From Offer to Keys: Steps to Purchasing Your Home

So your offer to purchase a home was recently accepted. Congratulations! BUT NOW WHAT! Take a look below, where I discuss the steps between an offer and getting the keys in your hand.

The offer to purchase is where it all starts, and is also known as an agreement of purchase and sale – this is the document you’ll give the seller once you decide on the home you want to buy, and will be a binding contract which is usually drafted by a real estate agent, but can also be drafted by a lawyer.

Your offer will have the following elements:

  • The property’s address
  • Your name
  • The seller’s name
  • The price of the property
  • The deposit amount
  • What chattels and fixtures are included with the price of the property
  • The date the transaction will close
  • Date of expiration of the offer
  • Other conditions, such as finance approval or home inspection conditions

Once your offer is accepted by the seller and before you are handed the keys on closing day, there is a mountain of work to do. At this point, you’ll need to review your offer to consider the conditions that need to be met by you prior to closing the transaction. You’ll also want to consider what your mortgage lender requires to be done prior to closing.

Once your lawyer gets involved, their first responsibility is to ensure you are obtaining good and marketable title to the property. This essentially means that title, or legal ownership, can be transferred to you without the likelihood that claims will be made on it by another party.

Your lawyer will take a number of steps to ensure that you will in fact receive good and marketable title on closing. First, they will search title to the property to confirm if there are any claims that would affect your ownership interest which you are not obligated to accept. Examples of this include previous mortgages, construction liens, liens for tax arrears, certain easements or restrictive covenants, or court orders registered on title.

Your lawyer will also conduct “off-title searches” to look for anything that might affect ownership interest which would not be revealed during a search of title. Examples of these off-title searches include execution searches to confirm there are no court judgements against any of the parties, as well as ordering tax and utilities certificates and zoning and work order reports, which are usually optional if title insurance is being ordered.

Off-title searches usually result in additional disbursements which can quickly add up as each government institution charges a fee for their own report or certificate. To help alleviate this, your lawyer will, in most circumstances, bind a title insurance policy to give added protection to you and the lender. The protections provided by the title insurance policy will significantly reduce the number off-title searches required and, in the vast majority of cases, the one-time premium for the title insurance policy ends up being cheaper than the cumulative costs of those additional searches and the requirement for obtaining an up-to-date survey.

Next, your lawyer will send a “requisition letter” to the seller’s lawyer requesting completion or compliance with standard terms in the agreement, such as delivery of funds, keys, compliance with municipal agreements and easements, compliance with condominium by-laws and rules, discharge of previous mortgages, and, if required, also requesting deletion or settlement of any competing interests in the property which the purchaser is not obligated to accept.

Your lawyer will also proceed with preparing closing documents and reviewing the closing documents to be signed by the seller to make sure your rights are protected and the documents reflect the terms of the agreement of purchase and sale.

If financing is being arranged, your lawyer will also process the mortgage and prepare and compile documents required by the lender. You will then sign the closing documents when you meet with your lawyer. Your lawyer will take care of delivery of funds received from you and the lender to the seller, pay for disbursements, land transfer tax and title insurance, and attend to completing registration of the deed, and any mortgages. Finally, your lawyer will report to you and the lender and follow up on any post-closing matters such as holdbacks for renovations and discharge of any previous mortgages.

It all comes down to the closing day, though. One of the first things that’ll happen on closing day, is the delivery of the mortgage funds to your lawyer. You will also need to deliver to your lawyer additional funds, minus the deposit you already made to your real estate broker, which are essentially comprised of the down payment amount plus the closing costs, which includes things like land transfer taxes, title insurance costs and legal fees. Your lawyer will then deliver the full amount to the seller, pay for any land transfer taxes, title insurance costs, and search fees, and register the home on Ontario’s land registry system.

Then, you’ll be given the keys to your home! It’s that easy.

This article does not constitute legal or other professional advice or an opinion of any kind. If you need help or have If you have any questions, we invite your business and are happy to help! Call Zeeshan or request a consultation via this website today.

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