PURCHASE OF PROPERTY

If you are purchasing or mortgaging property, the following may be of assistance and guidance with respect to the process and procedures.

CONTENTS:

(A)          Scope of our Legal Work;

(B)          Identification;   

(C)          Survey/Surveyor’s Real Property Report;

(D)          Mortgage Financing;

(E)          Changes/Adjustments to Purchase Price/Holdbacks for uncompleted work;

(F)          Title Insurance;

(G)         Information Checklist;

(H)          Registered Title;

(I)           Fees and Expenses;

(J)           Closing the Transaction;

(K)          Matters outside the Scope of our Work on your Behalf;

(L)           After Closing;                                                                                                    

 

(A)          SCOPE OF OUR LEGAL WORK:

 

We will review available documentation and conduct Searches at various Registries sufficient to allow us to determine if, in our considered opinion, and in accordance with generally accepted practices, good and marketable legal title exists to the subject property.  The Searches which we conduct are intended to determine that there is a properly registered chain of ownership and that any Mortgages, other encumbrances, liens or claims have been discharged or will be discharged on closing of the transaction.  If as a result of our inquiries and reviews we advise that, in our opinion, matters exist which will not be remedied prior to the closing date and which prevent us from providing an unqualified certification of good and marketable title, your basic options are:

 

•             To request cancellation and withdrawal from the transaction; OR

 

 

•             To consider accepting the property without our certification of good and marketable title.  In reviewing this possibility, you will need to discuss  the matter fully with your Solicitor.  If you will be obtaining a Mortgage to assist in the purchase, your Mortgage Company will, as a minimum, require under the foregoing circumstance the benefit of a Lender’s Title Insurance Policy.  A Lender’s Insurance Policy provides benefits only to the Lender.  In reaching a decision respecting the acceptance of available title, you may decide to consider obtaining a Home Ownership Protection Policy from a Title Insurance Company to provide Policy coverage to you as the owner. [For further comments on Title Insurance see paragraph (F)]

 

(B)          IDENTIFICATION:

 

The Law Society requires Law Firms to properly identify its clients.  As a minimum, we have to  obtain and copy at least one (1) primary piece of identification such as a Driver’s License or MCP, etc.  Some Mortgage Lenders require additional proof of identity and we will advise if this applies.  The identification form with a copy of the supporting identification document(s) must be retained in our file.

 

(C)          SURVEY/SURVEYOR’S REAL PROPERTY REPORT:

 

A Survey refers to a Description and Plan of the land prepared by a licensed Surveyor.  It should show the dimensions of all sides of the property, the total land area and it should be tied into a  properly referenced surveying monument which would allow a Surveyor in the future to establish the precise location of the land covered by the Survey.

 

A Surveyor’s Real Property Report, is an additional document  prepared by a licensed Surveyor which normally shows the location of structures on the land, the location of the driveway, the fence lines, easements, and possible encroachments onto or off the land with respect to adjacent properties. 

 

We will provide you with the Survey and/or Real Property Report which may be available.  Please review it carefully to ensure that it accurately reflects your understanding of the property.  An available Survey and/or Real Property Report may not meet current surveying standards or it may not accurately reflect the location of structures, fences, driveway, or encroachments at this time.

 

 

If the Vendor has agreed to provide an up-to-date Surveyor’s Description and Plan and/or Real Property Report, we will provide a copy to you as soon as it is received.  You must review it in the same manner and for the same purpose as referred to in the above paragraph.

 

If the available Surveyor’s Description and Plan and/or Real Property Report is outdated, or not up to current surveying standards, and if the Vendor has not agreed to provide an up-to-date Survey and Real Property Report, the following options are available to you:

 

•             You may elect to accept the Survey and/or Real Property Report (subject to your Lender’s requirements set out in “Your Mortgage Financing of the Transaction”);  OR 

 

•             You may, at your cost, arrange to obtain an up-to-date Survey and/or Real Property Report; OR

 

•             You may instruct us to obtain a Home Ownership Protection Policy issued by a Title Insurance Company. [For further comments on Title Insurance see paragraph (F)] If you wish to consider the option of obtaining the comfort of a Home Ownership Protection Policy from a Title Insurance Company, please advise us as early as possible prior to the anticipated closing date;

 

(D)          MORTGAGE FINANCING:

 

 DISCLOSURE STATEMENT:       

 

Your Mortgage Lender will provide a Disclosure Statement which would normally indicate, amongst other things, the principal amount of your Mortgage, the interest rate, the term (length of time that the Mortgage interest rate is locked in), the amortization (number of years over which payments are spread), prepayment provisions (if any) and information associated with your total borrowing costs.  We prepare Mortgage documentation and draw down the Mortgage Funds based solely on the information provided to us by the Lender.  As a result it is your responsibility to ensure that the Disclosure Statement and any Mortgage documentation signed by you reflects your understanding of your Mortgage Loan.

 

 INSURANCE:

 

Property Insurance must be obtained prior to closing.  All Lenders require that they be named in the loss payable section of the Policy.  We will, prior to closing, provide you with an extract of  your Lender’s requirements respecting Insurance and this should be provided to your Insurance Agent/Broker so that the Policy, once issued, meets your Lender’s requirements.  Written confirmation from the Insurance Company of the Insurance particulars must be provided to us prior to closing.

 

 SURVEY/REAL PROPERTY REPORT:

 

Lenders require one (1) of the following:

 

•             A current Survey and Real Property Report; OR

 

•             The issuance of a Lender’s Title Insurance Policy;

[For further comments on Title Insurance see paragraph (F)];

 

 OUR ACTING FOR YOUR LENDER  AND YOU:

 

Most Mortgage Lenders permit us to act on your behalf and their behalf in transactions.  However, Lenders require us to advise you that we act regularly for the Lender, that the Lender requires us to recommend that you obtain independent legal representation and, if we are to continue to act for you, that we obtain your consent.  If you wish to obtain independent legal representation with respect to the Mortgage, please advise us immediately.  If you are agreeable to our acting for you and your Lender your signing and return of page nine of this letter will constitute your acknowledgement and consent.

 

(E)          CHANGES/ADJUSTMENTS TO PURCHASE PRICE/HOLDBACKS FOR UNCOMPLETED WORK:

 

If, on or before the closing date, any of the following events occur we will have to advise your Mortgage Lender of the situation.  Such events include:

 

 

(i)            A change in the purchase price from the amount stipulated in the original Agreement of Purchase and Sale;

 

(ii)           A significant adjustment as between the parties to reflect damage to the property, required upgrades or holdbacks to reflect uncompleted work by the Vendor(s);

 

The Mortgage Lender must determine if the change, adjustment or holdback is acceptable as it relates to its Mortgage security and lending ratios.

 

(F)          TITLE INSURANCE:

 

There has been a substantial increase in the past number of years in the use of Title Insurance with respect to Real Estate transactions.  Title Insurance Policies provide the named insured with coverage for actual financial loss with respect to certain “covered title risks” as defined and set out in the Policy.  Typically, the Policy provides, amongst other things, that the Title Insurance Company will defend title in any legal action as to that part of a legal action outlined in the “covered title risks”.  A standard Title Insurance Policy contains a long list of covered title risks and is intended, as indicated, to provide the named insured with Insurance against actual loss and costs, legal fees, and expenses resulting from the covered title risks and is subject to all of the various terms and conditions stipulated in the Policy. 

 

A number of Mortgage Lenders require that all of their Mortgages be supported by a Title Insurance Policy.  Certain other Lenders require a Title Insurance Policy under certain specific circumstances and virtually all Mortgage Companies will accept a Title Insurance Policy in lieu of a current Survey and Real Property Report or to address title defects or deficiencies which prevent the Solicitor from providing an unqualified certification of title.  Policies which provide coverage only to the Mortgage Lender are referred to as Lender’s Policies.

 

 

In addition to Lender’s Policies, Title Insurance Companies issue Home Ownership Protection Policies. Some Purchasers decide to obtain the comfort of a Title Insurance Policy even if there is nothing to suggest a known title defect or deficiency.  Additionally, in situations where we are unable as Solicitors to provide an unqualified certification of good and marketable title, Purchasers may elect to obtain Title Insurance and complete the transaction.  If a client decides to complete a transaction on the basis of a Home Ownership Protection Policy, we do not provide any opinion or representations as to the impact of defects or deficiencies on future sales, if Title Insurance will be acceptable to a Purchaser in the future, or any representations respecting premiums or claims processing.

 

If a Lender’s Title Insurance Policy and/or Home Ownership Protection Policy is to be utilized in the closing of the transaction, we will, prior to the closing date, make the necessary application to a Title Insurance Company.  We are not an agent of the Insurance Company and the decision to utilize a Home Ownership Protection Policy in the closing of the transaction is entirely the decision of the Purchaser.

 

(G)         INFORMATION CHECKLIST:

 

Attached is a Purchaser and/or Mortgage Checklist form.  If we are representing you, please complete and return to us. 

 

(H)          REGISTERED TITLE:

 

If title is to be in more than one name, the Deed which transfers ownership must specify the type of joint ownership.  There are essentially two (2) types of joint ownership, namely, a joint tenancy and a tenancy-in- common.  The major distinction between the two (2) types of ownership is that as between joint tenants upon the death of a joint tenant the interest of the deceased person automatically passes to the surviving joint tenant(s) and is not a part of the Estate of the deceased joint tenant.  In the case of a tenancy-in- common, the deceased tenant-in-common’s interest in the property does not automatically pass to the surviving tenant(s)-in-common but forms a portion of the deceased tenant(s)-in-common’s Estate.

 

(I)           FEES AND EXPENSES:

 

 

If we have provided you with an Estimate of our Legal Fees and  anticipated out-of-pocket expenses, we will endeavour to complete our work in accordance with the estimate.  Any estimate of Fees and  Expenses is based upon a standard Purchase and/or Mortgage.  Circumstances may arise in the course of a transaction which may result in some reasonable increase in the Legal Fees and a necessary increase in out-of-pocket expenses.  Examples of circumstances which may lead to an increase in Fees and Expenses include our having to spend significant time in negotiating the Agreement of Purchase and Sale, the preparation of additional documentation arising from compliance with stipulations and conditions imposed by the Mortgage Lender, issues arising from the application of the provisions of the Family Law Act to ownership of a matrimonial home, matters associated with any required Independent Legal Advice, the preparation and registration of Powers of Attorney or other documentation. 

 

If a transaction is terminated for any reason prior to its completion, you will be responsible for the Legal Fees and Expenses associated with our work on your behalf up to the point of termination.

 

(J)           CLOSING THE TRANSACTION:

 

We do everything possible to close transactions on scheduled closing dates.  However, if it is not possible to close on the scheduled closing date we will endeavour to advise you of any anticipated delay as soon as possible.  If we are unable to contact you, and some reasonable extension to the closing date is necessary, you authorize us to agree to an extension.

 

In order to achieve an orderly closing, we recommend that you address ahead of the closing date as many matters as possible.  These would include, for example, acquiring property Insurance and applying to utility providers for services. 

 

You will be provided with a Statement of Adjustments prior to closing which will indicate all adjustments including property tax adjustments, fuel oil/propane adjustments (if applicable), rental adjustments (if applicable) and your closing costs including Fees and Expenses.  Funds required to complete the transaction, must be provided to us by Certified Cheque, Bank Draft or Electronic Bank Transfer.  All closing funds are payable to “Easton Hillier Lawrence Preston, in trust”.

 

 

If you have Mortgage Financing, certain documents must be signed by you before the transaction can close.  If you will be unavailable to sign such documents at our office, you must notify us of this well ahead of the closing date.

 

Prior to the release of the purchase price by us to the Vendor’s Solicitor, we strongly recommend that you complete a final inspection.  The intent of this inspection is to confirm that there has not been any intervening damage or loss to the property and that any items included in the purchase price such as furnishings or appliances are located on the premises.  If a Real Estate Agent is involved in the transaction, the final inspection will normally be done with the Agent being present.  Once you have completed the final inspection, you must notify us of the results of your inspection.  We will not close the transaction until you confirm that the inspection is satisfactory.

 

(K)          MATTERS OUTSIDE THE SCOPE OF OUR WORK ON YOUR BEHALF:

 

We do not provide opinions, or make findings or representations to you in relation to the following:

 

•             As to the physical condition of the premises or any of its electrical, plumbing, mechanical or other systems.  We remind you that the maxim “let the buyer beware” applies to property purchases;

 

•             That the property, or any structures on the property, including rental units, comply with Municipal codes, Building codes or other Governmental requirements;

 

•             Any opinion with respect to Environmental matters including whether or not the property or any structures on the property contain any contaminants and/or hazardous materials;

 

•             Any opinion or representation that any sewerage disposal system or any well providing water to the property, has been properly installed, is adequate for its present or future use, is located within the boundary lines of the property or is in compliance with any applicable standards, regulations or requirements.  In relation to well water, we make no finding that such water is potable, or that its supply is adequate for present or future use, or that it can be replaced by a system meeting required standards;

 

 

•             Any arrangements for the transfer of electrical, telephone, cable, oil, propane supply or servicing or any other utility.  You need to address these matters yourself before the closing date;

 

•             Any opinion or representation respecting the existence, or adequacy, of any warranties related to new home construction or the existence, or adequacy, of any warranties associated with mechanical or other systems and equipment located on the property;

 

In view of the foregoing, we stress the importance of your carrying out your own due diligence by such inspections as you may deem appropriate.  If you do not feel qualified to carry out inspections, reviews or assessments yourself, you should give full consideration to using qualified inspectors/assessors.

 

(L)           AFTER CLOSING

 

We attend to registration of documentation at the Registry of Deeds.  In view of processing time at the Registry, it may take up to a couple of months before documents are returned to us.  We will then forward your original registered title Deed together with copies of other relevant documents to you.