6 Common Questions During The Real Estate Buying Process

At FDT we believe in actively listening to our client’s needs and provide them with the right advice in a timely fashion. We stay connected with our clients throughout their real estate transaction process and keep them informed with all details. While they are busy packing and moving, FDT makes their transaction convenient by accommodating them as per their needs.

1. What are the steps involved in the real estate purchase transaction process?

1. Enter into an Agreement of Purchase and Sale
This will be done with a real estate agent. They will assist with the negotiations of the transaction. If you do not fully understand your Agreement of Purchase and Sale, your lawyer would be happy to review it with you.

2. Arrange Financing
The will be done with your bank or a mortgage broker. Your bank or mortgage broker will collect information to ensure that you qualify for the funding necessary to purchase your property. After this is approved, the bank or broker will forward mortgage instructions to your lawyers office.

3. Title Search and Documents
Once the deal is firm, your lawyer will conduct a title search to ensure that you will be receiving a good and marketable title. Your lawyer will send requisitions to the seller’s lawyer to rectify any deficiencies on the title prior to closing. Once this is completed, your lawyer will prepare all documents to complete the transaction.

4. Signing
Your lawyer will meet with you 2-3 days before closing to complete the signing of all documents.

5. Closing the Deal
On the day of closing, your lawyer will handle the transfer of money and registration of the mortgage if applicable and transfer of title.

2. How will COVID-19 affect my real estate transaction?

In an effort to help flatten the curve of infection, most of our employees and lawyers are working remotely. We will still be seeing clients for in-person meetings if no other option is available.

Due to changes in legislation, we are now able to offer virtual signing. You print the documents at home or pick them up from our office and you will meet with your lawyer virtually. After the documents are signed, you either scan the documents to our office or drop them off at our office. 

If a virtual appointment is not achievable in your situation, speak with your lawyer to arrange an alternative signing method.

The health of our employees and clients is our top priority.  Our office has been closed to the public since March 24, 2020, due to the COVID-19 crisis.

In an effort to help flatten the curve of infection, most of our employees and lawyers are working remotely. We will still be seeing clients for in-person meetings if no other option is available.

Due to changes in legislation, we are now able to offer virtual signing. You print the documents at home or pick them up from our office and you will meet with your lawyer virtually. After the documents are signed, you either scan the documents to our office or drop them off at our office. 

If a virtual appointment is not achievable in your situation, speak with your lawyer to arrange an alternative signing method.

3. Why do I need a Real Estate Lawyer?

To Review Documents
The Agreement of Purchase and Sale is a binding contract, is it also a long, wordy and technical document. You may wish to have your lawyer review this document prior to signing so that they can ensure that your best interests are represented. In addition, your lawyer will also review any and all mortgage instructions that are received for your transaction.

To Conduct Research
When you purchase a home, you have to ensure that you are receiving a good and marketable title. Your lawyer will search the title to your home to ensure that there are no liens or encumbrances on the title that would affect marketability. Your lawyer may also look for encroachment issues, environmental concerns and review surveys or public records if applicable to your transaction.

To Close the Transaction
Your lawyer will ensure that all of the necessary documents relating to the closing of the deal are executed and provided to the right person. Your lawyer will also ensure that all of your financial obligations are met including obtaining mortgage funds from your lender and secure them until the transaction closes. Finally, your lawyer will ensure that your mortgage and transfer of title are registered on the day of closing.

4. What is “Land Transfer Tax”?

Who Pays Land Transfer Tax?
When you acquire land or beneficial interest land, you will pay land transfer tax to the province when the transaction closes. Land transfer tax is normally based on the amount paid for the land, in addition to the amount remaining on any mortgage or debt that is assumed as part of the purchase.

Definition of Spouse for Land Transfer Tax Purposes
For land transfer tax purposes, spouse means either of two persons who are legally married to each other, or who are not married legally to each other and have cohabited: continuously for a period of not less than three years, or. in a relationship of some permanence, if they are the natural or adoptive parents of a child. This is also known as a common-law relationship.

Land Transfer Tax Refund for First-Time Home Buyers
First-time home buyers may qualify for a land transfer tax refund. In order to claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home anywhere in the world while he or she was your spouse. Keep in mind the above-mentioned definition of “spouse”.

How Much Is the Refund for First-Time Home Buyers?
The maximum refund for first-time Home Buyers is $4000.00. Beginning January 1, 2017, there would be no Land Transfer Tax payable by qualifying first-time home buyers on the first $368,000.00. First-time home purchasers of homes greater than $368,000.00 would receive a maximum refund of $4000.00.

5. What is “Title Insurance”?

Title Insurance is a policy that protects your ownership interest (i.e. title) on your residential or commercial property. It protects your property from losses incurred as a result of unknown title defects or other covered matters that exist at the time of your purchase but are unknown to you at that time.

Title insurance is not mandatory in Ontario; however, most lenders will almost always require you to buy a title insurance policy to cover the original mortgage amount. Title insurance provides coverage for many things including but not limited to, fraud and identity theft affecting the validity of your title, survey errors, encroachment issues, undisclosed liens and existing work orders.

Title insurance eliminates the need for your lawyer to do many expensive searches and you may end up saving money by buying a title insurance policy. Title Insurance is a relatively inexpensive way to protect your title against a wide range of potentially costly issues.

6. What are “Closing Costs”?

The closing costs in a real estate transaction vary depending on the type of transaction you are doing. In a nutshell, the closing costs depict what is required to close the transaction.

Lawyers’ Fees
Your lawyer’s fees have two components fees and disbursements. Your legal fees cover the fees for the work done on your file and disbursements are fees that we have to pay ahead of time to complete the work. For example, your disbursements may include, photocopies, banking, postage, registration fees, title insurance etc. 

Land Transfer Tax
If Land Transfer Tax is applicable, it will be due on closing.

Balance Due on Closing
The balance due on closing is the amount of money that we have to pay to the seller’s lawyer on closing to complete the transaction. 

All three of these items make up your closing costs.

Contact FDT today if you have your own questions.