The Role of the solicitor in a residential property purchase
ONCE THE OFFER HAS BEEN ACCEPTED
As soon as the Agreement of Purchase and Sale has been signed, you should bring the materials to your solicitor right away.
Once the offer has been accepted, your solicitor should explain to you your obligations under the contract. The solicitor should also advise you as to what expenses you are likely to incur with respect to the closing procedures, including Land Transfer Tax, disbursements and legal fees. If you are buying a new home from a builder, the solicitor should provide you with an educated estimate as to how much you should budget for "hidden charges" such as Ontario New Home Warranty Enrolment Fee, Hydro and Water meter installation charges, Fencing charges, Grading Deposit charges, etc. If all of the conditions in the Agreement have been met and the Offer is firm, the solicitor proceeds to investigate the title to the property. Initials searches include utility searches, property tax searches, building, zoning and planning searches and searching registered title to the property.
Letters are sent by your solicitor to all municipal or regional utility departments confirm that there are no arrears or outstanding charges, such as gas, water or hydro expenses; that there are not conditional sales contracts, easements or unregistered agreements, liens or other encumbrances affecting the property or equipment being left by the vendor. These letters also verify if the equipment on the property is rented or owned and they also advise the various utility departments of the scheduled closing date, the new owner's name and the name of the vendor's solicitor. These letters also request information as to the type of billing and if the billing is metered, to do final meter readings on the scheduled closing date and to forward final bills to vendor, in care of his solicitor. Each department has a set fee for replying to these letters and these fees are paid by the solicitor on your behalf and shown as disbursements on your account.
A Tax Certificate is requested by your solicitor to verify the amount of the current year's taxes and to inquire as to arrears and outstanding charges for taxes for the current year and any preceding years. Additional information is requested as to local improvement charges, charges for work orders, snow shovelling, demolition, hydro, water or other public utility, charges under the Telephone Act, The Fire Marshall's Act, the Public Health Act, or the Weed Control Act, charges or special rates under the Tile Drainage Act, the Shoreline Assistance Act, or any other charges forming a lien by the Municipality against the property. Each Tax Department has a set fee for providing a Tax Certificate and this fee is paid by your solicitor on your behalf and shown as disbursement on your account.
BUILDING & ZONING
A letter is sent by your solicitor to the Building and Zoning Department together with a copy of the survey for the property to reveal the full particulars of zoning by-laws and restrictions relating to the distance from the street and side and rear lines, type of construction, lot areas and building areas, lot frontage and depth requirements and permitted uses. This letter also requests information regarding any occupancy permit or completion certificate requirements, full particulars of any outstanding work orders or similar requirements, whether all subdivision agreements and similar agreements have been complied with and fully carried out. Each Building and Zoning Department has a set fee for providing this information in the form of a Building Compliance letter and this fee is paid by your solicitor on your behalf and shown as disbursement on your account. It is important that you provide your solicitor with a copy of the survey for the property as soon as possible if you have received one from the vendor or real estate agent. If no survey is available, it is important that you let your solicitor know so that (s)he can advise how your interests can be protected.
A Search of title to the property is commenced in the appropriate division of the Land Registry Office to determine whether or not the vendor is the owner of the property, whether or not he has the right to convey the property, and that the property is not subject to any encumbrances, encroachments, easements, liens, agreements or mortgages that were not disclosed in the Agreement or Purchase and Sale. The Solicitor's search of title includes ensuring that all appropriate legislation regarding the conveyance of property has been complied with in connection with the property and with adjoining lands for a period of 40 years of prior title. The Registry Office has set fees for viewing the parcel abstract books and for providing copies of the relevant pages of the property abstract and documents, plans and prints registered on title. These fees are paid by your solicitor on your behalf and shown as disbursements on your account. This search is completed prior to the Date for Requisitions shown on the Agreement of Purchase and Sale and is again up-dated on the day of closing.
A search of Executions is completed in the appropriate Sheriff's Office to ensure that there are no executions against the vendor or prior owners of the property that would affect your title. Executions are filed by Creditors against Debtors when a Judgment in court awards the Creditor and amount to be paid by the Debtor. Executions are also searched against purchasers when the purchase is being financed by means of a mortgage. Your solicitor may be acting on your behalf as purchaser and on behalf of the mortgagee. He must also ensure that the mortgagee will have a good and valid mortgage registered on title and that there are no executions against you as mortgagor that would affect the mortgagee's interest in title. Executions are searched prior to the Date for Requisitions and again on the day of closing. The Sheriff's Office charges $11.00 per name to search executions and these fees are paid by your solicitor on your behalf and shown as disbursements on your account.
Once the initial searches have been completed, and prior to the Date for Requisitions shown on the Agreement of Purchase and Sale, your solicitor will prepare and deliver a letter to the Vendor's Solicitor requesting that any items revealed in the initial searches be dealt with on or before closing. This letter will include a number of documents prepared by your solicitor for execution by the vendor, including undertakings, warranties, bills of sale and declarations with respect to various Acts that affect the transfer and ownership of the property. It is important that you provide your solicitor with a copy of the Agreement of Purchase and Sale well in advance of the Date for Requisitions to ensure that all matters affecting title are dealt with prior to closing.
While your solicitor is completing his initial searches, it is your responsibility to make necessary arrangements for financing. You should have decided, prior to signing the Agreement of Purchase and Sale , the amount of financing you will qualify for and the amount you will require to complete the transaction. There are a number of expenses that you may not expect on the day of closing that relate to mortgage financing. Your solicitor can advise you of these costs when the financial institution that you chose provides you with a Mortgage Commitment Letter. Prior to signing this Mortgage Commitment Letter it is advised that you consult with your solicitor to review the contents of this letter and the results of signing it.
Once you have signed the Mortgage Commitment Letter, you should provide your solicitor with a copy of it. Your financial institution will provide their solicitor with a copy of the Mortgage Commitment Letter and quite often your financial institution will allow your solicitor to act on their behalf as well, in order to reduce your costs. Ensure that you notify your financial institution of the name, address, phone number and fax number of your solicitor as soon as you have arranged the financing.
If your solicitor is acting on behalf of the financial institution, he will be provided with a package prepared by them together with instructions and conditions with respect to the mortgage. Your solicitor will prepare all necessary documentation for the mortgage and will be required to submit them to the financial institution for approval prior to closing. Your solicitor must ensure that all conditions of the Mortgage Commitment Letter are met and must also certify title of the property to the financial institution on closing.
Your solicitor should advise you as to whether or not you can benefit from any government programs designed to assist home buyers from time to time. Those programs include Land Transfer Tax Rebate programs, Ontario Home Ownership Savings Plans, RRSP plans, together with details as to how the CMHC 5% Down Payment works.
If you are financing your home purchase by means of a mortgage you will have to arrange for fire insurance to cover the property from the day of closing. You should advise your insurance broker of the name, address, phone number and fax number of both your solicitor and of the financial institution providing your mortgage. the mortgagee mush be noted on the policy and a binder letter must be received by your solicitor confirming that insurance coverage is in place effective on closing and noting the interest of the mortgagee thereon. Be sure to explain the importance of this to your insurance broker as the financial institution will not advance funds to close your purchase until they know that there is insurance on the property.
BEFORE THE DAY OF CLOSING
You will be required to attend at your solicitor's office a few days prior to closing to sign all necessary documents and to provide your solicitor with the balance of closing funds by way of certified cheque. At this time all aspects of your purchase and financing will be reviewed and if you have any questions you should feel free to ask at this time.
NEW HOME PURCHASES
If you are purchasing a new home from a Builder, you will be contacted by the Builder a few days prior to closing to complete HUDAC inspection of the home under the Home Warranty Program. A representative of the Builder will complete this inspection with you and you should be sure to note any deficiencies on the form provided by the Builder. This form is call a Certificate of Completion and Possession and is your insurance that the Builder will rectify any deficiencies noted on the form within one year. If you are financing your home by means of a mortgage your mortgagee will require a copy of this form prior to advancing funds. You should try to arrange for your appointment with your solicitor to follow your inspection of the property and your solicitor will ensure that a copy of the Certificate of Completion and Possession is provided to the mortgagee.
Your solicitor will make arrangements to exchange signed documentation required by your financial institution for the mortgage advance cheque on the day of closing. The proceeds of the mortgage advance and any funds provided by you will be deposited to your solicitor's trust account and your solicitor will prepare and certify the necessary cheques for closing in accordance with the vendor's direction.
Your solicitor will arrange to meet with the vendor's solicitor at a mutually convenient time at the appropriate Land Registry Office where he will sub-search title and complete final execution searches. Documents, keys and cheques will be exchanged and your solicitor will attend to the registration of all necessary documents. Once the documents have been registered the vendor's solicitor may release the funds to his clients and your solicitor may release the keys to you.
If you are purchasing a new home through a Builder, your keys may be released at the Builder's site office near your new home. Your solicitor will advise you if this is the case. You should provide your solicitor with a telephone number where you can be reached on the day of closing if your home number is being disconnected on that day. After closing you may pick your keys up at the solicitor's office and move in to your new home.
When you move in to the new home check to see that all items noted in the Agreement of Purchase and Sale and indicated as included in the purchase price are left on the property by the vendor. If you believe something is missing, contact your solicitor immediately.
After closing your solicitor will prepare a reporting letter to you certifying your title and explaining all aspects of the transaction. This reporting letter will also contain copies of all necessary documentation, your Statement of Account, and Trust Ledger Statement, a survey to the property, the Duplicate Registered Transfer/Deed of Land and a copy of the registered Charge/Mortgage of Land (where applicable). You should keep this letter and these documents in a safe place for future refinancing or sale of the property.