IN THIS SECTION
- THE ROLE OF A LAWYER IN A HOME PURCHASE
- REVIEW OF AGREEMENT
- NEW HOMES
- TITLE AND OTHER SEARCHES
- COST OF SEARCHES
- TITLE INSURANCE
- CLOSING MONEY
- AFTER CLOSING
THE ROLE OF A LAWYER IN A HOME PURCHASE
The lawyer’s job is to make sure you’re getting what you’re paying for.
Before your offer is signed, take it to a lawyer. He or she will go over it with you, and make sure you understand all of the legal aspects of the contract. It is, after all, the largest and most important contract most people ever sign.
REVIEW OF AGREEMENT
Your lawyer will review topics such:
- the survey
- special clauses (i.e. warranties about physical aspects of the property, water portability, closing costs, et cetera)
- title insurance
If the offer is conditional upon financing or on something else, such as a home inspection, or on the sale of other property, your lawyer will probably wait until the condition has been met before beginning work.
The offer may have conditions and warranties:
- Conditions are about things that are so important that if they aren’t met, you can back out of the deal.
- Warranties are about things that are important but not so much that the deal can be cancelled, and instead these can be handled by adjusting the price, getting something fixed, et cetera.
The lawyer may also be able to tell you whether you can do what you want in the house. E.g. rent out a basement apartment, conduct a home-based business, and install a pool in the back yard. For this reason, it is extremely important that you share your plans with your lawyer as early in the process as possible.
Builders’ offers contain a lot of things that you won’t see in a resale offer. You usually have less room to negotiate these things.
- delay of closing if the house isn’t ready in time
- changes in the colour of brick, siding, flooring, shingles and so on.
- extra costs such as for water meter installation, hydro connection, boulevard tree planting, development charges, local improvement charges, ONHWP enrollment
- refrain from making any changes in the grading until the entire subdivision is finished, including landscaping, fences, pools, decks, and so on.
- restrictions against TV dish antennas, clotheslines.
- and many more!
You purchase exclusive ownership of the unit and a percentage interest in common with other unit owners in the rest of the complex.
- If the building is new and is being built for you, you have ten days to back out of the deal for any reason at all. This is not the case with the purchase of a resale condominium.
- There are restrictions on what you can do with and in your unit.
- The Ontario New Home Warranty Program also applies to new condominium units.
TITLE AND OTHER SEARCHES
The lawyer will examine the title by reviewing the on line title records, and examine any survey. The purpose of this is to make sure that the seller owns all that you want to buy, and that he has a complete right to sell it; sometimes other people’s consents are needed. Arrangements will be made to take care of any mortgages, back taxes or other liens that you haven’t agreed to take on, so that these don’t become your problem.
The lawyer doesn’t carry out any physical tests of the property. You should negotiate the right to an inspection by experts in the Agreement. If there are problems you will have to negotiate their resolution with the seller.
The lawyer will also check property taxes, zoning, other rights to the property, and whether there are any municipal orders to repair or clean up the property.
In purchases of rural properties, we can check for unregistered hydro easements and whether a use permit was issued for the septic system, and whether there any issue with a conservation authority such as the NVCA.
There is no absolute right at law to inspect the property before closing to make sure that it’s in the same condition as when you signed the offer. Make sure that your Agreement includes the right of a final inspection.
COST OF SEARCHES
Disbursements (out-of-pocket expenses) for an older home average $500.00, and about $350.00 for new homes. In the case of rural properties, or properties in older neighbourhoods, the search costs can be considerable. No two titles are the same.
Purchasers will also have to pay Ontario Land Transfer Tax. Click on the link below to calculate the amount of tax you will have to pay in most cases:
This is absolutely essential if the lawyer is going to do a complete investigation. Surveys reveal the extent of the Vendor’s title and all physical claims against it.
Surveys are also necessary for getting a comment by the City or Township on whether the house and the lot and anything else such as a deck or porch or pool comply with zoning regulations. The mortgage lender will always insist on these assurances from the lawyer, so an accurate survey is essential.
- If the seller doesn’t have a current survey, a new one should be done.
- Should be dealt with in the offer to purchase.
- In the absence of a contractual stipulation, a seller has no automatic legal obligation to give you a survey if he doesn’t have one.
- The lawyer will demand correction of any problems he discovers.
Banks rely on the lawyer to guarantee that the security for the loan to you is perfectly legal in every respect.
The lawyer prepares the mortgage the way the bank wants it, makes sure it is registered properly, and sends a written report to the bank.
Most mortgages contain sections dealing with advance payments, penalties for paying the mortgage off early, keeping the property insured, selling the property to an unqualified purchaser, not making major renovations or a change of use without the bank’s approval, and anything else that alters the security for the loan. Any default will entitle the bank to an eviction order against you, after which they will sell the house to pay back the loan (“power of sale”).
Very useful in most cases to sidestep problems such as an encroachment, a deck that was built without a building permit, a pool on a City easement, or a lack of a survey that shows all of the structures on the lot now, which prevents the lawyer from assuring the bank that everything is perfect.
Protects the bank from any loss it might suffer from the problem if it later has to sell the house under the mortgage to recover its money.
Many people now want title insurance to protect them from the risk of losing their home title from title or identity fraud.
If arranged at the outset, some of the lawyer’s searches don’t have to be done, and this can offset much of the added cost. Doesn’t fix the problems, just insures over them, like a legal Band-Aid.
Lawyer gets a statement of the amount of money needed to close with the seller.
Lawyer calculates the amount of money you need to bring in, on top of your mortgage loan, including Land Transfer Tax, adjustments to the purchase price, legal fees and disbursements, and so on.
Lawyer meets with you, review searches, the statement of adjustments and other matters. Explains all documents you must sign.
Lawyer closes the deal with the other lawyer at the registry office, after updating searches, exchanges money for a deed and keys, registers the deed and mortgage, and calls you to let you know that the house is officially yours.
After closing, the lawyer sends you a report telling you about tax and mortgage payments, giving his opinion about the title, and giving you the deed and mortgage and other papers.
The above notes are extremely general, are not intended as legal advice, and may not apply in every case. Each home purchase is as unique as you are. Please consult a lawyer before relying on anything contained herein. I would be pleased to answer any questions you may have regarding your home or real estate purchase.
Please feel free to contact me.