Your offer to purchase your home has been accepted and subjects are removed. Now there only remains three dates important to complete the process:
The Completion Date: the date all of your money and mortgage financing will be paid out.
The Adjustment Date: The date used for adjusting taxes and other charges.
The Possession Date: the date you take possession of your property.
If you have mortgage pre-approval, you should confirm your offer to purchase by sending a copy of your contract to your bank. If you have not been pre-approved, you will need to contact a mortgage broker or your bank to arrange financing as soon as possible. You will need to bring your Social Insurance Number, proof of earnings (usually 2 years of T4 Statements) plus the details of your assets and outstanding debts. You will also need to choose your legal professional and give his or her phone number to the bank or mortgage broker and your REALTOR®.
What Banks Want: Appraisal, Insurance, Site Surveys and Title Insurance
Besides documentation, the banks require information on the property. You can get a print out of the MLS data from Rod Friesen, it looks something like this. The bank will want an appraisal to independently confirm the price you are paying for the property is fair market value. The cost for this is paid for by you. The bank will also want you to arrange for fire insurance on the property prior to the completion date.
To arrange this with a fire insurance agent, you or your REALTOR® will have to provide information on the house. One the policy is in place with the proper address and bank name on it, it can be faxed to the legal professional as an insurance binder for mortgage funding. Insurance agents often charge a service fee for this binder that will be your responsibility to pay.
The bank may also want to ensure that the house and buildings on the property are located on your land and not the neighbor’s. This is done by way of either a site surveyor or title insurance. To be acceptable to a bank, a site surveyor must be a current and accurate, surveyor produced, to-scale diagram of your property including all buildings located on it.
The seller, your REALTOR® or the local City Hall may have a current site survey on file and, if not, one can be ordered from a surveyor. The site survey is a useful document to have after completion for future financing and so you can accurately locate future additions or extensions.
Alternatively you can buy a one time title insurance policy to insure the bank against site survey defects and other issues. To decide which option is best for you, determine which one the bank will accept, your usage requirements, and the cost involved for each. Contact your legal professional for further information on your options.
Lawyers or Notaries: What’s the Difference?
The primary difference between a lawyer and a notary is the amount of work they can do for you. Both can sign the documents you need to buy your home, but only a lawyer can effectively deal with the matter should legal complications arise. Lawyers also carry a more comprehensive degree of liability insurance than required by a notary.
The bank will generally require you to use a lawyer for its list of professionals. Since the bank is lending you the money, it has the right to have its documents prepared by the professional of its choosing and to charge you for that service. If you have a legal professional in mind, check with that person to see if they are on your bank’s list.
Although you can use your own lawyer, if you want to save costs, you can by signing a consent form to engage the bank’s lawyer to help you with the purchase completion process.
To complete the purchase of your property, you will need to hire a legal professional to do the paperwork for you. Since there is a significant amount of money involved in your purchase, you need to have a bonded legal professional to transact the money for you. These professionals are either lawyers or notaries.
Legal Fees – the professionals fees for preparing the documents and his time.
Disbursements – the charges the lawyer pays on your behalf that you are to pay.
Taxes – legal fees are taxed with GST, PST and some disbursements will be taxed depending on what they are.
Some firms charge a flat fee that includes all the closing costs. Some lawyers charge a set legal fee plus costs, which are estimated but could double if unexpected circumstances arise. If you are getting an estimated set of costs, get the estimate in writing to prevent any surprises on closing day.
Once you have chosen your lawyer or notary, communicate this information to both your REALTOR® and you bank, so all documentation can be forwarded directly to your lawyer or notary.
Your First Telephone Contact with your Legal Professional
You will need to contact your lawyer or notary to inform him or her that you are planning to use his or her services. Your legal professional will require certain information from you:
-Your legal name and occupation
-The address that you wish on the property title
-Whether you are a first time home buyer
If you are, you may be exempt for the 1 to 2% property transfer tax charged on the purchase price of property in BC. To see if you are exempt, review the regulations online at: http://www.rev.gov.bc.ca/rpt/ptt/FormsandGuides/0269.pdf
-Who your bank is and whether you have a site survey
-Who your insurance agent is
Once this first telephone call is completed and all instructions are received by your lawyer, your lawyer or notary will proceed to draft documents for you. A second telephone call from his or her office will occur to confirm with you an appointment time for meeting (usually 1-4 days prior to the completion date), as well as the amount of funds you will need to complete the purchase. When you come in for this appointment, these funds will need to be in the form of a bank draft or certified cheque.
Your Meeting with Your Legal Professional
In preparation for this meeting, your lawyer or notary will have drafted a transfer which will be signed by the seller of the property. They will also discuss the following three essential areas of the purchase with you during this meeting:
1. Conveyance Supporting Documents including Property Purchase Tax Returns and the Purchaser’s Statements of Adjustments. The Purchaser’s Statement of Adjustments is a complete financial report of all dollar adjustments (including the purchase price of the property, the amount of the local taxes, the legal expenses and bank required fees, as applicable)
2. Title: After you finalize the purchase of your property, you will obtain title to it. This title is housed at the Land Title Office and contains three main categories:
–The Registered Owner in fee simple or freehold (both terms being legal terms that indicate ownership)
–Financial Charges, being the mortgages or financial charges on the title.
–Any City or Private Charges registered against the title.
These non-financial charges or encumbrances can include a variety of items. Common examples include building restrictions, general covenants or agreements requiring or restricting the use of property for some purpose, and right of way and easements where public authorities or neighbors can gain access to a portion of the property for various stated purposes. These items, along with the size of the property being purchased, are very significant and as such, are handled twice; once by your REALTOR®, identifying property limitations during your offer to purchase the property, and secondly, by your legal professional to confirm that you have been made aware of the property’s restrictions prior to purchasing the property.
3. Bank Documents for a Mortgage. You will be required to sign the Mortgage documents (Form B- Part 1 and 2) and other bank documents.
Part 1 states the amount you are borrowing, the interest rate at which you are borrowing, the interest rate at which you are borrowing and the general repayment agreement you made with the bank.
Part 2 is a set of the Standard Mortgage Terms (administrative provisions). These Standard Mortgage Terms are written in favor of the bank in the similar vein as if you had the money and were loaning it to someone else. They stipulate that you are obliged to keep the property in good condition and make the payments, failing which the bank has legal recourse and can, if necessary, sell the home in satisfaction of the loan.
Further, if after sale there is a shortfall, the bank may be able to pursue you to recover the outstanding amount of the loan.
The Day of Completion: What Happens
On the completion date, your lawyer or notary will place your certified cheque or bank draft in Trust and submit all of the documents you have signed, along with the Transfer, to the Land Title Office for registration.
Computerized time searches of the title are triggered and only when your lawyer or notary’s satisfied that you will own the property (subject only to the mortgage and charges of which you are aware), will he or she then release the funds to the seller’s legal professional to clear title of any financial obligations of the seller.
The Land Title Office issues a time date serial number for all documents to evidence the ownership. Once the funds are exchanged, the contract is completed, which entitles you to take possession on the date stated in your contract.
Shortly after this, your legal professional will forward to you a copy of the Transfer and Mortgage with registration confirmation, as well as copies of other documents you did not receive in your meeting with the lawyer.
Approximately 2-6 months later, you will get another letter from your lawyer or notary containing a copy of a State of Title Certificate ( a document issued from the Land Title Office) showing you as the registered owner, subject to your mortgages and any encumbrances or ordinances noted in your meeting with your lawyer or notary. The State of Title Certificate confirms your ownership of your home and concludes the matter.