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  • Real Estate Legal Documents – What You’ll Need to Sign at Closing

    Real Estate Legal Documents – What You’ll Need to Sign at Closing

    Before your transaction closes, you'll meet with your Real Estate Lawyer at a signing appointment to review and sign your closing real estate legal documents. This is the time when you'll sign the required documents to make your purchase, sale or refinance transaction official.

    The excitement of getting to the finish line tends to make us all a little impatient or uninterested in the fine-print legal details.  While your real estate lawyer will explain the purpose of all real estate legal documents and what they mean in plain English, we put together some further insight into what to expect when you are at the signing table. 

    Charge (A Fancy Name For A Mortgage)

    If you are taking out a mortgage to buy your new home,  the Charge/Mortgage is the document registered against your home in the Ontario land titles registry.  

    When reviewing the Charge/Mortgage, you may notice in the “Chargor(s)” section reference to whether or not you are a spouse. The reason for spousal information being includes, even if they might not be on title of the property is because a spouse must provide his/her consent to the mortgage.

    Consent To Also Act For Your Bank

    When your transaction involves a mortgage, your lawyer will generally act for both you and your mortgage lender (or lenders in some cases) to save you the cost of paying for two lawyers.

    While this isn’t the norm to the rules in most other legal transactions, where each side retains their own representation, an exception to the rule permits a lawyer to act for both parties only if he/she is given permission from both parties to do so.  

    When signing real estate legal documents for the purchase of your new home, you may come across a document called “Consent to Act…”.  By signing this document, you give your lawyer permission to act for both you and your bank.

    Acknowledgments And Directions

    Acknowledgments and directions are documents signed by you and used by your lawyer as written confirmation that you have reviewed certain documents and that the information is accurate. A direction states that you authorize and direct your lawyer to take certain action. Your lawyer may require you to review and sign an acknowledgment and direction before your mortgage or the transfer of title is registered. Your lawyer may also require you to review and sign a direction for the transfer of funds from your bank to be held in trust by him/her until the amount is paid to the home seller.

    Transfer of Title

    The Transfer of Title is a document that is registered with the Ontario land titles registry.  In a nutshell, this document directs the transfer of interest in the home.

    Joint Tenants or Tenants In Common

    If you’re buying your home with other people such as a family member or a spouse, you may be asked if you’d like to be registered as “Joint Tenants” or “Tenants in Common”.

    With joint tenancy, you co-own 100% of the home with the other people on title and no one person owns a specific share of the home. For example, spouses may purchase a home together as joint tenants because, in the event that one of the spouses passes away, 100% of the ownership of the home then automatically belongs to the surviving spouse.  

    On the other hand, with tenancy in common, you own a specified share of the home and may be able to transfer or sell that share to others. Upon death, the share of the home will pass to the tenant in common’s heirs.  Often times in co-ownership or investment properties the owners are considered tenants in common.

    Statement of Adjustments

    The statement of adjustments likely gets the most questions during the signing appointment.  Put simply, a statement of adjustments summarizes the monies that will be exchanged, less any adjustments (deductions in the favor of the buyer or seller). 

    The statement of adjustments is similar to your monthly bank statement, as it has a list of various debits and credits with a balance at the end. In the buyer’s statement of adjustments, the debits represent amounts already paid, such as the deposit, while the credits include the purchase price of the home and any fees or utilities the seller has prepaid. The total amount in the credits column (purchase price + prepaid items) minus what’s in the debit column (the deposit) is what you owe to the seller on closing day.

    If you are buying a home, you’ll likely see your purchase price, plus any additional fees, less any deposits you’ve put down and funds that are coming in from your lender.  The balance of the statement is what you’ll need to pay at closing.

    If you are selling your home, you’ll see items such as proceeds from your sale, property tax adjustments, deductions for real estate commissions, and a payout to your mortgage lender, as applicable.

    The more you know, the smoother your transaction will.  Now that you have a better idea of what documents to expect at your signing appointment, taking a few minutes to prepare questions or ask for clarifications is always a good idea.

    At Deeded, we’re committed to making your Real Estate transaction seamless and smooth.  We believe that consumers should be empowered and in control of the most significant purchase or sale they’ll likely make. 

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  • Buying Real Estate With Friends? Use a Co-Living Agreement

    Buying Real Estate With Friends? Use a Co-Living Agreement

    If affording Real Estate in Toronto is out of the question for you, there may be a light at the end of the tunnel.

    With prices of Toronto and Vancouver Real Estate skyrocketing, co-living is starting to become an increasingly popular way for people to get into the market. According to a report by RE/MAX realtors, more than 40% of Canadians overall would think about buying with a friend or relative.

    So, what is co-living?  Co-living (or co-housing as it’s sometimes called) is where residents share living space and a set of interests, values, and/or intentions.  It’s a new take on an old idea, inspired by the sharing economy.

    Essentially, it involves buyers sharing occupancy and ownership costs of buying a home.   It could be with friends, family members, or in a growing amount of cases, strangers. Sharing the costs of the down payment, mortgage payments, utilities and property taxes opens up a new door to home ownership, but what are the risks?

    No matter if it’s family, your best friend or a stranger, it is important to consider that priorities can change and things can always be unpredictable.  While owning even a part of a home is an asset, it may not be as easy to pull out your money and walk away should things not work out.

    Therefore, having an airtight and binding arrangement is essential before agreeing to a co-living agreement or co-investment situations.  Here are some of the elements we suggest discussing with (and eventually agreeing on) with your co-living partner(s):

    Budgets

    • • Understand initial outlays such as deposits, closing costs
    • • Calculate operating costs such as property taxes, utilities, repairs, maintenance fees, etc.

    Financing and Deposits

    • • Did all parties pre-qualify for their portion of the required financing?  
    • • Does everyone have access the needed deposits or down payments, plus closing costs?

    Equity and Ownership 

    • • What percentage of ownership does each party get on title?
    • • How will you divide ongoing expenses such as repairs and insurance?

    Liquidity 

    • • What happens when all parties agree to sell?  
    • • What happens when one or more of the parties do not agree to the sale of the property?   
    • • How is risk/reward shared in a market where a property may appreciate (or depreciate)
    • • What process will be used to value the home should there be a sale

    Management and Rules of the House

    • • Dividing up common chores such as, for example, cutting the lawn
    • • What would happen if one person becomes unemployed or ill and can’t afford to pay his or her share of the mortgage
    • • If one of the co-owners falls behind on mortgage and tax payments, how does the other owner recover his or her share of the arrears?

    Even though some of these items may lead to a naturally uncomfortable discussion, it is critical to have an agreement in place that ensures not only the smooth operation of the property, but a fair division of ownership and a fair way to unwind the partnerships should things go in a different direction.

    Consulting an experienced lawyer is an essential part of ensuring a fair, binding and enforceable co-living agreement.  It is a worthwhile expense, even if things are looking rosy at the moment.

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