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Tag: real estate closing Toronto

  • Conditions On An Offer:  Why They Matter

    Conditions On An Offer: Why They Matter

    Purchasing a home has a great deal of inherent risk, that is why sometimes buyers and sellers look to mitigate that risk by using certain protections when making an offer. That is where conditions on an offer to purchase come in.

    When a buyer’s offer is accepted by a seller, both parties are entered into the contract. However, when making an offer, either party has the choice to make the agreement contingent on certain factors.

    These criteria, or conditions, are clauses that would void or alter the purchase/sales contract if certain obligations are not met.  These obligations can typically fall under three major categories: home inspection, mortgage approval, and lawyer’s review of the agreement.

    Mortgage or Financing Condition

    It is common sense not to purchase something that you don’t have the money to pay for, that’s exactly the purpose of a mortgage or a financing condition in your offer.  The financing condition clause protects the buyer in the case they are not able to secure a loan. 

    This clause allows the buyer a predetermined period of time (usually 3-5 business days) to secure a lender that will issue a mortgage after the date the offer is accepted. If the buyer is unable to secure a lender that will commit to a loan, the buyer may invoke this clause of the agreement and walk away from the sale with the down payment and no other penalties.

    It is always a good idea to get pre-approved by a mortgage lender prior to putting in an offer.  This process will give you a better idea of what you can afford and what the lender is willing to lend you. Although the clause may allow you, as the buyer, to walk away from the transaction, it is always a good idea to have your mortgage lined up.

    Home Inspection

    A home inspection is one of the most important clauses to include in a closing agreement. This contingency allows the buyer to have a third-party inspect the property after putting down a deposit. 

    The purpose of this condition is to ensure that there are no issues with the property such as damage. However, if something does appear to be wrong, a home inspection contingency allows the buyer several options. They may either request that it be fixed at the sellers’ expense, renegotiate the price to factor in costs of the repairs they would have to pay or ultimately back out of the sale. It’s rarely advisable to waive an inspection contingency, for more information of why home inspections are a must have, visit this blog.

    Lawyer’s Review Condition

    Before entering a binding agreement that may involve a very significant purchase such as a home, it is always wise to have the agreement reviewed by a lawyer.   

    There have been many cases where both buyers and sellers did not understand their obligations under a binding agreement of purchase and sale. Some of these cases have resulted in litigation and heavy financial judgements against buyers or sellers. Having a lawyer review clause in your agreement will allow for a few days to have the agreement properly reviewed, giving you peace of mind.

    Waiving All Conditions in a “Hot Market”

    The Real Estate market has been highly competitive across North America for the past few years with properties often receiving multiple offers and bids in attempts to purchase the property.

    As a buyer, it is ultimately your decision whether you would like to waive or forego any certain conditions in order to make your offer more attractive to the sellers.  For example, a seller would typically see an offer with no conditions more attractive than an offer with certain conditions.  

    Quite simply, it gives sellers more certainty as opposed to having to wait days for all conditions to be satisfied and risking having to re-list their property should the deal fall apart.

    While removing conditions may increase your chances of securing the property,  it comes with taking on additional risks.   For example, if you agree to purchase a property without an inspection and find out there are damages and issues after the fact, those issues become your responsibility.

    Final Thoughts

    When making an offer on a home it’s wise to use an experienced Realtor that can help you ensure you have proper protection. 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 to suit your situation.

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  • Land Transfer Tax. What Is It and How To Budget For It.

    Land Transfer Tax. What Is It and How To Budget For It.

    You’ve signed on the dotted line and your offer was accepted.   Congratulations on your new home! As you start readying your finances for closing, one of the top items that first-time home buyers forget to budget for is the land transfer tax (LTT for short).

    What is The LTT?

    Buyers of houses and condos in Ontario pay LTT when they purchase a property. Buyers who are purchasing a property in the City of Toronto also get to pay the Toronto LTT, on top of the Ontario LTT amount.

    With rising property pricing the LTT can be significant.  To give you an idea, on a $1M property in the City of Toronto, you’d be paying $32,950 in LTT.  This amount is due on closing and is collected by your lawyer and remitted to the government.  The LTT applies to all properties:  resale or new construction.

    The land transfer tax amounts are calculated on a sliding scale formula, but to make things easier, use our simple Land Transfer Tax calculator where you can plug in your purchase price and save yourself the number crunching. 

    There is some good news for first-time buyers.  You may qualify for a rebate equal to the full amount of your LTT, up to a maximum of $4,000.

    Do I Qualify for the Ontario Land Transfer Tax Refund?

    To qualify for the Ontario Land Transfer Tax Refund for First-Time Homebuyers, you must meet the following criteria:

    • • You must be a Canadian citizen or permanent resident of Canada,
    • • You must be 18 years of age or older,
    • • You must live in the home within 9 months of purchasing it,
    • • You cannot have owned a home before, and
    • • If you have a spouse, they cannot have owned a home during the time they have been your spouse.

    If you’re planning on buying a house or condo, make sure you’ve budgeted for land transfer tax.

    Important note: This article is not Legal Advice.  No one should act, or refrain from acting, based solely upon the materials provided on this website, any hypertext links or other general information without first seeking appropriate legal or other professional advice.

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  • Status Certificate. What is it and Why Should You Care.

    Status Certificate. What is it and Why Should You Care.

    If you are buying a condo, you will probably encounter the term “status certificate”.  What exactly is a status certificate and why are status certificates important?

    Think of a status certificate as a comprehensive document that provides information about the current state of a condominium property.  The purpose of it is to give potential buyers as much information as possible about their unit and the overall health of the operations of the condo complex.

    What Information Can I Get From A Status Certificate?

    A condo unit is typically subject to additional rules and regulations compared to a (freehold) house because it’s managed by a Board of Directors and often a property manager. 

    The condo board is responsible for managing the budget for the overall condo, which includes upkeep, repairs and improvements to the common elements on the property.  Common elements are typically anything outside of your unit such as elevators, lobby, amenity facilities, etc. For this reason, you’ll want to make sure that the condo board is fiscally responsible and can handle necessary repairs that come up now and in the future.

    That’s where the status certificate comes in.  The status certificate is a recent collection of relevant information such as the condos by-laws (rules about things like pets, fitness facilities, swimming pools, barbecues, smoking, etc.), a current budget for the condominium, a recent reserve study (we’ll talk about that in a moment), and whether any lawsuits may be pending against the condo.

    With this information at-hand, a status certificate can help you make your purchase decision and anticipate any issues such as:

    • • Anticipated increases in maintenance fees
    • • Any major future repairs you may be liable for a share of
    • • The overall financial health of the condo
    • • Any special assessments that may be costly down the road

    Where Do I Get Status Certificates?

    You or your Real Estate agent can order a condo corporation’s status certificate. All you have to do is submit a written request and pay the $100 fee (plus HST) to management or the condo corporation.

    It takes about 10 days, although it can be rushed for an additional fee.

    Is it Mandatory to Get a Status Certificate?

    Typically, when buying a resale condo, your real estate agent will recommend that you obtain a copy of the status certificate and thoroughly review it with your real estate lawyer before you commit to a purchase.

    Most offers on resale condos are conditional upon review of the condo status certificate, so that buyers can ensure everything is in order.

    If you are getting a mortgage or refinancing your mortgage on a condo property, your lender will require a status certificate be obtained and reviewed by a lawyer as a condition of the mortgage.

    How Do I Review the Status Certificate?

    Status certificates can often be complex and contain key information within dozens of pages, we recommend having an experienced Real Estate lawyer review the status certificate for you. A lawyer will know the key information to look for, how to interpret the information and will typically summarize the key points and what you should be aware of.  

    What is a Typical ‘Deal Breaker’ That Can Be Found in a Status Certificate?

    Condos carry a monthly maintenance fee to pay for common expenses are shared between all owners. If the condo corporation is running short of funds to pay operation expenses, you will notice an increase to your maintenance fees.  While some increases may be reasonable, in some circumstances, when reviewing the status certificate is a condition of your offer to purchase, a sharp increase to maintenance fees may not be within your budget and you may decide to not proceed with buying the unit. 

    Another major item that can be found by reviewing the status certificate is called a special assessment.  A special assessment is an additional charge that condominium owners are required to pay on top of their regular monthly maintenance fees. While all owners are responsible for paying a special assessment, it’s important to realize that the condo board of directors does not need to get the approval of individual owners to add a special assessment.  For example, if the condo has an urgent requirement to repair the roof at a cost of $500K and does not have sufficient funds in the reserve to cover the cost, each unit may have a special assessment put against it, which means you and other unit owners are liable for your share of the cost of repairs. 

    Under Ontario law, there’s very little owners can do if they can’t pay or disagree with a special assessment. If an owner can’t pay, the condominium corporation can put a lean on the property. 

    Keep in mind that reviewing status certificates will only highlight any issues at the current time but does not guarantee against having condo fee increases or special assessments in the future.

    Can Deeded Help With My Status Certificate?

    Of course! As you are shopping for a condo unit, we’d be happy to review the status certificate for your property and provide you with a comprehensive, yet understandable summary.  If you are in a bidding war situation, we’d be happy to turn around a status certificate review within 48-72 hours.  Please feel free to contact us anytime.

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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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  • Online Real Estate and Mortgage Closings

    Online Real Estate and Mortgage Closings

    We created Deeded to bring simplicity and accessibility to one of life’s most important transactions.

    Our vision is to bring the entire closing process online, making it transparent, convenient and human.  It is something we felt strongly was needed to meet the demands of the modern consumer and compliment the ongoing digitization of the Real Estate transaction.

    Little did we know that shortly after launching, our vision would quickly become the reality by which online Real Estate closings are the norm.   The crisis caused by COVID-19 has sent the entire industry into a tailspin where new practices had to be adopted literally overnight in order to accommodate a new reality.

    In the past two weeks we’ve seen regulations change, significant support from the title insurers and a resilient industry come together and innovate in order to get current and future transactions closed.

    This is where our technology, streamlined processes, and team shine.  Preparation always meets opportunity.  We were built for a digital age.  We’ve invested in a future that turned out to be now.  It’s why we feel so prepared to serve you during these difficult times and beyond.  

    Deeded offers fully online real estate closings, making purchases, sales and refinances smooth and seamless.  

    There Are 4 Easy Steps To Get Your Deal Closed By Deeded.  

    Upload Documents

    Securely upload required documents and complete a brief online intake and ID verification process.   The entire process takes under 10 minutes.

    Attend a Video Signing

    We’ll schedule a video signing meeting at a convenient time for you (including evenings and weekends).   All you need is a computer with a webcam, an internet connection and a smartphone.   There’s no printing, scanning or couriers required.  

    Electronic Funds Transfer

    On a purchase we will ask that you direct deposit the funds into our account. On a sale we will wire the funds into your account after closing.

    Keys at the Property

    On a purchase we’ll arrange for your sellers to leave the keys in a lockbox at the property. On a sale, simply leave your keys in a lockbox at the property.

    Our Deeded Team is ready to help you get started, to obtain a quote, please click here.

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  • Realtors: Real Estate Transactions Amidst COVID-19

    Realtors: Real Estate Transactions Amidst COVID-19

    Will COVID-19 impact closing your Real Estate transactions?

    A hotter than ever spring housing market coupled with a reduction in mortgage rates is responsible for record-breaking numbers of Real Estate transactions in markets across Ontario.

    As the Coronavirus (COVID-19) continues to spread, it may soon become a reality that your clients and perhaps you will face a quarantine much like we’ve already seen occur in China, Italy, Iran and other countries.

    This may present unexpected challenges in closing your Real Estate transactions that may impact your clients and your business. Here are the most common questions we've received along with potential contingency plans to minimize disruption to your business and your client’s lives.

    For Firm Deals, Are Clients Obligated Too Close?

    Most firm residential real estate transactions in Ontario require the buyer or seller to close the transaction by a specific date as set out in the Agreement of Purchase and Sale (APS). 

    Most residential transactions do not usually include a force majeure clause that typically excuses a party from performance if the failure to perform is due to an event beyond the party’s control.

    Therefore, in most cases, clients will still be obligated to close their transaction despite any challenges that may be beyond their control.

    For any deals moving forward, consider incorporating a COVID-19 delay clause into your real estate transaction to protect you and your clients from a delay that is caused directly by COVID-19 disruption (such as a quarantine). This clause should be written and reviewed by a lawyer as it will need to be specific, clear and enforceable.

    Can Closings Be Delayed As a Result of COVID-19?

    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 or your clients foresee the need to postpone or change your closing date, the sooner amendments can be signed by both parties, the better. 

    Given the uncertainly, it is important to proactively communicate with your clients, lawyer, and the co-operating agent to ensure the closing is proceeding as scheduled.  Knowing the flexibility of your buyers and sellers can make a big difference in putting together potential amendments.

    What if Clients Cannot Make it to Sign Closing Documents?

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

    At Deeded, we have started to leverage remote signing and ID verification technology to allow clients to sign documents via video conference from the comfort of their home.  This service is available to qualified clients. Please reach out to us at hello@deeded.ca if we can help with your closing.

    What if Lenders Are Disrupted By Coronavirus?

    Most employers are taking serious measures to protect their employees and prevent further spread of the virus in the workplace. As such, lending operations may face delays and logjams caused by shortages of staff.

    Mortgage instructions from the lender are required to close a deal that requires financing and a delay in getting mortgage instructions may mean a delay in closing. It is best to be proactive, working with your partners on the deal to ensure that:

    1. 1. Clients sign mortgage commitments - Some lenders may offer remote options to sign paperwork.
    2. 2. Mortgage instructions are sent to the lawyer's office at least 2-3 days prior to closing

    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, real estate transactions can close on time and funds and keys can be released to the respective parties.

    What if My Brokerage is Closed?

    Some brokerages have advised agents to work from home and may take additional steps to close their office during the pandemic and have deal staff working from home. This may impact your ability to take deposit cheques and collect commission cheques in a timely manner.

    For deposits, you can ask that it be wired or directly deposited into your brokerage's trust account instead of taking deposits as cheques. Payment for commissions can also be wired/transferred from the lawyer's office to the brokerage and if your broker is already setup to transfer commissions into your bank account, this can avoid any delays and potentially disrupting your cash flow.

    How Else Will COVID-19 impact The closings of my Real Estate transactions?

    The escalating situation with the spread of COVID-19 may impact other parts of your transaction such as your lawyers, mortgage brokers, stagers and other key resources.  It is more important than ever to proactively communicate with your partners and develop a contingency plan. 

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