First Time Home Buyer
Thinking about taking the big step of moving from a rental accommodation to a home of your own?
With interest rates still affordably low, the cost of owning a home is often less than what it costs on
a monthly basis to rent a downtown apartment. What is involved in making the move? Who is
available to make the transition as painless as possible? That's where your friendly local lawyer,
real estate agent and other professionals are ready to offer you their services, so why not take a
deep breath and step into the real estate market.
This article is the first of a six part series intended to help you to start the process of buying your
own home. Each article will take you a step closer to realizing your goal of home ownership. As
informative and helpful a series of this type is, it will undoubtedly leave some questions that you
may have unanswered. For those questions, feel free to contact me at the e-mail address found at
the end of the article or by telephone or fax, numbers for which are also provided at the end of the
So where does one get started? First, identify your ability to purchase by contacting your local
bank (or ask me for a name of a bank manager who can help!) for a pre-approved mortgage or by
contacting a mortgage broker. Often this can be arranged through your real estate agent. By
finding the right agent and sticking with him or her, you will find that your search for the right
home will seem effortless. Finding the right agent can be as easy as asking a friend whom he or
she used when he or she purchased, or you might ask your lawyer. In order for an agent to best
serve you, you will often be asked to enter into an agency agreement which will commit you to
using one agent in your home search. Shop around, meet a few agents until you find the one in
whom you could place your trust and with whom you would feel comfortable working with closely
over the period of your home search.
It is just as important for you to find the right lawyer. In today's competitive market, lawyers are
often asked to quote fees for real estate transactions. Prices vary dramatically from lawyer to
lawyer. Purchasers should beware of making price the only criteria when choosing a lawyer since a
lawyer who severely undercuts the prices of others must inevitably cut corners on the work he or
she performs for you. Call and speak to prospective candidates. Ask what is involved with a real
estate transaction and what costs are involved, not only in fees but in disbursements. This topic
will be dealt with in some detail in a later article.
So you have been to a bank to see what you can afford, you have a lawyer in place who will
prepare or at least review an offer you wish to submit and you have a real estate agent to help you
in your home search. What next? Identify what it is you want to buy. A good starting point is to
determine what type of dwelling would best suit your lifestyle.
There are many options. For those of you who want the life of suburbia with larger yards,
established areas surrounding the downtown core may be for you. Others want the life of suburbia
for the sole reason that a brand new house outside of the downtown area with a relatively short
commute can mean more house and property for the buck plus a newer, less time consuming
property to upkeep. The provincial government incentive plan for first time home buyers buying a
brand new construction from a builder is still in effect for qualified buyers which results in a
savings on Land Transfer Tax.
For those who want the space and relatively trouble free lifestyle associated with a new house but
want to stay in the downtown area, a renovated house may be the answer.
Another option is a condominium. Perhaps the least troublesome to maintain, it is the perfect
answer to someone who finds him or herself continually on the road for business or pleasure. Lock
the door behind you and there are no worries.
Once you have decided on what you want and where you want to live, your real estate agent takes
over from there and researches properties that fit your ideal home. Good agents will preview
homes prior to showing them to you and exclude those that do not fit your needs and wants so as
not to waste your valuable time. Your search can take as long a time as you want. You are in
control, but beware: when my partner and I were looking for our house, we gave our agent the
impression that we were only scouting out neighbourhoods and were not prepared to buy for at
least six months. He arranged for us to see six or seven places one day and lo and behold, he found
the house that we ended up buying. By the way, instead of taking six months to find and buy the
place, we bought the place within two weeks of first getting together with our agent. It is a tribute
to a job well done on his part.
That's not to say that all of you are going to be successful in finding the right place so quickly. It is
a big decision that should not be rushed into. Remember, get a pre-approved mortgage, find a
lawyer and a real estate agent with whom you will feel comfortable and you are well on your way
to finding your new home.
Next time, I will go into more detail about what should go into an offer to purchase and what is the
role of the lawyer and the real estate agent at that stage.
After a careful search of the properties available, aided by your able real estate agent, you have
found the house for you. You have made the decision to put in the offer and you want to be sure to
do it correctly so as to best protect your interests. That is when you turn to the team you have
assembled: your lawyer and real estate agent. Together they can prepare the offer to purchase
known as "The Agreement of Purchase and Sale" which I will refer within this article as the offer.
An Agreement of Purchase and Sale is a contract for the purchase of the house, the property it sits
on and often chattels, meaning the appliances, drapes, electric light fixtures and carpets among
other things that may be found in the house. Whether you buy a house or a condominium, the
issues addressed in this article are similar to both and I will only highlight any differences between
The contract identifies the Vendor and the legal description of the property being purchased. This
is the Lot and Plan number of the property. In a condominium purchase you have a Unit and Level
number and a Condominium Corporation Plan number. With high-rise condominiums, you often
are purchasing a parking and locker unit together with your residential unit. That is not always the
case. In some condominiums you are assigned a parking space and locker unit without having
ownership of it. This is called exclusive use and differs from ownership. If you are buying these
extras, it must specifically say so in the offer.
Today you can buy a house by paying 5% down and by financing the balance. The 5% must come
from your own resources and cannot be borrowed money. When submitting an offer, you are
required to pay a deposit towards the purchase price. This deposit is refundable if you withdraw
your offer during the "conditional" period or if the Vendor cannot convey clear title or ownership
of the property to you on closing, otherwise, if the transaction fails to close as a result of a default
on your part, the deposit is forfeited. The amount that you pay as a deposit is up to you. It does not
have to represent 5% of the purchase price since a deposit and your down payment are not one and
the same thing. You have up until the actual closing date to pay the balance of your down
payment. The deposit is simply your sign of good faith to the Vendor that you are willing to risk
the amount of the deposit in order to purchase the property. Lawyers recommend that you try to
get away with as small a deposit as possible since you put less at risk by doing so.
Real estate agents will suggest that a larger deposit will indicate to a Vendor that you are serious
about your offer and that you want the house! Sometimes size can make a difference and I would
agree that there are circumstances when a large deposit will impress a Vendor, especially one who
may have multiple offers to consider. The higher the price of the house, the higher the deposit.
First time homebuyers can make use of their RRSPs as a down-payment on the purchase of a home.
These funds must, however, be in your RRSP at least ninety (90) days prior to being withdrawn for
Your real estate agent will help you determine what the price range of a particular property should
be by doing a market analysis of similar properties in the area. Real estate agents will warn against
low-balling to the point where it insults the Vendor. The Vendor's real estate agent would have
done a similar comparison of properties in order to recommend a selling price and unless he or she
has really miscalculated, the asking price will not be far off the eventual selling price. By
submitting a low ball offer, it can sour any further negotiation and make your purchase more
difficult and perhaps make it impossible to get a good price. You must have enough trust in your
real estate agent to follow his or her recommendation in this regard, though you always have the
final say. Remember, do not fall into the trap of offering more than you can afford. Remember
that there are several thousand dollars in other costs to be considered in addition to the purchase
which must all be factored into you budget. That is the topic of next issue's article.
Most offers are submitted with conditions. Some of the most common ones are the following:
1. FINANCING: Although you should have already been to a bank to pre-approve yourself
for a mortgage, you will want to have a condition which allows you at least five (5) banking days to
finalize your mortgage arrangements. This clause will be worded in such a way that allows you to
walk away from the transaction if you do not find financing that is "satisfactory" to you. What this,
in essence, does, is allows you an out if you have simply changed your mind. Every condition
placed in an offer must be released by the signing of a waiver. If you refuse to sign the waiver, the
deal dies. So, even if you could get that financing, you can simply refuse to sign the waiver if you
simply find that you really do not want to go through with the purchase for whatever reason.
2. HOME INSPECTION/TERMITE INSPECTION: When buying a brand new house from a
builder, you will do what is called a HUDAC Inspection prior to closing. This is an inspection
done with a representative of the builder of your house where you are viewing the finished product
for any flaws, such as broken tiles, damaged walls and floors, utility services, and so on. This
report is then sent to the Home Warranty program office administered by the Province and acts as
your insurance policy or warranty for the house. This is not available on re-sale houses. You must
provide your own inspector to carefully review the house and inform you of any current or potential
problems with the house, structurally, mechanically and cosmetically. Again, you would give
yourself five (5) banking days and you would ask either your lawyer or real estate agent for the
name of a qualified inspector. There are bound to be flaws found with any re-sale property, and the
result of the inspection can be used to adjust the purchase price if the findings would suggest a
large cash output to fix the defects. The Vendor is usually given the opportunity to fix the defects
but if he is unwilling to do so and is also unwilling to adjust the purchase price, you can then use
this condition to walk away from the purchase. A Home Inspection runs anywhere from $250 -
$700 but the actual inspection does not differ much from one inspector to another. The final report
you receive will be the difference in cost in most cases. A home inspector will not generally do a
termite inspection though he or she may be able to detect obvious signs of termite infestation. A
termite inspection is not always necessary but is advisable for many properties in the Beaches and
properties south of the Danforth.
3. STATUS CERTIFICATE: This applies only to condominiums. This certificate is issued by
the condominium corporation's management office and will indicate the status of the building and
whether the current owner is up-to-date in common expense payments. It costs $100.00 (G.S.T.
included) and can take up to ten (10) days to obtain. Therefore, you will have to have a condition
that the offer is not binding until you have received a satisfactory Status Certificate.
4. SURVEY: This clause is important for house purchases. If you are requiring any kind of
bank financing, you will need either a survey or title insurance. A survey must show a "bird's eye
view" of the property, that is to say that it is a diagram of the property from above showing the
location of the house, all outbuildings and fences as they are currently on the property. An up-to-
date survey is considered one that has been done within the last five (5) years where no changes
have been made since the survey was prepared. Most banks will accept a survey that is accurate
even if it is over five (5) years old so long as it indicates the street address, name of the surveyor,
date of the survey and shows the dimensions of the property and where the house sits on the
property. There must be dimensions on the survey showing the space between the building and the
lot lines. If there is no survey or not an acceptable one, you can often negotiate a new survey into
the Purchase Price.
5. SWIMMING POOLS: If there is an in-ground pool on the property, you will want to be
sure that it shows on the survey and you will want proof that it was installed pursuant to all
municipal requirements. You will also want the Vendor to be responsible for the cost of a
professional service to open the pool in the spring and to be responsible for any flaws in the
swimming pool and supporting equipment that are detected at that time.
6. TENANTS AND BASEMENT APARTMENTS: This is a very tricky area these days. The
Province has passed guidelines regarding basement apartments and there exist many properties with
illegal apartments. You must decide for yourself whether you are willing to assume the risks
inherent in purchasing a property with an illegal apartment. Those of you who would be counting
on the rental income to finance a mortgage will not be able to do so if your down payment is less
than 25% of the purchase price since CMHC financing (government guaranteed high ratio
mortgage financing) is unavailable to any property containing a rental unit. There is no use
misleading the financing institution in this regard since your lawyer will have a legal obligation to
the mortgage company to disclose the existence of the rental unit.
7. SUBJECT TO LAWYER'S APPROVAL: Short of having your lawyer take part in the
preparation of the offer, this is your next best protection. Have your lawyer review any offer you
may wish to submit. I, for one, do not charge extra for this service. Most realtors will be happy to
assist you by faxing a copy of the proposed offer to your lawyer.
Stay tuned next time to find out what other costs you will have above the purchase price. Until
then, happy house hunting!!
How exciting!! You've bought a house!! Now you have to figure out how to pay for it. Of course,
you are already pre-approved for a mortgage so that is not a concern but have you considered all of
the other costs involved?
The worst thing for a purchaser to be faced with is the unknown when it comes to closing costs.
No one wants to find out days before closing that he or she has to come up with thousands of
dollars in excess of the mortgage proceeds and what you have already paid as a deposit. So how
can you protect yourself from the unknown? Talk to your lawyer. Make sure that he or she will
keep you informed and prepare you as soon as possible for your financial responsibilities relating to
closing. I make it a practice of faxing or delivering to clients a break-down of all costs relating to
the transaction at least a week before closing, sooner if possible. Land Transfer Tax is something I
discuss the first time I talk to a new client. I will discuss this a bit later in this article.
So let's take it from the top. What's it going to cost you? Take your purchase price and deduct
your deposit to get your starting point. Added to this will be adjustments for things like realty
taxes, water accounts and oil, where applicable. With condominiums, there is also an adjustment
for common expense payments. Properties with tenants will also have adjustments for rents and
interest on rents, and if you are assuming a mortgage or the vendor is giving you a mortgage, these
items will also appear on the "Statement of Adjustments". Depending on the time of year, these
adjustments can be minor or can result in an adjustment of hundreds of dollars. They are all easily
itemized by your lawyer.
In addition to those costs is the provincial "Land Transfer Tax" and registration costs. Land
Transfer Tax is a tax that is payable on the transfer of property where some form of consideration
or compensation changes hands. There are very few circumstances where the tax is not paid. One
such exclusion is, however, very useful for a first time home-buyer who is purchasing a newly
constructed home from a registered builder. Qualified buyers will be able to reduce their land
transfer tax payable on closing by as much as $2,000.00 (which represents Land Transfer Tax on a
property worth $227,500.00). The deadline for this program has recently been extended.
You calculate your Land Transfer Tax by multiplying the purchase price by 1%. Take that figure
and subtract $275.00 to get your tax payable. This equation works for properties up to
$250,000.00. Properties valued between $250,000.00 and $400,000.00 attract a tax of 1.5% on the
amount over $250,000.00 up to $400,000.00 in addition to the tax payable on the initial
$250,000.00. The tax escalates further for properties over $400,000.00. Ask your agent or your
lawyer to calculate the tax for you.
The cash outlay does not stop there my friends. It costs money to administer a real estate file,
especially a purchase file. A title search is required and most lawyers use agents to do this work for
them. Ontario has two land registration systems. Land Titles is the cheaper of the two when it
comes to the cost of the title search because it is generally less complex to search. These properties
contain the letter "M" in their legal descriptions. The other system is called the Registry system
and it requires a search of the title of the property back a period of at least 40 years. A typical title
search will cost anywhere from $100.00 - $300.00 including disbursements.
An "Executions search" is done in conjunction with these searches. In a Land Titles search, it is
only necessary to search the names of the current owner(s) and yourself to determine that neither of
you have been successfully sued and had a claim registered against you in the Sheriff's office for
Metropolitan Toronto. Each name search costs $11.00. In the Registry system, you search back
each owner within your 40 year search period. So, if there were 20 previous owners, your bill for
this part of the search alone is $220.00!! If there is a match of a similar name, the fee to obtain
information about the writ is another $6.00 per match. You can see how this can get very costly.
Your lawyer has a responsibility to satisfy himself that the vendor is up to date in his/her utility and
tax payments. Your lawyer will write letters to the municipality asking for this information. They
are all happy to reply to these inquiries .... for a fee of course! Depending on the municipality,
these letters alone will cost you anywhere from $45.00 - $221.05. Your lawyer must also inquire as
to whether the structure you are purchasing complies with the local building and zoning by-laws
and whether there are any outstanding work orders relating to the structure. Guess what? That will
cost you another $50.00 - $125.00 depending on the municipality.
It is adding up fast isn't it? Now each file is unique in itself and expenses incurred in some will not
be incurred in others. Some expenses specific to only certain files are things like Corporate
searches where a prior owner was a corporation. A PPSA search is generally done to confirm that
the chattels (appliances, etc.) purchased with the house are not subject to a financing contract with a
department store or other retailer. If there are agreements registered on title, your lawyer will write
the municipality to confirm that the terms of the agreement have been complied with and to
determine whether a release of the agreement can be obtained. All of these carry their own fee.
You can expect to pay for miscellaneous costs like parking and some law offices even charge for
photocopies and fax transmissions!! Everything is subject to G.S.T. , of course.
A few years back, the Law Society of Upper Canada introduced a special Real Estate Transaction
Levy. This $50.00 amount is charged on every real estate purchase, sale or mortgage transaction.
This amount can be paid by the lawyer directly or billed to the client. Because I feel that my fees
are quite reasonable, but would not be so if I paid $50.00 myself for the pleasure of doing the work,
I pass it on to the client, but I cannot speak as to what the practice is of other lawyers.
Title Insurance has been introduced to Ontario over the last few years. It is a different way of
approaching the technical aspects of the purchase of a property. The traditional method is to get a
lawyer's opinion on title. That is where the lawyer does all of the searching as set out above and he
or she provides you with his or her opinion upon closing that you have good title or ownership to
the property. Now you can pay an insurance premium and the lawyer's opinion is replaced by a
title insurance policy. This is most often used when there is no survey or an inadequate survey or
when there are issues on title that are unclear or possible problems in the future. In the event that a
problem arises that is covered by the insurance, you would make a claim against the policy as you
would on your car or house insurance. The insurance company addresses the problem and you pay
nothing more than the original premium. Instead of going to your lawyer to fix the problem, the
title insurance company does it for him or her and he or she is not liable for correcting the problem.
The premium amount depends in part on the type of property and the purchase price. By taking out
title insurance, many of the fees set out above are no longer payable under certain circumstances. I
only recommend title insurance to my clients where there is a legal need to do so or when it is
economically beneficial to my client to obtain it.
Now for the cost that you are usually most interested in, and that is the lawyer's fee. Don't expect
me to give you a fee schedule here, cause it ain't gonna happen!!! Each file is unique to itself and,
after discussing with you the nature of your transaction, a lawyer will generally quote a price for
the work to be done. With the information I have provided you above, you can then add the
expenses to give you a ball-park figure as to what your total costs will be in the end.
When calling for quotes, be clear as to what is included. Get an estimate for the fees and for the
disbursements. Too often I hear people say to me that they can get legal services so much cheaper
elsewhere. When I ask them to explain what was included in the quote, they often cannot tell me
when I ask about specific expenses. I advise them to call back the lawyer who gave them the
quote and ask. Surprise, surprise! The quote often did not include crucial expenses like the Land
Transfer Tax and so on. Remember, you often will get what you pay for so beware of bargain
basement legal services.
Next time, we will talk about what you have to do up to closing and what you can expect your
lawyer to do for you. Until then...take care.
Over the last three articles, we have discussed the legal aspects of what is involved in purchasing a
home. There are, however, many practical aspects which also need the attention of you and your
From the time that you waive all of your conditions onward, the lawyer's role is to take care of the
1. Notifying the utility departments of a change of ownership. Your lawyer will also
investigate the status of the tax account and make sure that the vendor is current in his/her utility
payments so that there is no possibility that arrears of a previous owner will come back to haunt
2. Do a title search and other searches to determine that you will purchase good title to the
property and that you will not have someone challenging your ownership of the property once you
move in. The lawyer gathers this information and writes a letter to the lawyer for the vendor called
a "requisition letter" and this sets out any issues that have to be addressed by the vendor's lawyer to
satisfy your lawyer that title is marketable so that you will not have problems with the title when
you go to sell the property. Your lawyer will also prepare documents for the vendor to sign and
return on closing.
3. Your lawyer should inform you of what it will cost you to close the transaction as well as
discuss things like insurance and the survey with you. S/he will also inquire as to what mortgage
company is financing your purchase so that s/he can obtain instructions to prepare the necessary
mortgage documentation. There are also documents relating to the purchase itself which must be
But you are not without a few tasks to perform. This should keep you busy:
1. Book a mover - Depending on the size of the job, you may decide to book a truck and do it
yourself. If you have anything large and heavy to move, you may well find that the expenditure of
a few bucks is a good investment. Beware to book well ahead if you are moving at the beginning
or end of a month, you may find yourself in a tight spot if you leave it too late. Like anything else,
shop around and get quotes for the job and determine in writing what each is willing to provide you
for the price quoted. Consider insurance on the move as well so as to protect against you having to
replace anything broken in transit.
2. If you have gas appliances at home you will have to arrange to have them disconnected by
the gas company.
3. Change your address on things like cheques and be sure to notify credit card companies, the
bank, the Ministry of Transportation and, of course, Canada Post of your new address. For a fee,
your mail can be re-directed to your new home for up to six months after your move. Notify others
who you would like to know of the move. Now's a great time to catch up with old friends!
4. Make sure you have a child and pet sitter and that house plants are moved separate and
apart from your other belongings.
5. Take advantage of the fresh start by sending things out for cleaning so that they come into
the new environment without dirty remnants of the past.
6. You will likely have the opportunity to visit your new property on one or more occasions
prior to closing. Make sure you have this right written into your contract. On one such occasion,
take measurements and then draw a floor plan at home so that you can see how your furniture will
fit into the new house.
7. If you are taking your refrigerator with you to the new house, defrost it and the freezer at
least 24 hours before the move.
8. Make sure that valuables are moved personally.
9. Mark cartons you will need immediately so that you won't be searching for that cutlery for
10. Arrange for telephone, cable and newspaper service at your new address.
11. Have insurance in place on the new property effective the day of closing.
12. Arrange for school enrollment for the kids.
Be sure to have a case of beer ready and order pizza for your helpers, and be ready to relax when it
is all over.
Next time, we'll discuss what happens at your lawyer's office just before closing.
Until next time, happy house hunting!!
The deal is signed, preparation have been made to move and we are fast approaching the day of
closing. You must now meet with your lawyer to sign the reams of documents required to legalize
this relationship between you and the lender and to finalize the contract you have entered into with
In this day and age, customer service is what often distinguishes one service provider from another.
A lawyer's time is valuable, but in my opinion, no more valuable than your own when it comes to
providing you with a service. The lawyer meeting is very important but so is your job schedule and
not everyone has the luxury of taking time out of the usual 9-5 routine to see his/her lawyer, even
for something as important as a meeting relating to a house purchase. When interviewing lawyer
candidates, ask them if their hours are flexible so as to accommodate your schedule. I, for one, will
see clients evenings and weekends in addition to the traditional 9-5 business hours at no extra
So what can you expect to be faced with at your lawyer's office? The stack of papers can often be
intimidating and that it why it is the lawyer's role to explain everything in detail so that you have a
full understanding of what you are signing. Allow me to take a quick trip through the most
common papers you will be asked to sign.
Direction re: Title: This document is an instruction to the Vendor and his/her lawyer as to whom
will be taking title to (ownership of) the property on the day of closing. This paper will have on it
the name you wish to have used on the Deed and it will show your birthdate so as to distinguish
you from anyone with a similar name. If there is more than one person going on title to the
property, you have a decision to make as to how you wish ownership to be indicated on the Deed.
One choice is called "joint tenancy". Simply put, if two or more people hold title to the property as
joint tenants and one owner dies, the survivors become owners of the deceased's interest in the
property without a reference to the deceased's will having to be made to determine where that
interest goes. This is the most common form of ownership used by couples who wish their
significant other to get the entire house should one predecease the other. There is, however, a
second option called "tenants in common". This allows the ownership of the property to be defined
in specific percentages between owners, whether it be 50-50 or some other division of the interest
in the entire house. Some couples use this option where one person has contributed a larger amount
of money towards the purchase of the house or where people who are not a couple are simply
purchasing a property together and would rather a family member or friend or other person or
charity inherit his/her interest in the property upon his/her death. Once the decision is made and the
Deed is registered, this can still be changed but it would cost you the government registration costs
and whatever lawyer's fees you might incur in making the change.
Affidavit of Residence and of Value of the Consideration (Land Transfer Tax Affidavit): This
government form confirms with the government that you are not a non-resident (you spend less
than one half of the year outside of the country annually) and it sets out what you are paying for the
property. It is based on this statement that your Land Transfer Tax is calculated. The calculation
of the Land Transfer Tax was set out in my last article.
Consent to Act re: Conflict: In almost all real estate purchases these days, there technically exists a
conflict of interest for the lawyer acting for you in that he/she is also acting in most instances for
your lender as its lawyer. Where one lawyer acts for two or more parties in the same transaction, a
conflict of interest exists under the guidelines set out by the Law Society of Upper Canada. The
Law Society is fully aware that it is to the financial benefit of the Purchaser to allow for a lawyer to
take on this dual role rather than have the Purchaser pay for his/her own lawyer as well as for the
lawyers for the lender. The form indicates your consent to the lawyer so acting and acknowledges
the existence of the conflict and confirms your understanding that there can be no information
withheld from the lender by the lawyer acting on your behalf.
Standard Charge Terms: Each lender has a set of Standard Charge Terms registered at the Registry
Office. This document set outs what the lender expects of the borrower during the term of the
mortgage and also indicates to the borrower what the lender's rights are in particular circumstances.
It sets out your obligation to pay taxes, utilities and all other charges that could potentially result in
a lien against the property if they were to go unpaid. Most importantly however are the clauses
which set out what the lender can do in the event that you were to miss a payment on your
mortgage or fail to have the property adequately insured. The default clauses should be carefully
reviewed with you by your lawyer so that you cannot claim ignorance of same in the event that you
do default on your mortgage. A copy of this document should be provide to you at the time that
you sign same.
Charge/Mortgage of Land (the Mortgage): This document acts as notice to the world that your
lender has loaned you the money to finance the purchase of the property. It sets out the amount
borrowed (inclusive of the CMHC high ratio mortgage premium, where applicable) and the interest
rate payable. It indicates payment dates, the principal and interest payment amounts and the
maturity date of the mortgage. Any pre-payment privileges will usually be explained on a schedule
to the mortgage. If you have entered into an agreement with your lender regarding more frequent
payments than monthly payments, much of the information on a mortgage will not reflect this as a
mortgage often will only show what would have been the payment schedule if you were paying
monthly. You should also be provided a copy of this document at the time that you sign same.
Any such side agreement you have with your lender will prevail over your registered mortgage in
the event of a conflict.
Survey Direction and Declaration: The direction and declaration are actually two different forms.
The direction is a cover your ass form a lawyer uses where there is not a survey for the property
which is less than five years old. Your lawyer should review the survey with you well before
closing and discuss with you the pros and cons of having a new survey prepared. Should you wish
to proceed with the transaction using the existing survey, the lawyer will ask you to sign a form
confirming your instruction. The lender will often ask for your declaration that the survey,
regardless of its age, is accurate and can be relied upon for mortgage purposes.
Direction re: Funds: The lender wants you to authorize the transfer of the mortgage funds to your
lawyer directly on the day of closing.
Declaration of residency and no secondary financing: This form is becoming more prevalent and is
standard procedure on CMHC mortgages since a CMHC financed property cannot include a rental
component. You state in this declaration that you intend to occupy the house as your principal
residence. A lender will have approved you on the basis of you paying its mortgage and its
mortgage alone on a monthly basis. If you register a second mortgage and have to make payments
on it monthly as well, this would, in most cases, change your ability in your lender's eyes to meet
your mortgage obligations with it as the first mortgage holder.
Title Insurance Acknowledgment and Direction: Your lawyer is obliged to inform you of your
right to choose title insurance should you wish to obtain it and he or she must have you sign an
acknowledgment that you have been offered the choice. Title insurance is a substitute for your
lawyer doing many of the municipal searches addressed earlier. It is often cheaper than the
traditional lawyer’s opinion on title especially for condominium purchases. It is also very useful
when there is any question of there being a title irregularity as it offers an extra degree of protection
in the event that there is a legal title problem when you go to re-finance or sell your property. The
title insurance is a one time fee of anywhere from $116.00 upwards depending on the type of
property and value of the property being purchased or mortgaged. You would only pay a premium
again if you increase your mortgage or move to another institution. The additional premium at that
time generally runs about $75.00.
Your lawyer should also take the time to review the Statement of Adjustments. This sets out what
is paid to the Vendor on closing by showing the purchase price, your deposit and any adjustments
for payments of taxes or water or oil that may have been overpaid or even underpaid by the Vendor
prior to closing. He/she should also quickly review with you the title search to provide you with an
understanding of what you are buying. Many lawyers have their secretaries or assistants sign you
up. I have never felt that to be appropriate and I feel that a client is deserving of the lawyer's time,
without additional cost, to have the lawyer sit down and discuss the file with you.
Lastly, you will discuss how you are to get the keys once the deal is complete. So next time, I'll let
you know what actually happens on the day of closing. Until then, take care and happy house
The big day has finally arrived. You have met with your lawyer, signed all of the required
paperwork and have paid to your lawyer an amount to cover fees and disbursements. It is now in
the hands of the lawyer to complete the transaction. Here is the inside scoop as to what actually
goes on during the day of closing so that you get your key to your new home.
Most of you will be purchasing with the assistance of a mortgage company. Most financial
institutions are providing the lawyer with a bank draft for the closing day in the amount of the
mortgage advance when they send your lawyer the mortgage instructions. But, for those
institutions which still require that funds be advanced on the day of closing from a branch of their
institution, the wait for mortgage money can sometimes drive a lawyer crazy. Once the lawyer has
the mortgage proceeds, s/he goes to his/her bank and deposits it, together with the proceeds you
have provided him/her with into his/her trust account. S/he will then certify cheques in the manner
in which the Vendor's solicitor has instructed. Cheques are often made payable to the Vendor's
mortgage company to pay off the existing mortgage.
Once the cheques are ready, the Purchaser's lawyer (or representative) meets with the Vendor's
lawyer (or representative) at the Registry Office. The Purchaser's lawyer then carries out
subsearches prior to closing on the property to ensure that there have been no registrations against
the property since the title search was completed. Your lawyer would also search executions with
the Sheriff's office. This search is to ensure that neither you nor the Vendor have been sued and
had a judgment against you filed with the Sheriff. If a match is found against a person with a
similar name to the Vendor, whether the person named in the writ is one and the same person as the
Vendor, steps must be taken to satisfy the Sheriff that the Vendor is not the person named in the
judgment in order to clear the Transfer/Deed of Land for registration and to allow your lawyer to
give an opinion to the bank that the mortgage has first claim against your property.
The lawyers then exchange documents. The Vendor's lawyer provides documents giving you
assurances and warranties regarding the property you are purchasing. Your lawyer supplies the
Vendor's lawyer with the cheque(s) and a direction indicating how you are taking title to the
property (if there is more than one Purchaser involved). Each review the documentation and, once
satisfied, the Transfer/Deed of Land and the Charge/Mortgage of Land are submitted to the
registration clerks for their perusal.
The registration clerk reviews the documents to ensure that they are completed properly. Once the
clerk is happy with the documents, they are registered upon the payment of the Land Transfer Tax
and registration costs. Upon registration, the keys are released and your lawyer gets them to you.
If you are buying a brand new house, the keys are often released at the site office.
Now you start paying the mortgage, taxes, utilities ...... it never ends!!!! You may think that that
would be the end of it but home ownership opens up a whole new can of worms. Consider the
1. If you and your partner are buying the property, especially if one has contributed more
initially then the other, you may well consider some sort of agreement spelling out your individual
obligations and rights, what happens upon death or separation and who pays for what.
2. If you do not have a will, what happens to the property upon your death? If you hold the
property as joint tenants with your partner, s/he would automatically be entitled to your interest,
but, if you both pass away in the same accident, what happens then? A will would set out all of
3. No one should have a will these days without an accompanying Power of Attorney for
assets and personal care.