What you need to know about real estate law before taking possession of your new home
It's exciting to complete the purchase of your new home, but don't make the mistake of assuming your work is done. There are still plenty of steps that need to be completed. Missing even one step can cause problems that at best are inconvenient and at worse could lead to significant legal problems that are difficult and costly to correct.
Here is how the process would unfold if you had the support and guidance of a Sharek Logan & van Leenen LLP real estate lawyer:
- If there are conditions (e.g. financing), you must ensure that you satisfy or remove the condition on or before the date you have indicated. If a condition date passes without the condition being satisfied or removed, the deal is technically dead. If a condition is "subject to a lawyer's review", ensure you send the contract to us well before the condition date.
- Once conditions are removed, ensure we get a copy of your contract and any amendments to it. This is your responsibility if no realtor is involved. Make sure you are pre-approved if you have used a mortgage broker for your mortgage or arranged your mortgage through your banker. We use the term "lender" to cover both. It's your responsibility to forward a signed contract to our law office.
- It is important that all parties know who is involved in the transaction. For example, your lender must send mortgage instructions to our office as we need this information to prepare the mortgage.
- If you have been approved for a mortgage based on your stated income, remember to forward paperwork to the lender that proves what you have stated.
- Let us know about the possession date as soon as possible. This is vital because the timing of your appointment with us and the acquisition of your mortgage money all hinge on the possession date. Regarding your description for title, we need to know how to show your name(s). For example, do you want "Jane Doe" or "Jane B. Doe" or "Jane Brenda Doe"? If someone else will be on title, provide each person's name. We also need to know how the ownership is to be described if there is more than one owner. You can choose "Joint Tenants", which means if one person dies, ownership automatically passes to any surviving owner(s) (most common for couples). The other option is "Tenants-in-common", which means one of the owners can sell his or her part interest or leave it to someone other than the other owner. Finally, we will want to know what address to show for the owners. If you will be living at the property, then the usual choice is to use that address as your address for title. If you will not be living there, and want notices etc. to be sent somewhere else, give that address. You can forward this information to our office by email: email@example.com.
- Never assume anything. Follow up with the broker or lender to ensure that all required paperwork and conditions are dealt with.
- Generally you should contact us at least two weeks before your closing date. Ensure you have provided us with all of your contract documents, your lender's information, and your realtor's information. On receipt of this information, we will contact you to arrange a meeting where you will sign the documents that need to be completed to purchase your home. You will need to bring two pieces of identification and the final cash amount required to close the deal (we should be able to inform you of the exact amount required). This amount will include the remainder of the purchase price (not covered by deposit or mortgage funds) plus any adjustments for property taxes and our legal fees. We will need a certified cheque or bank draft payable to Sharek Logan & van Leenen LLP. If we can't yet tell you the exact number, we will either call you back or let you know at the appointment. Typically, keys are handed over on the possession date. If it is a Comfree/ private deal, we have to mange the key release process. Let us know if you will be unavailable for any reason.
- Prior to meeting with us, you should arrange for home insurance that will begin on your possession date. We will ask you for a copy of this insurance, which is usually referred to as a "Binder Letter", issued by your insurance company and binding them to give you insurance in the future. Your insurance policy must show the bank as the "first loss payable." The insurance company will need the name of your bank, its address, and the amount of the mortgage. The effective date for insurance coverage is your possession date. Don't forget to change your insurance if your possession date is moved up. Condominium buyers may not require an owner's policy of insurance. However, we do recommend obtaining a condo owner's policy of insurance, even if it is not required by your lender.
- We are located in #2100 Scotia Place, 10060 Jasper Avenue, Edmonton, Alberta. While parking in this area is limited, you may find a spot in the parkade on Rice Howard Way, the Library parkade, the underground parkade in Scotia Place, or the underground parkade in Manulife Place. Remember to bring the funds mentioned in Tip #7, one piece of picture ID (e.g. Driver's License) and a second piece with your signature. A major credit card is acceptable. If you don't have two pieces of ID, please call us to discuss alternatives that will be acceptable to your bank, which may withhold your mortgage funds if acceptable ID is not supplied.
- If our office sends you any "homework" (i.e. supply insurance paperwork), make sure it is completed well in advance of the date when the deal closes.
- Arrangements for all the utilities in your new home can be arranged before you take possession.
- Arrange a time when you can meet your realtor to pick up your keys. If it is a Comfree/ private deal, we will make arrangements for the key transfer.
- After taking possession, confirm the date and amount of your mortgage payments. Contact your lender immediately if there are any errors.
- We will review a Statement of Adjustments with you that outlines the financial responsibilities between you, as buyer, and the seller. One of the items on this statement is property taxes. Property taxes run on a calendar year from January to December, but the full year's taxes are due and payable in June. You can make payment in two ways: one lump sum in June; enroll in the Tax Installment Payment Plan (TIPP) program, whereby you make monthly tax payments throughout the year. Call or check on-line for more information. Your lender may give you the option of adding property tax payments to your mortgage payments. For a number of important reasons, we do not recommend this step.
- A reporting package, including copies of the important documents you signed, will be sent to you or an address you designate. Make sure to keep this paperwork in a safe place. You can expect to receive the reporting package a few months after closing because some legal steps still need to be completed. For example, we still need to clear your title after your possession date (e.g. remove all the mortgages that the seller had on your title). If you need your paperwork (or parts of it) sooner, please contact our office.
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