Your Guide to the Home Buying Process
Purchasing a home is an exciting milestone, but it can also feel overwhelming. From signing the Agreement of Purchase and Sale to finalizing the closing documents, there are several steps involved. While legal professionals handle key aspects of the process, as a buyer, you must also be aware of your responsibilities. This guide provides an overview of a standard real estate purchase transaction to help you navigate the process smoothly.
Understanding the Agreement of Purchase and Sale
One of the most critical aspects of a real estate transaction is the Agreement of Purchase and Sale (the “Agreement”). This is a legally binding contract that outlines the terms of the sale, and it serves as the foundation of the entire process. Since deviations from this contract are rare, it is essential to ensure it is drafted properly to align with your needs.
Key Considerations in the Agreement
- Who Will Be on Title?
It is important to clearly state the names of all individuals purchasing the property in the Agreement. If you require a mortgage, consider whose name it will be under. Some buyers may need to add a co-applicant to the title to qualify for financing, so consulting a mortgage broker early is advisable. - Important Dates
- Closing Date: The final transfer of ownership cannot occur on weekends or statutory holidays, as the Land Registry Office is closed on those days.
- Title Search (Requisition) Date: This is the deadline for investigating the legal status of the property. Missing this date could prevent you from addressing potential title issues.
- Inclusions and Exclusions
- Ensure that any specific items you want included in the purchase (such as appliances or fixtures) are listed under “Chattels” and specified to be in “working order.”
- Determine whether any major home systems (hot water tank, furnace, air conditioning unit) are rentals. If you do not want to assume these rental agreements, request that the seller buy them out before closing.
- Conditions and Contingencies
- If you require a home inspection, make the purchase conditional upon a satisfactory inspection, typically within five days.
- If financing is uncertain, include a financing condition that allows you to withdraw from the Agreement if you are unable to secure a mortgage.
- Surveys and Property Issues
- A Survey can be useful for future property modifications, such as fencing or additions. If available, request an up-to-date survey from the seller.
- If the property has any deficiencies or outstanding repairs, ensure they are documented in Schedule A of the Agreement. If repairs are not completed before closing, this may allow for a price reduction, though it may require legal action later.
Additional Considerations for Buyers
Many homebuyers encounter unexpected issues during the purchasing process. One common issue involves spousal status.
If you have previously purchased a property and declared a marital status, it must remain consistent unless there has been a legitimate change (such as a divorce). Failing to disclose an accurate marital status can create legal and financial complications, particularly in cases where a matrimonial home is involved.
Additionally, in most real estate transactions, the lawyer represents both the borrower and the lender. This means that all material information—such as marital status—must be disclosed to the lender. If the property is considered a matrimonial home, your spouse may need to provide consent for a new mortgage, unless a divorce order states otherwise.
Securing Your Mortgage
Your ability to complete a home purchase largely depends on securing financing. Given the current economic climate, most buyers require a mortgage to finalize their purchase. Mortgage brokers and buyers must act proactively to ensure that financing is arranged on time.
If mortgage instructions are not received at least two days before closing, it becomes very difficult to complete the transaction. Lenders have specific requirements that must be met, including document submissions and approvals, before they release funds on the closing date.
To avoid delays, buyers should:
- Apply for a mortgage well in advance.
- Maintain open communication between themselves, their mortgage broker, and their real estate lawyer.
- Provide required documents on time, including property insurance and closing funds.
The Consequences of Not Closing on Time
Failing to complete a real estate transaction carries serious financial consequences. If you do not close on the agreed date, you risk:
- Losing your deposit entirely.
- Being held liable for damages if the seller incurs losses beyond the deposit amount.
A real estate purchase is a binding legal agreement, and walking away from a deal is not a simple option. This is why it is essential to stay organized, meet deadlines, and communicate promptly with all parties involved.
Final Thoughts
A real estate transaction involves multiple steps, deadlines, and legal considerations. By working with a qualified real estate lawyer and keeping an open line of communication with your mortgage broker and realtor, you can ensure a smooth and successful home purchase.
With proper preparation and professional guidance, your home-buying experience can be exciting and rewarding rather than overwhelming.
