If you are purchasing (whether for a primary residence or for an investment) we recommend considering the following information to ensure the transaction completes smoothly.
1. Mortgage Financing:
Be aware that if you are arranging an insured mortgage (where your cash down payment is less than 20% of the purchase price, the mortgage lender (on closing) will deduct certain costs from the mortgage advance. Please confirm with your mortgage lender as to what costs will be deducted.
If a Power of Attorney is being used, our office will require written pre-approval for the use of power of attorney from your mortgage lender.
It is your responsibility to arrange any mortgage financing which you might require to complete the purchase.
Once you arrange the mortgage, it will be your responsibility to:
satisfy any requirements of the lender, including providing proof of income, proof of cash down payment, payment of other debt obligations etc.
confirm with the mortgage lender that mortgage instructions have been sent to our office so that we can finalize processing your mortgage financing for closing.
Completing these responsibilities will avoid financing problems on the closing day.
2. Informal Loans from Friends and Family:
If you intend to borrow any funds (on an informal basis) from a relative or friend in order to complete a transaction, you should encourage such arrangements to be in writing.
Arrangements made in writing will help to avoid any future misunderstandings, and any lender is encouraged to obtain independent legal advice when making such a loan.
It is also recommended that the funds should be protected by registering a security against the property being purchased.
3. If Closing Funds are Provided by ONE Partner:
If a partner to the transaction is providing a greater portion of the cash down payment than the other partner, whether or not that other partner will be registered on title, it is highly recommended that you arrange a partnership agreement in writing (based on your written instructions).
We also recommend each partner obtain independent legal advice when entering into such a partnership agreement.
4. Names of Ownership Registration
Please advise how you wish to take title to the property.
Please note that you may not use initials of given names in the Land Registry documents. In addition, the birth date of each person who will be taking title to the property is required.
5. Utilities, Cable TV, etc:
Be aware that it is the purchaser’s responsibility to arrange for reading of any hydro, gas and water meters on the closing day, so that the vendor is billed up to the closing date and the purchaser is billed after the closing date.
If you have cable television, please advise the cable company of your move. You must also arrange for telephone services to be connected.
Should the water supply for the property you are purchasing be from a well (rather than a city water supply system), it is your responsibility to obtain a water sample kit from your local health department, arrange for testing of the water samples and to confirm with the local health department that the water is free from contamination.
6. Condominium Rules:
If the property you are purchasing is a condominium, please note that there are many rules that affect condominiums. Should you be concerned about what rules are imposed by the Condo Corporation in which your purchased unit is located, we suggest you immediately speak with the property management office.
If you do not comply with a specific rule affecting your condominium, the Corporation has the right to get a Court Order directing compliance and ordering payment of legal costs by the unit owner.
If you intent to rent your unit to tenants, insert a clause in the tenancy agreement that the tenant will comply with all rules and by-laws of the Condo Corporation.
7. Condominium Common Area Changes and Internal Unit Changes:
The Condominium Act of Ontario states that no changes may be made to common areas without the written consent of the Board of Directors and the consent of the majority of unit owners.
Accordingly, if you notice that there have been any changes made to the common areas, please make direct contact with the management of the condominium prior to closing, to verify whether any such changes have been consented to or were originally installed by the builder.
If it appears to you that the seller has made internal changes to the unit or common area changes, we recommend that you ask management whether or not such changes were approved.
8. If You Are Purchasing From a Builder:
If you have purchased a newly constructed residence, you should attend the property prior to closing to inspect and prepare a list of matters requiring attention from the builder. The inspection appointment time must be arranged by you with the builder’s representative.
At the time of inspection, you will complete the Certificate of Completion and Possession for delivery by the builder to the TARION Warranty Program. The Warranty Certificate issued should be received by you and a copy provided to our office prior to closing.
9. Title Insurance:
We recommend to all purchasers a Title Insurance Policy which will provide title protection against title defects, survey issues, liens, work orders, frauds, forgery etc.
The title policy ordered will be sent to you after closing the purchase, and such policy will exist for your entire period of ownership of your residence, no matter how long you own the property.
10. Non-Resident Purchasers:
If any buyer taking ownership is a Foreign National (a person who is not a Canadian Citizen and NOT a Permanent Resident of Canada), there is a 15% Ontario Tax based on the overall price (in addition to Land Transfer Taxes).
If two spouses (either married or common law), who are purchasing and one is a Foreign National, as long as the second spouse is a Canadian Citizen or Permanent Resident, then the couple is exempt from the 15% Non-Resident Tax, provided both buyers own jointly, and move into the property.
A refund of the entire 15% is available upon qualifying if the Foreign National buyer becomes a Canadian Citizen or Permanent Resident within four years of the closing date, AND uses the purchased property as their principle residence.
A full refund is also available if a Foreign National buyer is at an approved Ontario School for two years after closing OR has legally worked in Ontario for 12 months after closing AND uses the purchased property as a principal residence.
Please see Non-Resident of Canada for further information.
11. Closing Adjustments to the Purchase Price:
Upon closing, you will be asked to bring in a certified cheque, which will include any closing adjustments to the purchase price.
Your Agreement of Purchase and Sale states that the balance of the purchase price on the closing date will be paid by certified cheque subject to the usual adjustments.
On the purchase of a resale residence, adjustments typically include items already prepaid beyond the closing date by the seller, such as prepaid property taxes, condominium fees, etc.
On a newly constructed home, closing adjustments are greater since adjustments from a builder can include development charges, education levies, hydro and water meter installation costs etc.
As you are purchasing real estate, it is important to consider preparing a will at this time.
It is normal for people to delay in preparing a will, however it is worthwhile to spend a small amount of money and time to prepare a will in comparison to the time, money and effort associated with administering an estate where there is no will.