Agreement of Purchase and Sale “Real Estate Closing Date”

This article will explain what you can expect during the closing process from the moment your offer is accepted until you get the keys to your new home with specific reference to the closing date.

One of the main clauses of the agreement is “Completion Date” reads as “The Completion Date states “this agreement shall be completed by no later than 6.00 PM on the ———–day of ——–. Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this agreement.”

“Time is the essence” is a legal doctrine whereby performance of a contract is required by a specific date and often by a specific time. This simple provision provides for added certainty in defining the rights and obligations of the sellers and buyers, particularly when it has been negotiated and expressly made a part of the contract.

I have seen in my Real Estate Law practice that many buyers who are selling and also buying their house on the same date experience difficulties and the entire process becomes stressful for them. Any delay in the completion of one transaction affects the other transaction, in terms of extra penalty, extra cost of the movers and the worst you may be out of your home if the sale of your house is complete and your buying transaction falls on the next day or next day after weekend. It is always a good thought to give you a few days time between your sale-purchase transactions. When you are buying and selling your homes, you may want to consider taking a bridge loan for your buying. You would realise paying a little extra few hundred dollars more, if you are also selling your home, on bridge loan would be stress free and inexpensive than holding up moving trucks and camping in hotels. Besides, you’ll have added peace of mind when everything is not getting clubbed together. I would invariably suggest separating the two deals scheduling completion on different dates. Don’t make them dependent; make them independent of each other.

Do not hesitate calling me or having an appointment before you finalize your deal or financing.

Please note that the information in this newsletter is not legal advice rather are some ideas sharing with the readers. However you are welcome to discuss your situation with me after having an appointment.

Call us @ 905-290-7205 for more information.

Important Steps for Buying a Home (Resale home or condominium) in Ontario:

• Agreement of Purchase and Sale is signed by the buyer and the seller.
• Agreement of Purchase and Sale to be final has certain conditions which are for the benefit of the buyer. For example, Agreement is conditional upon buyer obtaining financing or conditional upon buyer obtaining home inspection to his satisfaction. If you are buying a condo, then the agreement is conditional upon review of the Status Certificate by the buyer’s solicitor. Status certificate can be obtained from the property management of the condominium.
• Once the conditions of financing, home inspection and review of status certificate is complete within the time limit specified by the Agreement, a waiver must be signedby the buyer and the seller stating that the conditions have either been complied with or waived , pursuant to which the Agreement becomes final.

Having completed these steps, you as a buyer should inform and send the executed Agreement of Purchase and Sale alongwith any amendments and the waivers to your lawyer

The buyer’s lawyer will then communicate with the seller’s lawyer and the buyer’s lender from the start to end, prepare all the necessary documents required for the completion of the real estate transaction.

In my previous newsletter I have tried to educate you on different issues concerning Real estate sale and purchase. Sometimes you are selling property and sometimes buying. As such your role and duties differ as a seller and buyer.
In this article let me to provide you some insight on fixture and chattels and rental items. I have seen in real estate closings that the buyers and sellers take this important aspect quite lightly.

Fixture and chattels

One of the contentious issues arises in a real estate transaction is that of chattels versus fixtures. Sellers and buyers both lose sight of the fact that they are contracting for items that are usually in the hundreds of thousands of dollars. However, there have been instances where a transaction was put in jeopardy for some ten dollar object. The OREA form has made the chattels and fixtures issue much simpler. The rule is simple. If it is fixture it must stay unless specified to be excluded and chattels will not be present unless specified to be included.
The chattels section simply stated asks for “chattels included”.
The rule to follow is “when in doubt spell it out”. Detail in chattels section (model, colour, serial no., etc) is strongly recommended. It is possible for seller to suggest that the fridge in the garage is the one that was the one to be left behind. Not the brand new one the buyer saw in the kitchen. In addition, as a buyer‘s solicitor, it might be appropriate to provide for a warranty in the agreement as to the good working order of the chattels on closing.
When it comes to fixtures, it is important to specify those items that the seller wishes to remove. These may include things like the dining room chandelier.

Rental items

There are number of items that would be listed in this section. These include hot water tanks, furnaces and equipments, water softeners, air conditioner, etc. It is important to disclose these items. They appear as fixtures. If not mentioned specifically as rental, the buyer is going to believe that the buyer will be the owner of these items when such may not be the case.
I have seen in my practice that the sellers many a times believe that that they own the equipment’s when got installed however in realty these might be rental or leased or the installing company had put a lien against the property and the seller perhaps was unaware. There are many varied situations as such my advice is to consider this section seriously while listing your property for sale or buying the property to avoid legal complications in closing the transaction.
Please note that this is for information only and not to be considered a legal opinion or advice and each situation is different. You need to check up with me along with details of your case.

Feel free to call me

Balvinder Kumar
Barrister, Solicitor, & Notary Public
201-10 Kingsbridge Garden Cir, Mississauga, ON L5R 3K6
PH: 905 290 7205

Why is home inspection necessary? 

Home inspection is an essential clause in the Agreement of Purchase and Sale that permits the buyer to hire a professional inspector to inspect the house for any vital defects.

These defects may relate to the wiring of the home, defective pipes, faulty heating systems, plumbing problems and issues with regard to flooring and roofing. Home inspection addresses to these issues and should be taken seriously. If ignored the cost of repairs required in the house may be very high.

Home inspection will provide the buyer with the following:

• It educates the buyer about the condition of the house;
• It provides the buyer with a list of repairs including time frames, the costs involved and other recommendations.
• It discloses conditions that are not readily visible or understood by a non-technical buyer;
• It reduces the liability of the realtor

It gives the home buyers a better understanding and more information about the property they intend to purchase.

If the home inspector’s report highlights defects in the property, the buyer has an option of cancelling the deal or continues with buying the house with a less price.

So buyers, beware…do not ignore home inspections…

What is Home Insurance and Why you need it? 

Your home is one of the most important asset that is vulnerable to to natural disaster, burgalry and other risks. Most of the lenders and financial institutions prior to advancing the funds on closing, require the homebuyer to have a home insurance. Home insurance generally consists of coverage for the building structure of your property for property damage from fire, wind, hail, theft or other similar damage, though it may include more or fewer terms depending on the requirements of your lender.

Once Agreement of Purchase and Sale is final, your mortgage approved, you must contact an insurance company for home insurance. Your lawyer will require a home insurance policy or a home insurance binder to be forwarded to your lending financial institution. If you are buying a condominium, the condominium corporation maintains a building insurance which is forwarded to the lender. The Certificate of Insurance is provided to the buyer with the status certificate package.

It is important to note that the home insurance of the property only covers the building structure and does not cover the personal contents in your home. It is advisable to maintain a content insurance. The insurance maintained by the Condominium Corporation will not provide the personal content insurance.

Consult your insurance broker for the best advice.

WHAT YOU SHOULD KNOW ON MORTGAGES TO MAKE A WISE DECISION

From the desk of Real Estate Lawyer

I have been thinking for quite some time to communicate some thoughts which could be useful in making right decisions in your real estate transactions whether you are the first time real estate buyer or refinancing an existing mortgage, one of the issues that always bother most Canadians is the mortgage financing. In order to have peaceful transaction completed you should consider following steps besides others:

1. Mortgage should be arranged well in advance, preferably before you sign the agreement of purchase and sale. You should know where you stand.

2. Always obtain a mortgage pre-approval confirmation in writing.

3. All the terms and conditions should be discussed in details especially with regard to the rate of interest, terms of mortgage, whether open or closed, variable or fixed, pre-payment and penalty clauses, CMHC fee, and what amount would be available to the lawyer for disbursement.

4. Make sure to confirm exact dollar amount to be adjusted towards any HST, property tax hold back, interest adjustment , first instalment, etc. This would give you a fair idea of the amount of finance being sent to the Lawyer and how much, if any, you would be arranging from personal sources. I have seen in my practice, the clients who do not have clarity on this area are confused and they struggle at the time of closing. For existing homeowners, before your mortgage is due for renewal you should check up with the existing financial institution and compare with the other institutions including the total borrowing cost.

5. Whether you are dealing directly with the financial institutions or through mortgage agent, make sure that you understand all the conditions and the institutions requirements should be completed before the scheduled closing date; proof of income, proof of funds, proof of employment, proof of cash down payment, payment of other debts obligations, appraisal, etc.

6. Most important, but not the last always stay in touch with the financial institution or mortgage agent

With whom you are dealing to make sure that the mortgage instructions are sent to the Lawyer well in advance of the closing date. I have seen some clients are struggling up to the last day of closing which result in delay in closing and consequently delayed cost.

Do not hesitate calling me or having an appointment before you finalize your deal or financing. Please note that the information in this newsletter is not legal advice rather are some ideas sharing with the readers. However you are welcome to discuss your situation with me after having an appointment.

In a real estate sale and purchase, there are some voluntary disclosures obligated on the part of sellers. These disclosures must not be taken casually as the impact could lead to serious consequences even after the date of closing. This disclosure could mainly be associated with the following besides others:

Latent or material latent defects– The material latent defects must be disclosed by the seller. If such defects in the listed property are known to the Real Estate Agent or brokerage, then it becomes their obligation to bring such defects to the attention of the prospective buyers.

Stigmatized property– It amounts to disgrace or factors negatively affecting the values of property. These factors may include incidence of murder, suicide in or on the property, or purported existence of ghost. These kinds of situations must be disclosed.

Existence of UFI (Urea formaldehyde foam insulation) – If existed in the property, and known to the sellers, must be brought to the notice of the buyers to avoid any future litigation.

Grow House-illegal growing of marijuana or growing of any banned substance. Such activities typically are associated with residential homes. Some noticeable indications of the house used for grow house could be: excessive moisture, rusting in the furnace and flues and chimneys, unusual staining on walls and floors, bath room alterations, unusual smells, utility line alterations, etc. There are specific regulations and law governing to these kinds of situations and the real estate agents should be careful while processing Agreement of purchase and sale.

Termites: If the property has history of termite issues.

Major repairs– Could be to the foundation, roof or structure of the property.

Water damage and mold– If the home has had a leaky roof, a flooded basement or dampness and mold in certain areas

Although it is not mandatory requirement or selling obligation on the part of the seller to get his home inspected by a certified home inspector, however, as part of good selling strategy and to avoid future litigation it might provide relief to the seller. Any issues pointed out by the inspector, get such observations attended to fix and disclose and let people know what you have done to resolve such issues. It makes you like a serious, honest and conscientious seller.

From legal point of view, the sellers’ strategy must be to avoid any future litigation costing thousands of dollars and let the issues must be disclosed to the prospective buyers which are materially important to decide the market value of the property.

(Please note, these contents of the newsletter are in brief and only for general information and cannot be construed as legal advice. If you have any real estate relating transaction coming up, please contact me in confidence to discuss in detail)

Criminal Background Name Check-RCMP

Criminal background name check might be need for following purposes

Adoption

Canadian Citizenship

Employment

Landed Immigrant Status

Name Change

Visa/ Border crossing/ Foreign Travel/ Work

Volunteer Employment

Please note that if there is a possible criminal record match, the best confirmation could be possible with the submission of fingerprinting.

AREAS OF PRACTICE OF LAW:

Family Law

Separation Agreement

Cohabitation Agreement

Marriage ContractsChild Adoption

Custody, Support and Access

Uncontested Divorce

Family Mediation and Negotiations

Real Estate Law

Sale or Purchase of Residential Real Estate-home or condominium

Sale or Purchase of business / Commercial unit

Leasing residential or commercial units

Mortgage refinancing and

Title Transfers

Agreement review

Wills and Power of Attorney

What is Status certificate?

Status certificate is a brief report provided by the Condominium Corporation that gives information on the current status of the Condominium Corporation. If you are buying a resale condominium, usually your agreement of purchase and sale is conditional, upon review of the Status Certificate by your lawyer. Status certificate is to be reviewed by the purchaser’s lawyer for the following:

1. Reserve funds-The reserve fund represents the account that will be drawn from for ongoing maintenance and repairs of the building. A well-managed condo should have a healthy amount of cash in its reserve fund at all times

2. Arrears of common expenses for the unit in question-The Status Certificate will mention if the unit you are considering buying is in arrears or if the owner is up-to-date with their payments

3. Increase of the common expenses for the unit since the date of the budget for the corporation for the current fiscal year and reasons for such increase by the Board of Directors

4. Levy of any special assessment (e.g. new roof, replace heating system)against the units in project to increase the contribution to the reserve funds and reasons for the special assessment levied by the Board of Directors- It is important to know whether the current owner paid for these or will you be responsible for this?

5. Any judgment and any outstanding legal actions against the corporation or the Unit the purchaser is intending to buy, against the condo corporation and the status of any legal actions to which the condo corporation is a party. If there are any outstanding legal actions against the corporation you may be responsible for paying for the judgments or other results of these actions. Buyer beware

Condo Corporation is obliged to provide:

1. A copy of the status certificate

2. A copy of the budget of CC for current fiscal year

3. Last annual audited financial statements for the CC

4. Auditor’s report on fiscal statement

5. Copies of current declaration

6. By laws, rules and regulations

7. A copy of the certificate or memorandum of insurance for each of the current insurance policies held by the CC

The Agreement of Purchase and Sale states that that balance of the purchase price on closing date will be paid in cash or certified cheque subject to usual adjustments. Closing amount will include any such adjustments payable on closing.

On a resale home, adjustments consist of items already prepaid beyond the closing date by the seller that benefit the purchaser after the closing date, which are pro-rated, and a credit is given to the seller as an adjustment on closing. Some examples of closing adjustments on a resale home are for prepaid realty taxes, prepaid condominium fees (if the property purchased is a condominium), and fuel oil (if property has an oil furnace). Any bill until the closing date is the responsibility of the seller and after that is the responsibility of the buyer.

On a new home purchased from a builder, closing adjustments are much higher than on a resale home. The adjustments include hydro and water meter installation costs, Tarion New Home Warranty Enrolment Fee, Tree planting, enrolment fee, driveway paving, grading deposit, gas water heater, educational lot levy, land taxes, real property taxes, GST/HST Rebates and many other items which are not normally adjusted when one buys a resale property.

The buyer’s lawyer wills usually advice the buyer about all the closing adjustments.