To assist you in your purchase we have prepared these “Purchaser’s Helpful Hints” which are intended to help us serve you more efficiently and make your transaction more understandable to you.
Specific topics covered below include:
FIRE INSURANCE
UTILITIES
LAND TAXES
HEATING/HYDRO
SURVEY
TITLE INSURANCE
SEARCH OF TITLE
SOLICITOR’S ACCOUNT
EXPENSES
ONTARIO NEW HOME WARRANTY PROGRAM
CLOSING MONEY AND DETAILS
CLOSING
CONTACT US
You should place a policy of fire insurance on the home to be purchased with coverage commencing on the date set for closing. If your property is to be financed by a mortgage, then your policy must show each mortgage company and their priority (for example – first mortgage, second mortgage). The policy must also show the complete address of each mortgage company. We recommend that your property and contents be insured to their full insurable value. The total coverage should be discussed with your insurance agent. You must provide us with written proof of coverage prior to closing. Please make sure that your insurance agent mails or faxes us proof of insurance coverage as soon as possible.
You should contact each of the utilities which serve your home and advise them of your upcoming purchase. Although we do contact some of the utilities (where unpaid utility bills might form a lien against the property) , it is prudent for you to speak with them as some utility companies require that you complete an application and provide a deposit.
We have a list of the addresses and telephone numbers for the various utilities and other relevant companies to assist you in contacting them. Please click on this link to access this resource – IMPORTANT TELEPHONE NUMBERS AND ADDRESSES
Property taxes are paid in four installments each year (you can arrange monthly direct debit payments with some municipalities). The Vendor will have paid either more or less than their share of the property taxes. This shortage or excess will be the subject of an adjustment on the Statement of Adjustments. The details of this adjustment will be reviewed with you prior to closing. We correspond with the relevant tax department to advise them of the change of ownership. The municipality will not reflect the change of ownership generally until they have been advised by the Assessment Office to do so. The Assessment Office receives copies of registered documents from the Registry Office and then initiates the notification process. This is occasionally a slow process. You should immediately contact the relevant tax department following closing to ascertain the date and the amount of your next tax installment.
If your new home is heated by electricity or natural gas, the meter will be read on the day of closing and your account will begin from the date of purchase. We previously arranged for meter readings with utilities companies. It has become increasingly difficult to provide all the information that these companies are now demanding, without increased expense to you as the purchaser. As a result we no longer contact utilities companies to arrange final meter readings.
If the home you are buying is heated by oil or propane, the tanks are generally filled on the day of closing (or shortly before that) by the Vendor. You will be required to pay for the cost of the full tank of fuel and this will be the subject of an adjustment on the Statement of Adjustments. You should check the fuel tank as soon you get to the home on the closing date to be certain that it has been filled and contact us immediately if it has not been. If you do not check the tank when you take possession, it will be difficult for us to satisfy the other side that it was not full on closing.
A survey is an important part of any land purchase. The survey shows the location of the house and other structures which you are purchasing relative to property lines . It will frequently show fences and other improvements. They will also identify any encroachments of neighboring buildings onto your property. The cost of a survey varies considerably depending upon the surveyor you select. If your transaction is title insured many issues which a new survey would disclose may be insured against by the Title Insurance.
Title insurance is now available through a number of companies in Ontario. You pay a premium in exchange for an insurance policy which covers certain matters in relation to your purchase or mortgage. Title Insurance eliminates the need for certain searches that we formerly performed on a purchase and in many cases provides coverage against issues which would have been disclosed by an up to date survey of the property. We generally recommend to purchasers that they title insure their transaction. Please ask us if you would like more information about Title Insurance.
As part of our service, and to protect your interest, we will conduct a search of title. All expenses which we incur in completing the searches will be shown on your account. This is a necessary expense. Other necessary enquiries will also be made to insure that your land is conveyed to you free of adverse interests.
Many of the properties in this area are rural properties with a private well and septic system. It is possible to request the local Health Unit to provide a septic use permit verifying the installation and location of the septic system. It is also possible to have a water sample taken and analyzed. We do not usually conduct these inquiries as they involve additional expense for the client. We will conduct these inquiries if you specifically request them. The cost will then be added to your account.
Although it is sometimes confusing to a new purchaser, a solicitor’s account is composed of two general categories of charges; the first being the solicitor’s fee which is his payment for services rendered and liability undertaken and the second, being the disbursements. Disbursements are expense monies which are spent by the solicitor on your behalf and represent money out of pocket which the solicitor asks that you repay to him. A more detailed explanation of frequently occurring expenses is provided below.
Associated with your purchase are many predictable and some unpredictable expenses. An example of the unpredictable expense is the fact that it is not possible to determine a search expense prior to conducting the actual search itself. On a typical purchase, expenses incurred, while often varying slightly with each municipality, should be expected approximately as follows:
- Registration expense – Fees are applicable for registration of a deed. Additional fees are applicable to register a mortgage. If other documents are to be registered, then additional registration costs may be incurred.
- Sheriff’s Certificate – Executions (Court Judgments) fees are applied per name. Searches must be conducted at the time of title search, and again at the time of closing. If executions are filed, details are ordered and fees are applicable per execution.
- Search Expense – The search of title is usually researched by an experienced title searcher who prepares an abstract of all documents registered against your property. This abstract is examined by us to determine the validity of your title. This procedure saves you money and saves us time. The Title Searcher charges a fee for a search. The fee varies depending on the complexity of the search and there will be additional charges for actual disbursements charged by the government for the examination of title. Both will be shown on your account in addition to the solicitors fee.
- Land Transfer Tax – This is a tax assessed at the time of registration. It is similar to retail sales tax, but is charged at a lesser rate than sales tax. Land Transfer Tax is 0.5% per thousand on the first $55,000.00 and 1.0% per thousand on amounts over $55,000.00 and up to $250,000.00. Thus on a $55,000.00 home, the tax would be $275.00. On a $150,000.00 home, the tax would be $1,225.00. First time Home buyers buying new homes are exempt from the payment of Land Transfer Tax. There may be additional Land Transfer Taxes charged by individual municipalities and these vary in rate.
- Administrative Expenses – This will vary with each transaction but actual expenses which are spent on your behalf will be recovered. These will include, where required, postage, photocopying, mileage, long distance telephone calls, fax, courier and other miscellaneous but necessary expenses. A detailed account will be provided to you.
- Goods and Services Tax – Our fees will be subject to the HST and some of the disbursements will be as well. The current rate of the HST is 13%
ONTARIO NEW HOME WARRANTY PROGRAM – NEW HOMES
The law requires that a new home purchased from a builder be protected under a Provincial warranty registration system which registers builders and warrants their buildings. This is the Ontario New Home Warranty Program. The Program provides a one year warranty with respect to all defects and a seven year warranty with respect to major structural defects. Water seepage damage is covered for a period of two years. To be valid, a claim must be received in writing by the Program within the appropriate time period.
Prior to closing, in company with the builder, you must inspect your home and complete a certificate of Completion and Possession. All deficiencies are listed and both yourself and the builder sign the document. It is particularly important to note items of damage where it could be alleged that the damage occurred while moving into the house. A copy should be given to you. This copy is important and should be kept in a safe place.
If your home is not a new home purchased from a builder, much less protection is available. Unfortunately, the doctrine of caveat emptor (let the buyer beware) is applicable in most situations. In the event that there is any serious defect which you discover after the deal closes, you should notify us immediately. In the event that it is a defect for which the Vendor is liable, it is important for the Vendor to be notified of required at that point unless we are still waiting for information the defect as soon as possible.
If some matter arises which requires your attention, we will contact you immediately. Otherwise, you may expect to hear from us shortly prior to closing. We will have all documents ready for your signature a few days before closing and will advise you how much money we require and how the amount is arrived at. If three days before closing you have not heard from us concerning the amount of money that we need you to bring in for closing, please call our office. We will usually be able to tell you the amount from the mortgage company or the other side.
If more than one person is involved in the purchase, all purchasers will have to come to our offices to sign the documents. We prefer it if everyone comes at the same time to avoid additional charges for multiple signing conferences.
All the funds required should be brought to our office when requested prior to closing in the form of a bank draft or certified cheque. Also, please remember to bring along your proof of insurance.
The time of your closing is not completely predictable. It is difficult to schedule closing times for a variety of reasons. Registrations cannot be completed after 5 pm so your deal must be closed by then. We will call you when your transaction has closed and advise you where you can pick up the key.
Electronic registration is now available in a number of areas in Ontario. It is mandatory in some areas and voluntary in others. The electronic registration process has made closings more complicated primarily because of the movement of funds. Historically all real estate transactions were closed at registry offices and all funds were exchanged at the registry office. With electronic registrations there is no longer a need to meet at the registry office and accordingly funds are sent electronically. So far there is no universal system available within Ontario to move funds in real time. Generally it is necessary to wire funds. Although the term “wiring” sounds like it would a speedy process, in fact it can take several hours for funds to make the trip from the purchaser’s solicitors bank account to the vendor’s solicitors bank account. For that reason if you are completing a sale and a purchase on the same day you may wish to consider obtaining bridge financing. This will ensure that if there is any delay in us receiving the proceeds from your sale it will not jeopardize your purchase transaction.
We hope the above notes are helpful to you. It is our desire to see that you understand the process as much as possible and that we provide a service to you which is worthwhile and mutually beneficial. If some portion of our process is unclear to you, please ask about it – clarifying it for you will assist us in making it clear to others.
Please jot down any notes or comments you wish to discuss with us and be sure to bring them with you to our office.
Feel free to contact us at any point for assistance or advice with respect to Real Estate law. We may be reached at 705-435-4339 / 1-877-85LEGAL (1-877-855-3425) or contact us via email .
