DEDICATED REAL ESTATE LAWYERS SERVING MILTON AND HALTON

We understand real estate law can be overwhelming.  Read through the guide below to learn more about the terms you’ll hear and read about in a real estate legal transaction.

Costs

A real estate purchase transaction involves the following costs: Legal Fee and Disbursements, Land Transfer Tax (Provincial Land Transfer Tax and Municipal Tax, where applicable), Title Insurance, Home Insurance, registration of transfer and charge, interest adjustments, incidental costs such as costs for extension etc.

Land Transfer Tax

Land Transfer Tax is applicable when you a buy a house, condominium, or land anywhere in Canada outside Alberta and Saskatchewan. In City of Toronto, Municipal Land Transfer Tax is applicable along-with Provincial Land Transfer Tax. In most provinces the tax is calculated based on the purchase price of the property. Each province sets its own land transfer tax rates, as do some municipalities. 

Title Insurance

Title insurance protects lenders and buyers from financial loss due to defects in a title to a property. Any real estate transactions must have a clear title to ensure the property is free from liens. A title insurance policy will cover numerous risks like flawed records, incorrect ownership, and falsified documents. The most common claims filed against a title are back taxes, liens, and conflicting wills. Title insurance protects both lenders and homebuyers against loss or damage occurring from liens, encumbrances, or defects in a property’s title or actual ownership. Unlike traditional insurance, which protects against future events, title insurance protects against claims for past occurrences.

Having no title insurance exposes transacting parties to significant risk in the event a title defect is present. Consider a homebuyer purchasing their dream house only to find, after closing, unpaid property taxes from the prior owner. Without title insurance, the financial burden of this claim for back taxes rests solely with the buyer. They will either pay the outstanding property taxes or risk losing the home to the taxing entity. Under the same scenario with title insurance, the coverage protects the buyer for as long as they own—or have an interest in—the property. Similarly, the lender’s title insurance covers banks and other mortgage lenders from unrecorded liens, unrecorded access rights, and other defects.

Home/Fire Insurance

Fire Insurance policy is one of the most important factors in a purchase transaction. Prior to the closing date, you must arrange for fire insurance policy for the subject property as of the closing date. 

If you are obtaining mortgage, the lender must also be noted as loss payee on the policy and you are recommended to ensure that the policy provides for “guaranteed replacement cost” as most lenders require this. Your insurance agent will need to provide us with a Binder Letter or Certificate of Insurance showing that the fire insurance policy is in place. Please organise this as soon as possible. 

Most lenders will not advance funds in the absence of a Fire Insurance Policy. We cannot use mortgage proceeds on closing unless we first verify that the fire insurance policy is in place and the lender is listed as an additional insured on your insurance policy.

Status Certificate

Status Certificate review is important during the purchase of condominium or condominium townhouse. We conduct a review of the Status Certificate and provide our clients with a report. It is important that the Status Certificate and accompanying documents be provided as soon as possible. Most lenders require that the Status Certificate should not be more than 30 days old from the closing date. Also, lenders require that they be notified about any concerns, especially any ongoing lawsuits against the Condominium Corporation. This may affect their lending decisions. Status Certificates reveal very valuable information about the Condominium Corporation, Common Expenses, Insurance, and budget of the corporation. 

Signing of closing documents

We meet our clients shortly before the closing date to review the file and to have them sign documents. In case our client is not able to sign the documents in-person, we facilitate the electronic signing via Docusign. 

For more information on real estate law, or to discuss a specific current or future transaction with a real estate lawyer, please contact us.