Questions when Buying a House
Greetings and congratulations on what is potentially the biggest purchase of your life. This is an information sheet on typical questions you may have about the legal aspects of this transaction.
I am going to answer the 10 most common legal questions for your real estate transaction.
Do I need a Lawyer?
Not only does having a lawyer protect your interests and ensures that you get what you contract for; but also in Ontario it is mandatory to have a lawyer because only lawyers can register on Teranet. That means that only Lawyers can convey land. So Yes, you need a lawyer.
What does the Lawyer do?
The lawyer basically facilitates the purchase or sale of the property. They make sure that you are getting what you contracted for. They do searches and make sure you obtain clear title. In Ontario you must register any interest in land electronically on Teranet to ensure good title.
What is Teranet?
In Ontario, Teranet is the exclusive provider of online property search and registration. Teranet developed, owns, and operates the Ontario Electronic Land Registration System. Only approved and insured lawyers can register transfers on Teranet in Ontario.
What are Closing Costs?
Closing costs are basically made up of: legal fees, disbursements, title insurance, land transfer tax, and CMHC fees (talk to your mortgage agent about those).
All fees depend on the type of transaction, residential transactions are completely different from a lot or a commercial property.
Protect your title by compensating you or addressing the problem:
~$255 basic*Increases as price increases
|Land Transfer Tax
|This is a government tax and it depends on the purchase price
1% minus $275 for up to $250,000
1% for purchases from $250,000-$400,000
2% for upward of $400,000**First time home buyers may be eligible for a deduction of up to $2000
Cheaper is not always better
What is Title Insurance?
Title Insurance is generally required. Title insurance ensures you get free and clear title. If the problems listed below occur, title insurance will compensate you financially or deal with the problem. That means you own what you think you own and do not owe people money.
Tax arrears: If the previous owner did not pay municipal taxes the municipality has recourse against you. Title insurance will pay these taxes so that you are not liable.
Boundary disputes: If there is a boundary dispute title insurance will compensate you.
Failure to get a building permit for additions or alterations: If the previous owner failed to get a building permit for alterations, title insurance may remedy the problem.
Illegal structures: If there is an illegal structure on your property that significantly interferes with the enjoyment of your property, title insurance may compensate you.
Fraud: Fraud can occur at closing or even later during your ownership. Unscrupulous people may convey your land to others or register fake mortgages. Title insurance will protect your interest without significant cost to you.
What Kind of Searches Do We Do for You?
The type of searches we do for you depends on the property. Typically we start with:
- Title searches: to see what is registered on title.
- Tax searches: to see what taxes are owing.
- Sheriff execution searches: to see if there are any judgments registered against you or the previous owners.
- Building, zoning, and fire inspections as appropriate.
What happens on Closing Day?
On closing day the lawyer will redo all searches, provide certified cheques to other lawyer, transfer money to other lawyer, complete the transaction on Teranet, provide you with keys, and officially close the transaction. After closing, the lawyer will fulfill undertakings. We will also forward complete accounting and final reporting letter containing all necessary documents to you.
Are New Homes the Same?
New home agreements are generally very long and legally complex documents. All reputable builders will give you several days to have your lawyer review the agreement and bring all additional costs and matters limiting the builder’s obligations to your attention for review. It is important to have legal counsel review these agreements ahead of time to make sure you know what your financial obligations are.
Are Multi Residential Properties the Same?
All agreements for multi residential properties should be reviewed by legal counsel prior to signing the agreement. There are many unique aspects to contracts pertaining to multi residential units such as zoning, HST, fire marshal inspections, health inspections, and so on. It is essential that you have a lawyer review these agreements.