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What To Expect When Purchasing Your Home

Your next home purchase will be made easier if you are familiar with and understand the typical steps taken in a real estate transaction. This article will provide you with an overview of what to expect, and it includes information on the role of a real estate lawyer throughout all stages of your home-buying experience.

You've Signed an Offer to Purchase. Now What?

You've signed an agreement of purchase and sale ("APS") with the seller. You're excited. You're going to be a home owner! Not so fast - before closing, there are a number of steps that still need to occur. So what's next?

Conditions in APS

In Ontario, it is common to add certain conditions to the standard form APS in a Schedule “A” to the agreement. A condition simply means that a certain specified event must occur, otherwise the agreement is void.

Generally, the most common conditions in real estate transactions are financing and inspection.

If you are financing your purchase (as most purchasers do), it will usually be necessary to obtain financing approval from a lender. This may take a few days after an APS is signed and having a financing condition ensures that you can pull out of the transaction if you cannot obtain financing.

The inspection condition provides an opportunity for a home buyer to have their own professional make a thorough inspection of the real estate in order to identify any problems which may not be apparent from routine viewing.

You can choose to waive the conditions in your APS at any time. However, if you choose to waive the condition prior to it being satisfied, it could mean that you will take on increase risk in the real estate transaction. Once all conditions have been fulfilled or waived, deal will be considered "firm" and, at this stage, it become difficult, unless title issues or other problems arise, to pull out of the transaction.

Review of APS

While we recommend that you retain a lawyer prior to signing the APS, most purchasers do not retain a lawyer until after the APS has been signed. Once a lawyer is retained, the first thing that a lawyer will typically do is review the APS. The lawyer will review the APS for matters such as:

  • Confirming that the legal description set out in the APS matches the description found on title to the property.
  • Confirming that the seller names listed on the APS match the names on title to the property.
  • Checking the APS for any potential red flags relating to fraud or other potential issues.

Title Search

Once a preliminary review of the APS is complete, the lawyer will typically conduct a title search against the property being purchased. After the title search is completed, the lawyer will review with you the state of title. This will include, as applicable, a discussion about the location of any easements located on the property, the impact of any restrictive covenants on the use of the property, as well as a review of other agreements which may be registered on title to the property. If any red flags come up during the review, your lawyer will discuss them with you and will provide you with options to deal with them.

At this stage, your lawyer will also prepare a "requisition letter" and will send that letter to the seller's lawyer for his comments and review. A requisition letter is a document which puts questions relating to title to other seller's lawyer. If any issues are identified by your lawyer during title search, the requisition letter will request that the seller's lawyer address and correct those issues prior to closing.

Title Insurance

As part of the title search, your lawyer will also arrange for title insurance. Title insurance typically provides coverage for title issues that existed prior to the purchase of the property by you but which issues were unknown to you prior to closing.

Preparation of Documents

Assuming that the title search has gone smoothly, your lawyer will work with you to prepare documents required in order for you to successfully complete your purchase. If you require financing for the purchase, your lawyer will work with your lender to prepare the appropriate mortgage documents to ensure that your lender advances the funds you require to close on the closing date.

What We Require From You

In order for us to provide you with the best service possible in your real estate purchase, you will need to provide to us certain information as part of the home purchase process, including:

  • The full legal name and date of birth for each purchaser.
  • The spousal status of each purchaser.
  • Information about the residency of each purchaser and whether each purchaser has been resident in Canada for at least 183 days out of the last 365 days prior to the closing date.
  • Confirmation of how title to the property is to be taken by each purchaser, including information about whether any purchaser is holding title as trustee for the benefit of one or more third parties.
  • Whether or not the purchase is being financed and, if so, information about the lender.
  • The intended use of the property being purchased after closing, particularly if the intended use differs from the current use of the property.
  • Which purchasers (if any) are first time home buyers.
  • Whether or not you have an up-to-date survey of the proeprty.
  • Two pieces of ID for each purchaser.
  • Contact information for each purchaser including the profession of each purchaser.
  • Prior to closing, a bank draft payable to the law firm, in trust, for any funds that are to be provided personally to ensure sufficient funds for closing of the property.

We're Here to Help

As always, if you have any questions about any of the services provided by Beganyi Professional Corporation Law Firm, we're here to help. Don't hesitate to contact us for more information.