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Tag: closing

  • Deeded automates onboarding to dramatically speed up closings

    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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  • Five most common title transfer issues

    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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  • I Received the Previous Owner’s Bill. What Should I Do?

    I Received the Previous Owner’s Bill. What Should I Do?

    You’ve spent the first month living in your new home and you couldn’t be happier. 

    However, when you go to check the mail, you notice a most unwelcome surprise. The city indicates there is an amount owing from the previous owner’s bill.

    Your first thought might be malicious intent on the side of the seller, them trying to get away without properly taking care of their bills. However, chances are that this is probably not the case. The most likely scenario is that the previous owner's bill was never sent to them, or, on occasion, the municipality did not process the change of ownership in a timely manner.

    Commonly, bills such as water and property taxes are connected with the property, while utilities such as hydro and natural gas are associated with the consumer. Therefore, while a title changes ownership, water and property taxes continue to accumulate charges to the account associated with the property even as the owner’s name is changed on the accounts. This common mistake sometimes leaves the new homeowner with the leftover bill of the seller. 

    If you find yourself in the situation of having to deal with a previous owner's bill, worry not, below we’ve outlined the exact steps you should take to resolve things. 

    Key Takeaways:

    • • Water bills and property taxes are associated with a property instead of a customer like utilities. This means you will sometimes see arrears on your water bills and property taxes from previous property owners.
    • • To deal with an arrears on your water bill contact your lawyer and have them contact the seller to request payment.
    • • Dealing with property tax arrears are more common on new homes and require your lawyer to contact the builder’s lawyer to adjust. 
    • • While arrears on your bill are a common post-closing issue and are often easy to solve, it is an excellent example of the benefits of title insurance.

    What Should You Do with Arrears on Your Water Bill?

    If you notice that there are arrears on your water bill from a previous property owner, the first thing you should do is contact your real estate lawyer and provide them a copy of the bill. Your lawyer will then contact the seller’s lawyer, who will then contact the seller directly to request payment of the bill. 

    If you do not receive a reply from the seller you are left with two options. If you have title insurance, you may submit a claim to your insurer. If you already paid the bill, the title insurer will reimburse you directly.  If you did not pay the bill, the title insurer will pay the bill on your behalf. However, if you do not have title insurance, your choices would be to either take the seller to court which would be costly and time consuming, or pay off the bill yourself. 

    What Should You Do with Arrears on Your Property Taxes?

    Property tax arrears on existing homes are rarely an issue after closing because they are known and adjusted at closing. However, if they are discovered, contacting your lawyer and following a similar format as you would for the above water bill situation is the best scenario.  

    However, if the property you are purchasing is a new home, then it is likely that the property taxes need to be adjusted with the builder after closing. It typically takes several months for a new property to be assessed. Once that happens, the new owner will receive a supplementary property tax bill.

    When you receive your supplementary property tax bill, we recommend you contact your lawyer to ensure everything is in order before contacting the builder’s lawyer to properly adjust the bill between the parties.

    More often than not, the builder will pay their portion of the bill to the new owners to reimburse them for paying the entire bill. Each builder has different policies in adjusting for property taxes therefore it is usually best to leave discussions up to your lawyer when getting reimbursed. 

    Final Thoughts

    Adjusting after closing for arrears on your bills is often a common post-closing situation and most of the times can be resolved fairly quickly.

    If all sides are cooperating, then the adjustment can be taken care of quickly and seamlessly. However, it’s recommended you always consult with an expert when dealing with these issues to avoid any mishaps. If you have any further questions, rest assured that the Deeded team is here to support you in any way we can.

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  • How Can I Protect My Home With a Will?

    How Can I Protect My Home With a Will?

    Prepared by Willful for Deeded

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

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

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

    What is a Will?

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

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

    What Happens To my Home if I Die Without a Will?

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

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

    Does The Type of Ownership Affect if the Property in My Will?

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

    Owning Property on Your Own 

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

    Property Owned Jointly With Rights of Survivorship 

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

    Property Owned Jointly With Tenancy in Common

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

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

    Do I Need to Update My Will Every Time I Move?

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

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

    The Important Takeaway?

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

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

    Important note: This article is not Legal Advice.  No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice. This article was written by Willful. Deeded Law Professional Corporation and Willful are independent entities. Deeded Law Professional Corporation does not assume any liability for the accuracy of the content or any services that may be provided by Willful.

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  • Why Skipping The Home Inspection Can Be a Bad Idea

    Why Skipping The Home Inspection Can Be a Bad Idea

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

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

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

    Conditions on an Offer

    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. 

    Do I Really Need an Inspection?

    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.

    Do Home Inspections Need To Be Done By Professionals?

    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.

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

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

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

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

    How Does The RRSP Home Buyer’s Plan Work?

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

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

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

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

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

    Declaring Your HBP Withdrawal and Repaying Your Debt

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

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

    Other Requirements to Qualify for the Home Buyers’ Plan

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

    Benefits and Drawbacks of The Home Buyer’s Plan

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

    Benefits

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

    Drawbacks

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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