawyer will work with you and your bank and/or mortgage broker to get your mortgage proceeds (if applicable).  You can seamlessly deposit your down payment funds into the lawyer’s trust account at any Canadian branch of TD bank.
    4. When it’s time to sign your closing documents, you’ll meet your Alberta Real Estate lawyer via secure video conference to sign your documents.
    5. Once your property is registered, they will arrange transfer of keys to you or your property manager.
    6. You can track the entire process through a user-friendly, personalized portal so you always know what’s next.

    What are the benefits of a virtual closing process for Alberta Real Estate?

    You’ll typically save time and money by not needing to travel to Alberta to sign your closing documents and avoid the additional costs of hiring an additional local lawyer to witness you signing your closing documents.   A virtual closing is secure, seamless, and efficient.

    Can you close properties in all cities within Alberta?

    Yes.  Whether your property is in Calgary, Edmonton, Medicine Hat, or anywhere else in Alberta, we can help you close.

    Do I physically need to be in Alberta to sign closing documents?

    No.  You can be anywhere in Canada.  All you need is a computer with a video camera and a reliable internet connection to attend your virtual signing appointment.

    I’ll be moving to Alberta.  Can you help me close my sale as well?

    Absolutely.  If your current property is anywhere in Ontario or British Columbia, we can help facilitate the closing of your sale, along with your Alberta purchase. 

    Can you help me refinance my Alberta investment property?

    We certainly can.  The same virtual process and benefits apply when you’re refinancing your Alberta property. Simply ask your lender or mortgage broker to use Deeded to close.

    Are there extra costs for this service?

    We certainly can.  The same virtual process and benefits apply when you’re refinancing your Alberta property.   Simply ask your lender or mortgage broker to use Deeded to close.

    How do I get started with closing?

    Simply click here to submit your information and purchase contract.

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  • Behind the scenes:  What happens on closing day

    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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  • Closing On a Friday

    Closing On a Friday

    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.

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  • 7 Questions to Ask a Real Estate Lawyer When Buying

    7 Questions to Ask a Real Estate Lawyer When Buying

    If you just firmed up your purchase or sale (Congrats!), you’ll likely need to choose a Real Estate lawyer to facilitate your closing. No matter which lawyer you choose, asking the right having the questions to ask a real estate lawyer before deciding who is going to handle your transaction can make, or break, the entire experience. 

    Here are some questions to ask a real estate lawyer considering them to represent you when buying or selling a house or condo:

    How Long Have You Been Practicing?

    Before hiring a real estate lawyer, it can be crucial to find out how much experience they have in the industry handling residential real estate transactions.  

    A good question to ask is how many transactions they have closed in the course of their practice.

    Although, it is not always necessary to find a seasoned professional with decades of legal work on their resume, finding a fairly experienced lawyer is extremely valuable.  Like any specialists, Real Estate lawyers who exclusively practice in Real Estate are more likely to have a wealth of knowledge and experience that will help with your transaction in comparison to someone who may be practicing in other legal disciplines. 

    What Do Your Closing Feed Include?

    Upon closing, the last thing you want is to be surprised at additional/unexpected closing costs. In addition to legal fees, there can be additional closing costs such as for title insurance, land transfer tax, disbursements and government fees. 

    While sometimes circumstances may lead to additional charges, make sure you know what your lawyer will charge you for legal fees and what they expect to charge on top of legal fees.  

    Things can get confusing as some lawyers may offer fixed fees which combine legal fees, disbursements and other charges into one overall bill, while some may advertise or quote their legal fees and will add additional fees and disbursements.  It is therefore important to ask and understand what an estimated final bill will look like, after legal fees, disbursements and government charges.

    While buying a home has most people strapped for cash as expenses can rack up quickly, the lowest price lawyer isn’t always the best choice.   What may look initially as saving a few hundred bucks can easily turn into thousands in potential additional costs if parts of the transaction aren’t done right.  Make sure to hire a professional who you feel comfortable with.

    Deeded offers transparent pricing so that you know exactly what is included in your legal fees and what to expect in terms of additional fees or disbursements.

    What Should I expect In Terms of Process?

    Buying or selling a home is a major transaction.  It is important to understand the closing process, especially when your lawyer’s office will be in contact, what information or documents they might need from you, and when you should expect to get updates on the progress of your transaction.

    Since every lawyer works in a slightly different manner, it is important to clarify and understand your role in the process in order to ensure a smooth closing.

    What is My Title Insurance Premium?

    Most purchase, sale and refinancing real estate transactions will include a title insurance policy in order to protect you and your lender from an array of issues that can occur after closing.  

    Title insurance costs vary depending on the price, location and type of property you are purchasing or refinancing and can range from a few hundred dollars to a few thousand,  so knowing what to budget in additional costs can save you from surprises down the road.  

    Our calculator estimates your title insurance premiums, but rates can vary greatly so please check with your lawyer to ensure you are getting the most accurate premiums for your transaction.

    How Much Land Transfer Tax Will I Pay?

    Land transfer tax applies if you’re purchasing a property.  The amount of taxes paid can be significant and vary depending on the price of your property, what municipality it is located in, and whether you’re eligible for rebates such as a first-time buyer rebate.   

    Land transfer taxes can be the most significant part of your closing costs, so it is important to know what to expect up-front.   

    Our land transfer tax calculator can estimate what you’ll be expected to pay, but it is important to verify any details with your lawyer and see if you’re eligible for any rebates.

    Are There Tax Implications For My Transaction?

    While your Real Estate lawyer likely doesn’t provide tax advice, your real estate transaction may trigger tax implications such as HST payable on a new construction home or an investment property, all the way to income taxes or capital gains taxes in certain cases.  There are also situations where you may be eligible for certain tax rebates to offset taxes payable.

    Nobody likes to be slapped with an unexpected tax bill or even worse, a re-assessment, so understanding what your transaction may trigger may be a question you’d want to ask your real estate lawyer or accountant.

    When and Where Will The Signing Take Place?

    Signing typically refers to having a meeting with your lawyer to sign the requirement documents for your Real Estate transaction.  Signing typically takes place a few days prior to closing and may involve all registered owners (whether you’re buying or selling), attending the signing appointment.

    Because life gets busy with work, travel and the occasional vacation, it is important to know when and where you're signing will take place.  If you won’t be in town or have other commitments that prevent you and other registered owners from attending a signing appointment (usually during business hours), your closing may be delayed.

    Deeded offers at-home signing appointments as part of our service.  This means we come to your home at a convenient time (including evenings and weekends) so you don’t have to take time off work or travel to a lawyer’s office to attend your signing appointment.

    In summary, choosing your Real Estate lawyer with care and asking the right questions up-front can prepare you for a smoother home closing, reducing surprises, and get you into your home faster.

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  • Mortgage Refinancing – What is it and What’s The Process?

    Mortgage Refinancing – What is it and What’s The Process?

    Mortgage refinancing is the process of paying off an existing loan and replacing it with a new loan with different terms than your original mortgage.

    There are many reasons why home owners choose to refinance a mortgage. The most popular reasons being converting from a variable rate mortgage to a fixed rate one (or vice-versa in some cases), consolidating debt from higher interest loans or credit cards or accessing some of the equity in the home to finance larger purchases such as renovations, a new vehicle, or a down payment on an investment property. 

    Refinancing is often confused for having a second mortgage, but in reality, the two are very different.  A second mortgage is in addition to your first and does not replace it as a refinancing would.  Mortgage refinancing gives the borrower new money that can be used to pay off the original mortgage, ideally with better terms.

    Should I Refinance?

    The decision on whether or not to refinance should be based on your financial goals. For example, if you’re looking to improve your monthly cash flow, take advantage of lower interest rates to reduce your payment or consolidate debt, refinancing may be a viable option.

    Unfortunately, every situation is unique so consulting with a mortgage professional who can calculate potential costs, penalties and legal fees for your refinance is always a smart decision before proceeding.

    I’ve Decided To Go Ahead, What’s The Process To Refinance?

    If you decide to take advantage of refinancing, your mortgage professional or current lender will need to process an application, similar to the one you did when you first got your mortgage.

    This means you'll need to be prepared with documents, paperwork, and an appraisal that supports your application.   

    1. 1. Depending on your credit and other variables, your mortgage professional will likely ask for proof of income, such as pay stubs, T4 slips and employment letters.  
    2. 2. You will likely need to have an appraisal done on your property to determine the current value and thus what you’ll be able to borrow.  Your mortgage professional can order an appraisal on your behalf, but you may be on the hook for costs of the appraisal
    3. 3. You’ll need to hire a lawyer to put together required documentation, title insurance and arrange for signing the new mortgage documents.  

    Deeded can help with your mortgage refinancing and make closing your refinancing a breeze.

    How Can Deeded Help?

    When it comes to refinancing your mortgage, our team at Deeded makes the process as easy as possible so you can "close" and access your money quicker.    

    Our team helps you understand your obligations, can expedite the process and help you navigate the legal documents that needs to be signed before funds are released to you. 

    With Deeded you’ll never need to leave your home to close your mortgage refinancing deal. We’ll come to your home and office, making it convenient and stress-free.

    We also made our fees for refinancing your mortgage clear and transparent so we can avoid surprises at closing and leave more money in your pocket.

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