BUYING AND SELLING YOUR HOME

If you’re the type of person who likes to know the ending of a movie before you watch it, then this section is for you. Or, if you just like to know how buying a house or property works, then read on.

What's Involved In Buying A New Home?

If you’re the type of person who likes to know the ending of a movie before you watch it, then this section is for you. Or, if you just like to know how buying a house or property works, then read on.

  1. Find it. You take your favourite realtor shopping for a property and your favourite mortgage specialist shopping for interest rates! Once you’ve found a property, your realtor drafts your offer on the Contract of Purchase and Sale (CPS), with subject conditions and a subject removal period. You sign the CPS and your realtor presents it to the seller for acceptance. When the seller accepts the offer, you use the subject removal period to find out everything you need to know about the property before you legally commit to buying it (common subject conditions include building inspection, being approved for a mortgage, etc.).
  2. You buy. Once you’ve done all your homework about the property and are happy with everything, then your realtor will help you remove the subject conditions and the CPS becomes legally binding on you (that means it will cost you money to get out of buying the property).
  3. Stuff happens. Your realtor’s office sends your lawyer the CPS and your mortgage specialist directs the lender to send them mortgage instructions. Your lawyer will look through the CPS, mortgage instructions, title search and a municipality tax search and prepare all the documents required to make you the owner of the property and to register your mortgage legally. When all the documents are ready, you sign the Buyer’s Statement of Adjustments, Property Transfer Tax Return and mortgage documents (if any), and bring in the money required to buy the property (including your down payment and all the adjustments in the Buyer’s Statement of Adjustments). This all happens before the Completion Date.
  4. You celebrate! Your lawyer will take all the signed documents and register them on the Completion Date and send confirmation to your realtor and to your lender. Then your realtor will give you the keys to your property on the Possession Date.

Legal tips for buying your home

Overall, buying a piece of real estate is the same as buying anything else. You need to try it, ask questions, think about it, then decide if it’s worth the price, know everything about it before you jump in. There are a few differences, however, like there’s generally no returns, the price is negotiable, and it’s probably the biggest price tag on an item that you will ever buy! So, here a few tips as you go down this process:

  1. Market: Market conditions often drive how able or how thorough or how much time you have to get the legal stuff covered off. We cannot stress enough that the legal stuff can be expensive, so be careful before skipping steps or not doing all of your due diligence. You need to decide how much to let the market dictate its impact on your legal liability.
  2. Subject Conditions: Make sure you have all the subject conditions stated in the Contract of Purchase and Sale that you need, and more. Give yourself the ability to go through all your due diligence without hesitation. This may not be possible given market conditions, but if you don’t, then you may not be able to get out of the deal and you’re stuck with completing on it.
  3. Building Inspection: Certainly the biggest one is getting a thorough building inspection from a reputable and detailed building inspector. Often your ability to sue your building inspector is limited to the amount you paid for the inspection so just beware of that! Then add some more after you’ve done your due diligence, like garbage removal, carpet cleaning, and tenancies.

Should you sell your home first before buying?

Oh, we would say this totally depends on what the housing market is doing. There’s certainly exposed risk for either of those depending on whether it is a buyer’s market or a seller’s market. The best people to chat to about that are qualified, proactive and knowledgeable real estate agents. Generally:

  • A “Buyer’s Market” means that there are more houses for sale than there are buyers generally. This means that there are lots of listings, pricing is pretty stable or sometimes falling, and that buyers have their pickings when it comes to the inventory for sale. This also means that the non-desperate sellers may wish to hold off if their situation allows it or that sellers may start to take their listings off the market if they don’t need to sell at that time. This could lead slowly turn into a “Balanced Market”.
  • A “Balanced Market” means that there is generally movement with purchases and sales evening out and that the demand for buying housing generally meets the supply that is available. The prices are generally competitive, but fair, and there is not much urgency. But as the market balances out, buyers are more encouraged to purchase a property, which often leads to a “Sellers’ Market”.
  • A “Seller’s Market” is when the overall supply for housing is less than the demand. This is when we see buyers offering higher than listed or assessed prices for properties. The sellers can demand what they want and create competition in the marketplace for their property. This causes sellers to jump on the listing wagon as they also want top dollar for their properties, which may lead to a “Buyers’ Market” again.

In a Buyer’s Market, we often see clients buy before they sell as the prices are good and they have time to find the property they want. They may often rent their first property out until the market is better or sell it after they have bought. There is a risk that they are unable to sell the property before they buy, and they will have consider other financing bridging options in order to close, but they prefer to know they secured the property they want. Alternatively, in a Seller’s Market, we often see people sell their homes at top dollar in these market conditions, and then either wait until the market cools off again to buy again or they rent their properties back from the purchaser for a period of time. It is the time to cash out and then take out the risk of going through the cycle again and not being able to sell or not being able to get the price they wanted.

Why is the lender asking if I want title insurance or a survey certificate?

If you’re buying a house, you will need to get a survey certificate or title insurance (depending on who the lender is and what they require). If you’re buying a condo or townhouse, you may have to get title insurance (depending on who the lender is and what they require but you will not need a survey certificate).

What’s the difference?

A survey certificate is a diagram prepared by a land surveyor of where a house sits on the legal lot. If the Seller had one prepared previously, then you may be able to use that one, but getting a new one costs around $350+ depending on how complicated and steep the land is. A survey certificate is different from an appraisal done by the bank.

Basically, title insurance is an insurance product that protects the bank if the value of the property decreases because the building happens to be outside the legal lot or something else is discovered. This costs around $150-500 and is a one-time premium based on the mortgage amount (the higher the mortgage amount, the higher the premium). If you want the title insurance policy to also protect you, the borrower, then you can have the option of paying an additional fee for that.

  • A “Buyer’s Market” means that there are more houses for sale than there are buyers generally. This means that there are lots of listings, pricing is pretty stable or sometimes falling, and that buyers have their pickings when it comes to the inventory for sale. This also means that the non-desperate sellers may wish to hold off if their situation allows it or that sellers may start to take their listings off the market if they don’t need to sell at that time. This could lead slowly turn into a “Balanced Market”.
  • A “Balanced Market” means that there is generally movement with purchases and sales evening out and that the demand for buying housing generally meets the supply that is available. The prices are generally competitive, but fair, and there is not much urgency. But as the market balances out, buyers are more encouraged to purchase a property, which often leads to a “Sellers’ Market”.
  • A “Seller’s Market” is when the overall supply for housing is less than the demand. This is when we see buyers offering higher than listed or assessed prices for properties. The sellers can demand what they want and create competition in the marketplace for their property. This causes sellers to jump on the listing wagon as they also want top dollar for their properties, which may lead to a “Buyers’ Market” again.

In a Buyer’s Market, we often see clients buy before they sell as the prices are good and they have time to find the property they want. They may often rent their first property out until the market is better or sell it after they have bought. There is a risk that they are unable to sell the property before they buy, and they will have consider other financing bridging options in order to close, but they prefer to know they secured the property they want. Alternatively, in a Seller’s Market, we often see people sell their homes at top dollar in these market conditions, and then either wait until the market cools off again to buy again or they rent their properties back from the purchaser for a period of time. It is the time to cash out and then take out the risk of going through the cycle again and not being able to sell or not being able to get the price they wanted.

What do you need to do if you’re a first time home buyer?

First, you have to tell your lawyer.

To qualify for the first time home buyer’s program, both the buyer(s) and the property have to qualify (7 requirements listed below):

Buyer Requirements:

  • you are a Canadian citizen or permanent resident,
  • you have lived in BC for 12 consecutive months immediately before the Completion Date or have filed 2 income tax returns as a BC resident during the 6 years before the Completion Date,
  • you have never owned a principal residence anywhere in the world at any time, and property requirements,
  • you have never received a first time home buyer’s exemption or refund,
  • the purchase price must be less than $500,000, for the full exemption (or less than $525,000 for a partial exemption),
  • the land is less than 0.5 hectares (1.24 acres), and
  • the property will only be used as your principal residence.

Property Requirements:

  • the purchase price must be less than $500,000, for the full exemption (or less than $525,000 for a partial exemption),
  • the land is less than 0.5 hectares (1.24 acres), and
  • the property will only be used as your principal residence

The penalty for making a false declaration is the amount of PTT you saved so you basically have to pay double. Yikes.

What do I need to know about insurance when buying my home?

If you are buying a house, you will need to arrange property insurance before the Completion Date with coverage to begin on the Completion Date because that is the day you become the owner of the property. Your lawyer can contact your insurance agent to add the lender as the 1st loss payee on the policy and request a certificate as confirmation for the lender.

If you’re buying a strata or leasehold property, your lawyer will contact the strata corporation or homeowner’s association directly to obtain building insurance. All you need to do is arrange insurance for the contents of your unit through your insurance agent.

Are there hidden costs associated with buying a home?

There really shouldn’t be any hidden costs, but we also know that different companies do things differently. But because we believe in being crystal clear with you, there will be no surprises at closing (except for the good ones)!

Here is a list of the things you should expect when you are selling a home in order to clear title and in accordance with the contract:

  1. Property Transfer Tax
  2. GST (if applicable)
  3. Prorated property taxes from January 1 to the Completion Date
  4. Prorated strata fees from January 1 to the Completion Date
  5. Title insurance or survey certificate (if required from the lender)
  6. Insurance binder or confirmation from your insurance company that you have insurance for the property
  7. Legal fees including disbursements (title searches, filing fees, etc.) and taxes

Buying or selling your home? Let’s get started. We’ll make it easy!

What's Involved In Selling Your Home?

  1. You list. You find your favourite realtor and wait for the Contracts of Purchase and Sale (CPS) to roll in from the buyer’s realtor. You sign the CPS and it becomes an accepted offer.
  2. You sell. If there are subject conditions and a subject removal period, then the Buyer goes through their due diligence process (like building inspection, being approved for a mortgage, etc.). Once they find out everything they need to know about the property, they will sign a subject removal addendum which legally commits them to buying the property.
  3. Stuff happens. Your realtor’s office sends your lawyer the CPS and they review the CPS, property title search, municipality tax search, request mortgage payout statements and the documents that the Buyer’s lawyer prepares, in order to prepare the documents to get the sale proceeds into your account. When all the documents are ready, you sign the Seller’s Statement of Adjustments, Order to Pay, GST Certificate, Non-Resident Declaration and Form A (Land Title Office document that transfers legal title to the Buyer). This meeting happens before the Completion Date. On the Completion Date, your lawyer will wait for the Buyer’s lawyer to let them know when the sale proceeds are ready for pick up and they will deposit them into their account that day or the next day (depending on what time it is). They use those funds to pay out all charges and mortgage registered on title and then prepare a cheque for you.
  4. You celebrate. You look for the money to arrive in your account and celebrate!

Legal tips for selling your home

Selling your home comes with a whole bunch of things you need to watch for. Here are the top 3 for us:

  1. PDS: The Property Disclosure Statement is a very important legal document that often forms the basis for lawsuits, if things go wrong. Sellers need to be very truthful and accurate when answering the questions. The test is generally to the best of your knowledge and experience with the property, so if “I don’t know” is the most accurate answer, check that box. The Property Disclosure Statement must also be specifically incorporated into the Contract of Purchase and Sale for it to be incorporated.
  2. Defects: Related to the Property Disclosure Statement are defects, which can be latent or patent. Sellers must disclose all known material latent defects. A latent defect is basically something that is not visible on normal inspection, but which materially affects the property’s use or value. On the other hand, a patent defect is one that is readily visible and obvious. These must be disclosed before an accepted offer.
  3. Tenancies: There are very strict rules for landlords when giving notice to their tenants when they are selling the home. If you do not want the tenant when you move in, make sure the seller is aware and that it is fully documented in the Contract of Purchase and Sale so you don’t have responsibility for that. If you do want the tenant, then you want a copy of the tenancy agreement so you know what you’re getting into and how much damage deposit there is and how long the tenancy is.

Are there hidden costs associated with selling a home?

There really shouldn’t be any hidden costs, but we also know that different companies do things differently. We like to say there should be no surprises at closing (except for the good ones)!

Here is a list of the things you should expect when you are selling a home in order to clear title and in accordance with the contract:

  1. Real estate agent commissions: sellers agree to pay their agent a commission for selling their home. That commission is then divided between the listing agent (for the seller) and the selling agent (for the buyer).
  2. Outstanding property taxes and utilities: sellers must pay out everything they owe on their property taxes and utilities from January 1 of the year they are selling all the way until the Completion Date. This may include taxes from previous years or installments that are not paid, but it is a fair and square deal and sellers need to be caught up on their payments at the Completion Date.
  3. Mortgages and Property Tax Deferment Agreements: anything owing under the registered charges on the property. These could be payable to an institutional lender like a bank, or to the BC government or other private party. These are all paid up to date with accrued interest and penalties, if any.
  4. Strata fees and penalties: any payments owed to the strata corporation will also be paid out from the proceeds before the seller receives the funds.
  5. Anything else that the sellers agreed to, for example, damage deposits from tenants, repairs to the building, etc.

All of these will show up on the Seller’s Statement of Adjustments or the Seller’s Order to Pay, and deducted from the sale proceeds.

Buying or selling your home? Let’s get started. We’ll make it easy!

WHAT DOES A REAL-ESTATE LAWYER DO?

Ah, what do lawyers do? Short answer: they do everything to ensure that the legal parts of the Contract of Purchase and Sale are carried out and ensure you’re protected throughout. This can include:

  • Doing title searches to find out if anyone other than the seller has any legal rights over the property that could restrict the buyer’s ability to use the property (including mortgages, registered easements, rights of way)
  • Preparing all legal documents to transfer the ownership from the seller to the buyer, including the Form A, Property Transfer Tax return, Statement of Adjustments, and Statutory Declarations
  • If a mortgage is required, meeting all the lender’s conditions and preparing all legal documents to register a mortgage against the property, then receiving funds from the lender
  • Ensuring that the seller’s mortgage and all financial charges (like liens) are paid out and discharged off the property
  • Confirming that all payments for which the seller is responsible are paid in full up to the completion date
  • Meeting with you to fully explain and witness all the legal documents
  • Delivering the final amount due to the seller’s notary public or lawyer and ensuring that the buyer is the registered owner of the property
  • If the property is a strata, then all the information required (like Form B Information Certificate, Form F Certificate of Payment, and strata corporation’s Certificate of Insurance.

Do you need a lawyer to buy or sell your home?

Short answer: nope! You don’t need a lawyer to help you buy or sell your home. Notary publics are also qualified to help with the transaction of transferring properties and registering mortgages.

There is a difference though (and it’s not usually the price): a law degree and legal experience to negotiate any problems. Notaries can deal with the transaction when things are smooth and nothing comes up, but if problems do arise, they often refer to a lawyer anyway so you end up paying much more for the transaction than if it was initially started at a law firm. Lawyers are trained to solve problems and can understand the law in order to do so.

Do you need a lawyer to buy or sell your home?

The legal costs for buying your home with a mortgage are generally around $800-2,000 (usually around $1,000) for legal fees and then disbursements on top of that. Disbursements are out of pocket expenses that we spend to get a home purchased. These are things like title searches (which show liens and mortgages on title that the seller needs to clear off), filing fees (to register the change in ownership and the mortgage), couriers to transfer funds to the seller or from the lender (yes, old fashioned cheques), software fees for generating the documents, etc. There are usually additional costs for alternative ownership arrangements (leasehold or co-op, for example), rush transactions (closing within 3-5 business days from when we receive mortgage instructions and contract of purchase and sale), more than one mortgage, or when there are complications, like conflicts and disputes that need to be resolved in order to close the transaction.

What you need to know about Contract of Purchase and Sale (agreement between the buyer and seller)

To be honest, a significant (like 90%) of the Contract of Purchase and Sale that your real estate agent prepares is pretty standard. It’s the approved form and everyone uses pretty much the same content. The things that are negotiable are:

  1. Purchase Price – the price that the buyer will pay for the property
  2. Completion Date – the date that the property will change ownership
  3. Included and Excluded Items – the items that the buyer and seller agree will be included in the purchase price. The law in this area is based on how “fixtured” something is to the property or building. The more permanently fixed it is to the property or building, the more likely it is included. But be careful here and make sure if you want something or don’t want something, that it is specifically included. This is also true for sellers and they should exclude things that they specifically want to take away. It’s better to be super clear in this section than to assume it will be included or excluded. We have seen things in this category like chandeliers, sheds, trees and shrubs in the garden, hot tubs, large mirrors or hung murals, art works suspended from the ceiling, shelving that looks like it’s built in, etc.

But the most important part of the Contract of Purchase and Sale is that big blank page at the end that states everything else! This is where the most time and attention should go because it is all the extra agreements that the buyer and seller agree upon, including any subject conditions that need to be satisfied before the contract is binding on all parties. Subject conditions are things that the buyer wants to know more about before paying a deposit and making the legal commitment to buy the property. These often include things like whether they can qualify for a mortgage to purchase the property, arranging a building inspection for the building and property, meeting the neighbours, getting insurance, lawyers reviewing the contract. Up until the subject conditions are satisfied or if the period of time for satisfying them is expired, the buyer can walk away from buying the property and the seller would have no recourse.

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