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Tag: home closing

  • 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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  • Does Alberta have a land transfer tax?

    Does Alberta have a land transfer tax?

    If you’re considering moving to Alberta or buying an Alberta investment property, the question if Alberta properties are subject to a land transfer tax (or property transfer tax as it may be called in some provinces), comes up quite often.

    Does Alberta have a land transfer tax? The short answer is no.  While most Canadian provinces levy a property or land transfer tax, Alberta requires only Land Transfer Registration Fees and Mortgage Registration Fees to be paid.

    The amount of these fees is much smaller when compared to other provinces.  Here’s a breakdown of the fees you can expect:

    • The Land Transfer Registration Fee costs a base of $50 and an additional $2 for every $5000 in property value.
    •  If you have a mortgage on your property, a Mortgage Registration Fee applies and costs a base of $50 and an additional $1.5 per $5000 on the mortgage amount.

    It's important to note that these fees and any legislation regarding land transfer taxes or applicable closing costs may change at any time. Always check with your lawyer or real estate professional prior to signing an agreement.

    For example, a $300,000 Alberta property with a $200,000 mortgage would cost:

    • Land transfer registration fees:  $170
    • Mortgage registration fees: $110

    These fees tend to be a small fraction of what a homebuyer could potentially pay for Land Transfer Taxes if buying a property in Ontario or British Columbia, making Alberta an attractive and cost-efficient place to purchase a property.

    If you’re purchasing or refinancing a property in Alberta, the Deeded team can help you close your transaction seamlessly with our virtual process.  You can sign your documents virtually from anywhere in Canada, saving you from having to travel to Alberta or retaining a second lawyer locally to witness your document signing.  

    Getting your Alberta closing process started is simple.  Click here to get started, upload your purchase contract, and we’ll get you on your way to owning your Alberta property.

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  • Six Most Common Post-Closing Issues and How To Avoid Them

    Six Most Common Post-Closing Issues and How To Avoid Them

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

    As much as we are optimists, we’d like to set the stage with both buyers and sellers.  Something will go wrong upon closing. Something will undoubtedly 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.

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

    post-closing damage

    How to handle:

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

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

    Surprise! You’ve got Rented Items

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

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

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

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

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

    How to handle:

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

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

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

    Appliances not working

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

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

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

    How to handle:

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

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

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

    Sellers Still On The Property After Closing

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

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

    How to handle:

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

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

    The Case Of The Missing Chattels

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

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

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

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

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

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

    How to handle:

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

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

    Garbage and/or Junk Left On Property

    post-closing damage

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

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

    How to handle:

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

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  • Insurance: Everything You Need To Know When Closing

    Insurance: Everything You Need To Know When Closing

    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 a 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.

    Costs vary depending on coverage, home value and additional factors

    Condo Insurance

    Your condo corporation will typically carry a commercial policy 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 a 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 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 you to obtain a policy to insure your title 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 policies typically costs between 2.8% to 4% of the mortgage amount. This cost can be rolled onto the mortgage so it’s not an out-of-pocket expense.

    Life, Disability and Critical Illness Insurance

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

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

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

    Costs can vary depending on 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 options that will cover major home systems and even appliances should they break down or require repair. 

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

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

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  • COVID-19 and Residential Real Estate Closings

    COVID-19 and Residential Real Estate Closings

    Will COVID-19 impact residential Real Estate closings?

    As the disruption caused by coronavirus (COVID-19) continues to spread, it may become increasingly essential to quarantine a large portion of the population to counter the spread of the virus as we’ve already seen happen in China, Italy, Iran and other countries.

    Given that we are in the midst of a very busy spring market, closing residential real estate transactions may face unexpected challenges that may cause ripple effects for buyers and sellers. 

    These challenges can range from not being able to attend a lawyer’s office to sign documents to disruption for professionals such as appraisers, lawyers and lenders.

    Am I Still Obligated To Close?

    Most residential real estate transactions in Ontario require the buyer or seller to close the transaction by a specific date.  Contrary to some commercial real estate contracts, residential transactions do not usually include a force majeure clause that could potentially excuse a party from performance if the failure to perform is due to an event beyond the party’s control.

    Therefore, in most cases, you will still be obligated to close your transaction despite any circumstances.  

    If you are considering buying or selling a home in the near future, a specific COVID-19 clause can be included in your agreement to allow for potential delays cause by potential disruption to lenders or the land registry.

    Can Closing Be Delayed As a Result of Quarantine?

    Closing can be delayed if an amendment to the agreement of purchase and sale (APS) is signed and agreed upon by all parties. If you foresee the need to postpone or change your closing date, the sooner amendments can be signed by both parties, the better.

    What If I Cannot Make It To Sign Documents?

    To close your transaction, you will have to attend a lawyer’s office to sign your closing documents. Some lawyers may offer at-home signing, which may not work in the case of a full quarantine.  

    At Deeded, we have implemented advanced video signing technology to allow you to sign closing documents from home. We will make this option available for free for qualified clients. Please contact us at hello@deeded.ca if we can help.

    What If The Land Registry Closes Down?

    Most title insurance policies include Gap Coverage that insures both purchasers and lenders against losses due to intervening registrations on title between the date of closing and the date of registration.

    This means that in the event that online registration is no longer available, or land registry offices experience delays or closures due to COVID-19, transactions can close on time and funds and keys can be released to the respective parties.

    What Else Should I Know About COVID-19 Impact Residential Real Estate Closings?

    The escalating situation with the spread of COVID-19 may impact other parts of your transaction such as your movers, utility companies or your condo property management. 

    It is best to be proactive in planning your closing and contacting the various parties involved to ensure contingency plans are in place should the closing be impacted by the COVID-19 disruption.

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