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 * Home
 * Areas of Practice
 * Why Sukh Law
 * Meet the Lawyer
 * Legal for Realtors
 * Resources
   * Blog
   * Residential Real Estate Closing Costs Calculator
   * Ontario Land Transfer Tax Calculator
 * Contact Us


FIRST TIME HOME BUYER TOP 5 QUESTIONS



WRITTEN BY SUKHMAN SANDHU

Sukhman Sandhu is the Founder & Managing Director of Sukh Law. Sukhman's
practice focuses upon complex real estate and commercial law transactions and
related litigation. Licensed to practice law in the Province of Ontario, Sukhman
currently represents individuals, small businesses and large institutions and
maintains a great track record of obtaining successful results.


REAL ESTATE LAW



JANUARY 29, 2021

Buying your first home can be very stressful. In order to protect your legal
interests, it is highly recommended to contact a lawyer as early in the
transaction as possible. If you need answers immediately, I have compiled and
answered the top 5 questions that I get asked by first time home buyers in my
legal practice.



FOR A QUICK OVERVIEW, WE WILL BE COVERING:

1. How much are the closing costs?

2. My offer was accepted by the seller and there are no conditions or conditions
have been waived or fulfilled. I have the fully executed Agreement of Purchase.
What are the next steps with my legal representative?

3. What is Home Insurance?

4. What is Title Insurance?

5. What if I notice damage to the property or one of the appliances is not
working after I move-in?



Let’s get started…










1. HOW MUCH ARE THE CLOSING COSTS?

Closings Costs when purchasing a home include:

A) Legal Fees & Disbursements: $1000 – $1500 on average

B) Government Registration Fees

C) Title Insurance

D) Ontario Land Transfer Tax – Based on Purchase Price of Home



Click here to use our instant closing costs calculator to obtain accurate and
immediate closing costs breakdown for your residential real estate closing.










2. MY OFFER WAS ACCEPTED BY THE SELLER AND THERE ARE NO CONDITIONS OR CONDITIONS
HAVE BEEN WAIVED OR FULFILLED. I HAVE THE FULLY EXECUTED AGREEMENT OF PURCHASE
AND SALE. WHAT ARE THE NEXT STEPS WITH MY LEGAL REPRESENTATIVE?

Here is a general overview:

A) Retain the services of an experienced real estate lawyer

B) Provide your real estate lawyer’s contact information to your real estate and
mortgage representatives

C) At the intake time, your lawyer will likely ask for:

 * Copy of the Agreement of Purchase and Sale

 * Copy of 2 pieces of ID for all purchasers — Health Cards not accepted

 * Spousal Status for all purchasers

 * If two or more individuals are purchasing together, how do you want to take
   the title? There are two options. Joint Tenants – If one person dies, the
   other person automatically becomes the owner of the whole property. Tenants
   in Common – If one person dies, that person’s share goes to his or her heirs
   as directed in the person’s will. Another key difference between the two
   options is that Joint Tenants always have equal ownership and cannot vary the
   ownership percentage. In contrast, Tenants in Common can vary the ownership
   share. As a result, for Tenants in Common, one person can own 80% while the
   other owns 20% of the property.
 * Are you a Permanent Resident or Citizen of Canada? If you are not a Permanent
   Resident or Citizen of Canada, the Non-Resident Speculation Tax (NRST) may
   apply. The NRST is a 15 percent tax on the purchase of an interest in
   residential property located in the Greater Golden Horseshoe Region (GGH).
   The GGH is the urban region centered around the city of Toronto.
 * Is the property you are purchasing going to be your primary residence or
   rental property? The first time home buyer land transfer tax rebate is only
   applicable for primary residences, the rebate is not available for investment
   or rental properties.

D) Your lawyer will ask you to obtain home insurance (also known as fire
insurance) and provide the law office with a copy of the confirmation policy or
binder prior to the closing. When obtaining a mortgage, it is important to
listen to your lawyer’s instructions as you will be asked to include the
mortgage lender’s exact name and service address as a loss payee within the home
insurance policy.

E) Your lawyer will conduct title searches, writ searches, and any other
required due diligence. Based on the search results, your lawyer will ask the
seller’s lawyer (requisition) to remedy any items or issues in order to ensure
that you obtain a clear title to the property.

F) If you are obtaining a mortgage, your mortgage lender will send the mortgage
instructions to your lawyer prior to the closing. Once your lawyer receives and
reviews the mortgage instructions,  you will be asked to make a bank draft or
certified cheque for one amount payable to the law firm in Trust to cover the
remaining down payment, land transfer tax, title insurance cost, government
registration fees, legal fees and disbursements.

G) Meet with your lawyer to sign paperwork and provide the bank draft/certified
cheque mentioned above.

H) Once the closing is completed (usually around 3-5 pm on the closing date),
pick up the keys from your lawyer’s office or your lawyer may provide a lockbox
code to access the keys. The lockbox is usually secured to the front door of the
property.












3. WHAT IS HOME INSURANCE?

Home Insurance covers loss and damage to your property. It is not mandatory by
law, however, it will likely be required by your mortgage lender if you are
buying a freehold property.

If you are buying a condominium property, please note that there are two layers
of insurance. The first layer of insurance is provided by your condominium
corporation which generally covers the main structure of your unit and common
areas of the entire condominium. This is paid through the common
expenses/maintenance fees. The second layer of insurance is obtained by the
owner of the condominium unit and it covers unit improvements and betterments,
loss assessments, and belongings, which the condominium corporation’s insurance
is unlikely to cover. For resale of condominium properties, mortgage lenders are
satisfied with the condominium corporation’s insurance and as a result, it is up
to you whether you want to obtain the second layer of insurance. For new
condominium properties (new construction), mortgage lenders and/or builder may
require you to obtain the improvements and betterments insurance.



A wide variety of coverage options exist and generally speaking, there are three
main types of coverage in most standard policies:

DWELLING

Covers damage or loss of the actual building (also known as dwelling). This
coverage protects you from certain events and occurrences that may put your home
at risk (known as insured perils). These insured perils include events such as:

 * Fire
 * Smoke
 * Theft
 * Lightning strikes
 * Water Damage
 * Wind
 * Aircraft or vehicle impact
 * Explosion
 * Falling objects (except those as a result of earthquake or snow slide)

CONTENTS

Covers your personal possessions against theft, damage or vandalism. This
includes items such as your furniture, furnishings, electronics, clothing,
equipment, boats and toys.

PERSONAL LIABILITY

If another person gets hurt on your property, you are vulnerable to a lawsuit
and could be held liable for legal and medical costs. Personal liability
coverage will pay for your legal defense and settlement.

It is important to note that each coverage type has coverage limits and it is
important to look at and assess how much coverage suits your needs and budget.

It is your duty to speak with your insurance broker or agent and find the
coverage that works for you. A law office does not order home insurance on the
client’s behalf.












4. WHAT IS TITLE INSURANCE?

Unlike home insurance which requires a monthly premium payment and is ordered by
the homeowner, title insurance is a one-time payment and ordered by the law
office. Title Insurance is an insurance policy that protects the owner of a real
estate property against loss or damage incurred in the event of a defect
affecting the title to the land. This specifically is referred to as the owner
title insurance policy.

It is not mandatory by law, however, title insurance is always obtained as the
alternative to title insurance is to order and examine more extensive searches
which is often much more expensive than the cost of title insurance.

Anytime a mortgage is obtained, the mortgage lender will require a lender title
insurance policy as well which protects the lender against the actual loss or
damage incurred in the event of a defect affecting the title and/or if the
lender’s security (legally known as a charge on the property) is not enforceable
against title to the land. Lawyer for a purchaser who is obtaining a mortgage
will order both owner and lender title insurance policies.

Title Insurance may provide protection from losses such as:

 * Existing liens against the property’s title (e.g. The previous owner had
   unpaid debts from mortgages, property taxes, utilities or condominium
   charges);

 * Title fraud;

 * Unknown title defects which prevent you from having clear ownership of the
   property;

 * Errors in surveys and public records;

 * Encroachment issues (e.g. a structure that you believe is on your property
   needs to be removed because it is actually on your neighbor’s property); and

 * Other title-related issues that can affect your ability to mortgage, lease or
   sell your property in the future.












5. WHAT IF I NOTICE DAMAGE TO THE PROPERTY OR ONE OF THE APPLIANCES IS NOT
WORKING AFTER I MOVE-IN?

Most Purchase and Sale Agreements state that the seller “represents and warrants
that the chattels and fixtures as included in this Agreement of Purchase and
Sale will be in good working order and free from all liens and encumbrances on
completion.” If you have not signed the Purchase and Sale Agreement yet, discuss
with your realtor to ensure that the above clause is included. In a scenario
where such a clause is included in the Agreement and an appliance such as a
washing machine is not working, document it with pictures and video and tell
your realtor and lawyer immediately. They will contact the seller’s
representative and request the seller to reimburse you for any repairs or
replacement if needed.

There are two caveats to this situation. First, it is important to notify the
seller through your representative within the first few days of the closing date
as any later may give the seller an opportunity to blame you for the damage and
as a result, ignore or deny any request to reimburse. Second, even if you
document and report immediately, the seller may still refuse to pay and you will
need to initiate legal proceedings to seek reimbursement.


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