Ottawa Real Estate Lawyer's Insights- Essentials to know before purchasing a home
Below, you'll find indispensable advice from an Ottawa real estate lawyer, addressing critical elements you must consider before purchasing property in Ontario using OREA Form 100, or the Agreement of Purchase and Sale.
Understanding Move-in Day Timings
Before the keys to your new property can be handed over, your lawyer has to confirm:
- The fulfilment of all lender conditions to secure necessary funding;
- Certification of cheques;
- Exchange of closing documents; and
- Completion of title documents registration.
Given that these processes usually wrap up between 2-5pm on closing day, it's crucial to schedule your movers to arrive late in the afternoon. This will help avoid extra moving costs, especially if you're paying by the hour. Also, remember to book elevator access early if you're moving into a condominium.
No Purchase Price Holdback
Standard OREA Form 100 agreements do not typically include a holdback of purchase monies on closing day. It might be worth considering an inclusion for a percentage holdback in case of property damage before closing. If high-value appliances or personal property are involved, document them with photos and model numbers as a preventive measure against damage or replacement after the seller's move-out.
Fire and Contents Insurance
Before closing, non-condominium homes must secure a Fire Insurance Binder. To avoid delays, have your insurance agent send your insurance binder to your lawyer. The insurance should cover the GUARANTEED REPLACEMENT VALUE of your home.
Condo owners must arrange public liability and unit content insurance, despite the condominium corporation insuring the building. This ensures protection against potential deductibles from the condo corporation’s insurance.
Adjustments on Closing
A few days before closing, you'll need to provide a certified check or bank draft for your lawyer to finalize the agreement of purchase and sale. The amount will include certain adjustments to the purchase price, such as prepaid realty taxes or condominium fees.
If your down payment is less than 20% of the purchase price, you may need mortgage insurance. Confirm the associated deductions with your lender to ensure you have adequate funds to cover the difference on closing. If you plan to use a Power of Attorney, get written pre-approval from your lender.
Loans from Family and Friends
If you're considering informal loans from relatives or friends, ensure these agreements are in writing to prevent future issues. You can also protect their interest by registering a security on title against your new property. Remember, lenders should seek independent legal advice.
Providing the Closing Funds
If one partner contributes significantly to the purchase but will not be a registered owner, a partnership agreement should be drawn up. Each partner should also get independent legal advice.
Form of Ownership
Decide on the form of ownership if more than one person will be a registered owner. In Ontario, there are three options:
- Tenants in common, where the deceased owner's share passes to their heirs according to their Will, or the Succession Law Reform Act if no Will is present.
- Joint tenants, where the property passes to the surviving owner, subject to certain conditions.
- Sole ownership, offering some protection against the other party's creditors.
Title insurance safeguards homeowners against losses related to title fraud, survey and title issues, and challenges to your ownership. It covers future and past problems, offering protection for as long as you own your property.
Be aware of the rules and by-laws that govern condominiums. These may include restrictions on flooring, pet ownership, commercial activities, and more. Ensure compliance to avoid legal repercussions. If you're buying for rental purposes, include a clause in the lease requiring the tenant to adhere to all condominium corporation rules and by-laws.
Alterations to the Common Area and the Condo Unit
Under the Condominium Act of Ontario, modifications to exclusive use common areas are prohibited without consent from the Board of Directors and the majority of unit owners. If changes have been made to the common areas of your condo unit or internal changes by the seller, verify with the management office that such changes were approved. If you plan to make changes after purchase, check in advance that they will be permitted.
DISCLAIMER: This information provided on our website is not a substitute for legal advice from a lawyer. It is offered without any representations or warranties, express or implied, regarding its accuracy or completeness. For specific legal advice, always consult with a professional.