Frequently Asked Questions
Do you charge an hourly rate, or a fixed fee for my purchase/sale?
For residential real estate purchase or sale transactions we are able to offer an initial quote on fees to help provide some cost certainty prior to your closing date. It is important to note that these quotes are for standard residential real estate transactions. If the circumstances relating to your purchase or sale should significantly change warranting an update to our initial quote on fees we will notify you immediately with an update the quote.
Should a lawyer review the Agreement of Purchase and Sale?
There is no legal requirement for your lawyer to review your Agreement of Purchase and Sale, however in many real estate transactions is it advisable to have a lawyer review the Agreement of Purchase and Sale while the agreement is still conditional, as the agreement would still not be irrevocably binding, and if any changes are recommend they can still be made or at least suggested.
Should I get a property inspection done?
Just as you would want to make sure that the legal aspects of an Agreement are reviewed by a lawyer, a property inspection allows a qualified professional to give an opinion on the physical condition of the property. It is important to note that your lawyer’s role will be mostly limited to the legal aspects of the transaction; lawyers will not offer any advice on the physical condition of the property and any structures. By including an inspection condition in the Agreement, it provides a buyer the right to identify building issues that can either be remedied by the vendor or the buyer can elect to withdraw from the Agreement. It is an important and vital right. Ultimately, in Ontario, it is “buyer beware” when it comes to the state of a property, and a prudent buyer should protect himself with a proper inspection.
Can the buyer/seller and I both use you as our lawyers?
Generally speaking, a lawyer can only represent one side in a real estate transaction (i.e. the “two lawyer rule”). There are specific circumstances whereby our professional governing body, the Law Society of Upper Canada, permits a lawyer to act for both sides in a real estate transaction (i.e. the transferor and the transferee are considered “related persons” by law, or where the transaction is occurring in a remote location where requiring two lawyers could cause undue inconvenience). We recommend that our clients contact us as early as possible to inquire about whether two lawyers would be required in a particular transaction.
When can I pick up my keys?
Most agreements of purchase and sale may list a closing time for the transaction. In reality, the actual time of closing will depend on when all closing documents, keys and funds have been exchanged, and the transaction electronically submitted by both lawyers. Because we cannot release the keys to you prior to the official closing of the transaction, we would have to wait until the transaction is registered (which must occur before 5:00 pm on the day of closing). We aim to coordinate with you as your closing date nears to give you an idea as to when keys should be available.
What do you do with my sale proceeds?
Upon receipt of the sale proceeds, we ensure that any mortgages, the realtor’s commission and our fees and disbursements are paid out. The balance of the sale proceeds remaining after these amounts are deducted is ready for you to be picked up at our office in the form of a certified cheque.
Is there such a thing as a “welcome tax” or land transfer tax in Ontario?
Yes. In Ontario, a purchaser is required to pay a land transfer tax based on a certain percentage of the purchase price (subject to any first time home buyer rebate). This amount is confirmed with you and collected from you prior to closing, and we would pay this to the appropriate government body. If you are a first time home buyer, you may be eligible for a partial rebate (up to $2,000) of the land transfer tax payable. If you would like to inquire further about eligibility for the land transfer tax rebate, please contact us.
Do I have to pay HST on my purchase?
For residential transactions, there is a general exemption from paying HST for what is considered a sale of a previously occupied residential complex (i.e. buying a previously used home). If you are buying from a builder, or a new home, HST would be applicable to your purchase and the builder ordinarily factors this in to the quoted purchase price. Depending on your usage of the property as your primary residence, you could qualify for a partial rebate of the HST paid, and a builder will normally also factor in this rebate. For commercial properties it is likely that HST would be collected and paid, either at closing or during a purchaser’s HST reporting period if they are an HST registrant and the parties jointly elect for the purchaser to report the HST.
What is a status certificate, and why has my realtor included a condition in my Agreement of Purchase and Sale for its review?
In condominium transactions, since you are dealing with an interest in a condominium corporation along with the other condominium unit owners relating to common property, a status certificate provides a glimpse into the financial and legal matters of the condominium unit and corporation as a whole. Status certificates will reveal whether condominium fees are paid to date, any special assessments have been levied against unit owners, as well as the status of the condominium corporation’s reserve fund set aside to pay for major repairs or replacements of common property. The review of this document by your lawyer ensures you have important background information that may not have been disclosed during negotiations relating to the unit.
What is the Tarion new home warranty program?
In Ontario, new home and condominium builders are required to participate in the Tarion new home warranty program, which provides buyers with limited warranty coverage for defects in the construction of their property, as well as for other items such as delays in closing caused by the builder. The warranty is transferable to subsequent buyers, provided that the maximum 7-year coverage period has not expired.
I am re-financing my mortgage, why is the bank saying I need a lawyer?
As part of the re-financing process, some lenders may require that any amounts owing on the previous mortgage be paid out in full (including any prepayment penalties and discharge fees) and be discharged from title to the property such that the new mortgage/charge will have priority in registered charges against the property. It is not possible for non-lawyers to register their own transactions (including the buying or selling of property).
When should I secure financing?
It is never too early to secure property specific financing approval from your lender. It is advisable to have financing secured with a commitment from your lender prior to waiving any conditions on the purchase. Whether you are working directly with a lender or through a mortgage broker, ensuring all documentation has been submitted to your lender early reduces the risk of delays resulting from inadequate time to work through any mortgage instructions.
What is title insurance?
Most lenders accept title insurance as an alternative to a costly legal opinion from a lawyer to insure or indemnify against loss or damage resulting from a title defect or legal risks relating to the title of the property. While it does not protect against every possible risk, most title insurance policies will protect the home buyer and the lender against common title defects, such as unclear title, existing liens, encroachments, fraud and errors in the public record. The cost of title insurance policies vary depending on the value of the property, therefore we recommend discussing cost on a case-by-case basis.
What is the difference between a “joint tenancy” and a “tenancy in common”
Most couples purchase home as joint tenants, which essentially means that if either person dies while owning the property, the deceased’s interest automatically vests with the survivor and transfers to the surviving owner. In these cases, title is held “jointly” as the interests are conceptually tied together.
In other cases, purchasers may want their interests to remain legally separate and divisible. As tenants in common, each owner will be said to own a certain percentage in the property, and would be able to sell or transfer that interest separately from the other owner(s)’ interests.
Do I need to be present to sign closing documents?
It is always advisable to be present with your lawyer when executing closing documents. In fact, some lenders require that certain documents related to the mortgage are signed in the presence of the lawyer of record indicated on mortgage instructions. If you will not be present prior to closing, we ask that you advise us of this as soon as possible such that we can confirm the availability of alternative arrangements.
- Land Transfer Tax estimator tool: http://www2.ottawarealestate.org/home/Calculators/LandTransferTaxCalculator.aspx
- Information on eligibility for HST new housing rebates: http://www.cra-arc.gc.ca/E/pub/gp/rc4028/rc4028-e.html
- More information on the Tarion Program: http://www.tarion.com/New-Home-Buyers/Pages/default.aspx
- More information on the two-lawyer rule: http://www.lsuc.on.ca/with.aspx?id=2147499397
- Warren Camacho LLP Buyer’s Information Worksheet
- Warren Camacho LLP Seller’s Information Worksheet