Real Estate General Information
If you are purchasing a home for the first time, you need to understand some basic things before appending your signature or sign any contract.
Immediately you sign any document, you are legally bounded by the contract and once you have put your signature on it, there is no more going back as you are automatically bounded by the laid down terms and conditions of the contract.
However, before you put your signature on anything, do ensure you consult your lawyer for clarifications and before purchasing or signing any contract bond, it is highly advisable you are familiar with the property. Below are some things to take note before signing a contract:
Look through the amount of the tax placed on it per year and if there is any arrears or debt existing.
Are there any restrictions to the title of the property?
It is important for you to go with a building inspector to look through the structural problems, so as to give you a detailed report.
Contact your bank to ensure that you are eligible for the amount of mortgage that would be required from you.
Is it possible to add conditions on the offer to purchase?
Definitely, you can as well put conditions on the offer to purchase. The usual conditions are:
- Accessing a suitable fund from your bank
- Obtaining a complete and necessary report from the building’s inspection.
- Getting approval on the offer from your attorney
- Trading your present house.
Do I require a help from a lawyer when looking to buy a house?
It is imperative to have a good lawyer when you have no prior experience of what buying and selling of houses entails. With the help of your lawyer, you would be able to have an adequate knowledge about the property you are purchasing, as well check for any limit on the title of the property, encumbrances, restrictive covenants, mortgages, builder’s liens etc. If you purchase a property with any of the aforementioned limitations, you are so much likely to break into a deep problem along the line. Hence, why it is very important to go through your lawyer before purchasing any property. Additionally, your lawyer will as well maintain your trust fund, In order for you to deposit your money safely for the property you are purchasing.
What are the following: An easement, an encumbrance, a restrictive covenant?
An easement is known as a non-possessory right given to someone else’s property. The most common easement is the right of way for water, sanitary and sewer lines.
An encumbrance usually represents some sort of charge upon the land, and may include both easements and restrictive covenants.
A restrictive covenant represents a clause in a lease or a deed to real property that limits what the owner of the property can do with it. They are the most common type of “restrictions”, and can be found on many properties. This is why you should always consult with a lawyer before making a purchase of the property.
Will a lawyer cost me a small fortune?
Yes, lawyers definitely charge for their services and their prices may differ from one another. This is why it is necessary for you to contact as many lawyers you can before contracting with one that is perfect for you both in price and service. Ensure there is a written agreement between you and the lawyer you are signing especially for the sake of additional and special charges. The value of the property and other unforeseen circumstances may warrant additional cost from your lawyer. Especially when the lawyer will have to input more effort and time. Demand a comprehensive written documentation of your lawyer’s fees; the starting fees, additional fees and other disbursements out of the pocket expenses.
Chat with the lawyer to ensure is the price and budget would go down well with you. Do the calculation and if the cost is too much, you can seek another one with cheaper price for same service you need.
When buying a house, what are the associated costs?
In addition to your legal fees, other necessary expenses include:
- The cost for a building inspector that would give you report about the property, that’s if you choose to hire one.
- Taxes adjustment fee. For instance, if the owner paid for a full year and you bought the house in the mid-year like June, you will have to reimburse the taxes from July to December.
- Fire and hazard insurance
- Appraisal fees (Your bank or mortgage might ask for this
- If it is a new house, you will be required to pay for GST
- Registration fees; this will be paid at the Land Titles Office
- Fees for obtaining a new mortgage
- Fess for getting a Real Property Report
- Interest charges; this will be paid if there is any delay in the transaction. This delay usually last for just few days
Bear it in mind to settle other additional charge like the moving, phone lines establishment, internet, utilities etc.
What about real estate agent’s commission?
Under normal circumstances, the seeker is the one who will be responsible for paying the real estate agent’s commission, unless it is clearly stated otherwise in the contract. This is why you should consult your lawyer before signing anything
What is included in the offer to purchase?
In Edmonton, the local real estate board usually prepare offers to purchase in advance. Information included in these offers your usually contain the following:
- All parties involved i.e. the seller and buyer
- Municipal and the legal title of the property
- The purchase price together with all the details about the current or new mortgages (will new mortgage be created or the older one be taken over, payment of the outstanding balance, the mortgage funding, total price)
- Interest on outstanding balance, in case there is any one.
- Terms and conditions of the sale
- Items included in the purchase, such as; household items, home appliances, tools etc.
- Information about the state of repair of the property and warranties about land use or an authentic proof that no warranties were made about the property
- Time requirements (The time limit for the vendor to accept the offer)
- Insurance requirements (The person responsible for insuring the property, for how long and the amount for the insurance)
- Information about the situation in case on or more parties decide to leave the deal
- The size and the payment of the real agent’s commission
- Paying of GST and other taxes
- Places for the signatures of the buyer, the vendor, their witnesses and the real estate agent
How will my spouse and I register ownership of our new property? What are the available options?
Normally, two options exist: To register the property as “join tenants” or as “tenants in common”
The first one means that all listed tenants have equal rights to the property, and if one dies, the others will automatically inherit all the entire property. Join tenants cannot will the property to anyone.
“Tenants in common” is another way of registering a property. Namely, all participants listed in the registry have equal rights to the property, with equal rights to occupy the whole of the land. If one of them dies and wishes to will the property to someone else, he/she can do so.
You can register the house to yourself or in the name of your spouse. Even though it seems great but is is better you consult and attorney before doing so. The future is unpredictable and one need to be extremely careful when dealing with such property
What are dower rights?
According to the Alberta provincial statute called the Dower Act; it defines the rights of a spouse to continue to live in the matrimonial house and rule on the property as long as she lives. The reason for this dower act is to protect the property from being sold of mortgaged without the knowledge of the spouse. Dower rights do not arise except with a spouse. Dower Act require the consent of the spouse in writing form and signed, or else the vendor must have to state on the transfer that he/she is not married or that the spouses haven’t lived together on the property since they become married.
What is a mortgage?
Mortgage is known as a charge on land majorly known for securing loan or debt. A bank or a company can lend you the money to purchase the property. After this mortgage, if you fail to pay, a warning will be issued to you after which your property may be repossessed to pay the loan through the foreclosure.
The few types of mortgages include: common law mortgage, equitable mortgages, and statutory mortgages.
How to go about getting a mortgage?
Bank and trusted companies offer mortgages, it is in their habit to earn money in the process of lending money to others through interest Always ensure you look and find the best deal with best interest rate and terms and conditions that are good for you. If you get good deal outside your bank, which is possible, your bank will most likely match it. This implies that the entire deal is so much negotiable. Another way through which mortgage can be get is through private funding or from your friends, parents or other members of your family. As long as the money is lend to you on the basis of mortgage arrangement.
Witholding a portion of the sale proceeds until a seller that is non-resident provides you with Clearance Certificate from Canadian Customs and Revenue Agency is the only way to avoid liability for a non-resident seller’s unpaid taxes. The holdback can be from 25% upward, depending on how the property is being used. To obtain a Clearance Certificate from the Canadian Customs and Revenue Agency, a non-resident seller should employ the service of a tax professional. It is something that should be done as soon as possible, since the entire process for something like 8weeks.
A Clearance Certificate will be issued once the tax is fully paid, not sooner. Canadian Customs and Revenue Agency will require payment of any other taxes outstanding or payable by the seller, while reviewing whether or not capital gains tax is payable. The commission, tax and legal fees on the sale cannot be deducted for the purpose of calculating tax owing at the time of the sale. The non-resident seller can claim these expenses by filing a tax return following the sale.