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Tag: real estate lawyer

  • What exactly is broom swept condition?

    What exactly is broom swept condition?

    If you are selling or buying a home, you may encounter a clause in your agreement that states that your property must be left in “broom swept” or “broom clean” condition.   What exactly does broom swept mean and why misinterpreting this condition can lead to legal arguments and bruised feelings?

    What is broom swept condition?

    Unless professional cleaning was included as a condition within the agreement of purchase and sale, the seller is typically expected to leave the property in what some in the industry refer to as “broom-swept condition”.  Broom swept or broom clean condition typically includes sweeping or vacuuming the floors, removing garbage, emptying cupboards, clearing closets and appliances (if included) and making sure that the property is free of any personal belongings (again, unless they were included).

    A common complaint from buyers when they take possession of a property is that sellers will leave their stuff behind.  From garbage bags to old paint cans, shampoo bottles in the shower, to old furniture, leaving personal belongings behind for a buyer to dispose of can quickly escalate to arguments and even legal ramifications between the buyer, seller, and their respective lawyers.

    Sometimes things are left behind with best intentions.  If you’re selling, you may think the buyer may want to keep something. However, thinking they may want to keep something doesn’t mean that the buyer actually does.  You should ask beforehand, so you know whether to leave it.  Otherwise, you’ll need to take it with you when you leave.

    For buyers, scheduling a walkthrough a few days before closing can also help identify any potential situations where stuff is left behind and allows for the opportunity to speak with the sellers to clarify what’s going and what’s staying.

    My seller left belongings and garbage behind.  What can I do?

    In the situation where your agreement states that the property shall be left in broom swept condition, but you unlock the door to find unexpected items or garbage left behind, document the situation by taking pictures and notify your Real Estate lawyer as soon as possible.  In most cases, your lawyer will communicate with the seller’s lawyer and request they rectify the situation and remove their belongings or compensate the buyer for removal costs.

    I’m the seller.  How should I leave my place?

    Regardless of whether it is in the agreement or not, leaving your place tidy for the buyer is a common courtesy.  No new owner wants to come into their new home to have to get rid of stuff left behind by others.    

    You don’t need to leave your place spotless and immaculate, but most definitely, pack all your personal items and dispose of items you are not taking with you in a proper manner prior to your move-out date.   Leave your property in clean condition, free of dirt, garbage and clutter.

    What if garbage is improperly left on the curb?

    Some sellers think it’s ok if they dispose their items by putting them on the curb and assuming it will be picked up by garbage collection.  

    Every municipality has different garbage collection schedules and may or may not accept some items for disposal.  Therefore, simply putting items on the curb is not a good solution for sellers unless you’re certain that these items will be picked up and are within the guidelines and limits of the municipality.  

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  • Five tips for a quick closing to your mortgage refinance

    Five tips for a quick closing to your mortgage refinance

    If you are closing your mortgage refinance, you’ll likely be required to use a lawyer or a title company to close your new mortgage.

    Refinancing a mortgage means paying off an existing loan (mortgage) and replacing it with a new one.  In most scenarios, your new lender may be a different institution than the one that holds your current mortgage and part of the amount you borrow may be used to pay off your existing loan to your current lender.

    Closing mortgage refinance delays are not uncommon and are caused by a variety of factors.  There are, however, multiple things you can do to ensure your mortgage refinance closing happens seamlessly and on time.  Here are some of them:

    Have valid government photo ID

    Since the beginning of the pandemic, many Canadians have not had the opportunity to renew their drivers’ license or passports. 

    While there has been a grace period during the pandemic, a valid government-issued photo ID is required.  If you are planning to close on a property or a mortgage, an expired drivers’ license or passport will not be accepted.  

    Ensure you provide updated debt statements

    If you are refinancing to consolidate debt, your lender may require your lawyer or title company to pay off your debtors out of the proceeds of your refinance.  For your debtors to be paid and to avoid accumulating additional interest, you will likely be asked for the latest statements for each debt.

    If you’ve already provided these statements to your mortgage agent or bank, you may be wondering why you may need to resubmit them again.   Occasionally the mortgage application to approval process may take weeks.  If a statement is out-of-date, the balances to be paid may be incorrect.  Therefore, you may need to obtain statements again for the purpose of closing.

    Statements must contain key items such as your name, your account number, and your most recent balance to be processed.  Most statements can be obtained online through online banking or by calling the company.  It may be a tedious process, but the quicker you can obtain the statements, the quicker your refinance can close and the impact of consolidating debt takes effect.

    Provide your lender with lawyer’s information

    Your lender will require your lawyer’s information to send mortgage instruction to the lawyer’s office.  In most cases, this information will be required when you sign your new mortgage commitment.  Delaying providing your lawyer’s coordinates and contact information to your lender may delay your closing.

    Schedule closing off peak

    Real Estate and Mortgage transactions peak from April through September and because purchases and sales have a firm deadline, chances are your refinance closing may get delayed.  If possible, choosing a closing date in the beginning or the month will increase the chances of your mortgage refinance closing on time.

    Close virtually

    Virtual closing is now an option in most Canadian provinces.  Quite simply, it means that you can sign your closing documents from the comfort of your home, without having to go into a lawyer’s or notary’s office.  

    A virtual closing isn’t only a convenient option, but when it comes to accelerating the closing of your mortgage, it eliminates a lot of the back-and-forth scheduling and time constraints required to book an appointment.   When you use Deeded, our virtual closing experience can be completed in the evenings and even on weekends.

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  • 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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  • My seller won’t close.  Now What?

    My seller won’t close. Now What?

    We've all heard of buyer's remorse. But what if a seller won't close?

    Finally. You signed an agreement last night to buy your dream home.  You’re so excited that you can’t sleep.  You think about all those other homes you saw and lost out on.  All the bidding wars you’ve lost, and the emotional rollercoaster you went through.

    At last, your dream home is within reach.  You drop off your deposit the next day and start making a massive “to-do” list to prepare for your move.

    Suddenly a call comes in from your lawyer.  Your seller refuses to close.  As you try to grasp what just happened and wait for someone to pinch you so you can wake up from this nightmare, reality sinks in.   

    Although most real estate transactions do close, there’s always a small percentage that may fall through.  More common are situations where the buyer can’t or won’t close.  Although this may happen for various reasons, in most cases, it is more likely that the buyer experiences remorse on their purchase and tries to back out of the deal.

    But what if a seller won’t close or experiences seller’s remorse?  This situation is becoming more common as the home prices continue to appreciate and a seller starts pondering if they’ve left too much money on “the table”.

    For example, John agreed to sell his house to Martha for $500K.  Both parties signed a binding agreement to close the transaction within 60 days.  Two weeks later, John’s neighbour, who has a very similar property puts their house on the market and ends up selling for $600K.   John starts feeling that he has missed out on the opportunity to get an additional $100K for his home.  This is commonly called seller’s remorse.   Seller’s remorse can be for a variety of other reasons such as sentimental value, or others.  After all, selling your home is a highly emotional experience.

    So parties can have remorse.  What does it mean for the transaction?

    A firm agreement of purchase and sale is a binding contract. When a seller won’t close or does not complete an agreement without cause the seller can be responsible for making the buyer “whole”. 

    This means that the buyer is entitled to be put in the same position as they would have been had the seller completed the transaction as promised and scheduled.

    So, continuing with our example above, if John ends up backing out of the agreement to sell his house for $500K and Martha now has to buy another home and paid $600K due to the appreciating market conditions, John, as the seller may be liable to his Martha for the difference between the original contract price and the price that Martha will ultimately buy a comparable the home for, plus any related costs incurred by the buyer, such as legal, carrying, moving or accommodation costs etc.

    As a buyer, your damages must be reasonable and foreseeable and you must do your best to mitigate the amount of damages suffered (so staying at Four Seasons while you're shopping for a new home, is not your best option). 

    As soon as you sense the seller won't close, speak to your lawyer and Realtor to discuss your options as there may still be a way to get the deal done.

    Since every situation is different, you should, first-and-foremost, consult a lawyer to seek proper legal advice and understand your rights and remedies. It's best to do so at the earliest sign of issues. Your lawyer and Realtor can also help establish a line of communications with the seller, while removing the emotional aspects out of the equation. In many situations expensive litigation can be avoided by understanding the interests of both sides and figuring out a way to move forward.

    If all sides are cooperating, then there is a good chance you might be able to reach a compromise solving the issue quickly and getting you into your new home.

    But I Put Down a Deposit, What Happens To it?

    If a seller backs out and decides to breach the agreement, you are generally entitled to a return of your deposit upon either signing a mutual release or a court order. 

    A mutual release is a document used in real estate when a deal falls through.  It releases both parties from the Agreement of Purchase and Sale. The buyer gets their deposit back and the seller is free to sell their house to someone else or hang onto it.  It also means that both the buyer and seller release each other from any future liabilities or damages.

    As a buyer, while it may be tempting to just get you deposit back and move on, it is wise to seek legal advice prior to signing a release to understand your options.

    If you have any further questions, rest assured that the Deeded team is here to support you in any way we can.

    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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  • 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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