| IN THIS SECTION
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.
Back to Top
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, your lawyer will probably wait until
the condition has been met before beginning work.
The offer will 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.
Back to Top
NEW HOMES
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.
Back to Top
CONDOMINIUMS
You purchase exclusive ownership of the unit and a percentage interest in common
with other unit owners in the rest of the complex.
You have ten days to back out of the deal for any reason at all if you are
buying a new unit in an unregistered condominium. Not in a 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.
Back to Top
TITLE AND OTHER SEARCHES
The lawyer will examine the title by reading the documents on file at the
Registry Office, examine the survey. The purpose is to make sure that the seller owns all
that you want to buy, and that he has a complete right to sell it. Arrangements will be
made to take care of any mortgages, back taxes or other liens that you haven't agreed to
take on, so 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.
No absolute right to inspect the property before closing to make sure that it's
in the same condition as when you signed the offer. Put it in your Agreement.
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.
Back to Top
COST OF SEARCHES
Disbursements and taxes for an older home average $450.00, and about $350.00 for
new homes. Can get as high as $475.00 plus Land Transfer Tax.
Back to Top
SURVEY
Absolutely essential if the lawyer is going to do a complete investigation.
Shows the extent of the Vendor's title and all physical claims against it.
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.
Back to Top
MORTGAGES
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").
Back to Top
TITLE INSURANCE
Useful 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.
Back to Top
CLOSING MONEY
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.
Back to Top
AFTER CLOSING
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.
Back to Top
Please feel free to contact me at: peter@plamprey.com
|
