by Nolan Johnson and Kip Krogman
You have decided to purchase a house. You are more than excited and happy, but also nervous and overwhelmed. We get it – we’ve been there too. There is a lot to do. You need to find the right realtor, set your budget, qualify for a mortgage and… come up for air… and then find the right house. Easy enough, right?
Your lawyer should play a critical role in calming your nerves. “Closing” the transaction entails a number of important steps and your lawyer will guide you through the process. But, what are the practical issues you can be prepared to address with your lawyer? Here are ten basic expectations:
- Expect your lawyer’s office to contact you a few weeks prior to your possession date. Your realtor (and your banker/mortgage broker, if the purchase is financed) will send your contact information directly to your lawyer’s office and the law office will then contact you for the appointment. The timing of this will depend largely on how promptly the lawyer receives instructions from the mortgage lender, so make sure your banker/mortgage broker has confirmed you have satisfied all conditions of financing, knows who your lawyer is and has sent mortgage instructions to the lawyer’s office.
- Expect, if your purchase is mortgage financed, that your lawyer will also act on behalf of your mortgage company and will prepare all of the mortgage documentation as well. Also expect your lawyer will thoroughly explain the mortgage documentation to you at your signing appointment.
- Expect that legal fees, including disbursements, (together these are often referred to as “closing costs”) will be added to the down payment you will bring to the lawyer’s office and you will be advised as to this exact amount when contacted by the lawyer’s office. Disbursements include Land Titles registration fees (transfer and mortgage), tax certificates, title searches, lender’s fees (including appraisal fees, title insurance fees, and “other” fees – make sure to inquire with your banker/mortgage broker about these so that if they are applicable they don’t come as a surprise), and general office expenses.
- Expect your lawyer to calculate and adjust the “purchase price”. This adjustment to the purchase price is known as the “cash to close” and is the amount required to satisfy the seller on the possession day. The cash to close will reflect adjustments made for the deposit, property tax, homeowner fees, condo fees, and the like (as applicable).
- Expect your lawyer to review with you a “Real Property Report” (or sometimes referred to as a survey – essentially an overhead map of your property), as supplied by the seller, to ensure that municipal bylaws are complied with.
- Expect your lawyer will ensure the transfer documents are received in good order from the seller’s lawyer. You will review and sign these documents with your lawyer and on possession day your lawyer will use them to transfer title.
- Expect your lawyer will require home insurance to satisfy the obligation to your mortgage lender. You will simply need to contact your insurance broker and obtain home insurance for the new home, effective on the possession day. For this, you will require details of the home (size, type of roof/exterior, furnace, sump pump, etc.). If you do not have these details you may need to inquire from the seller or your realtor. The lawyer will then simply obtain your insurance broker’s office information (this can be done when the lawyer’s office first calls to make an appointment, or directly with the lawyer at the signing appointment – the earlier the better) and request proof of insurance directly from the broker.
- Expect your lawyer will request funds from the mortgage company. The mortgage funds, combined with your down payment, will be used to pay the cash to close and complete the transaction. Upon satisfactory receipt of the cash to close, the seller’s lawyer will instruct the realtors to release the keys and the house will be yours!
- Expect that beyond the close of the transaction, your lawyer will ensure registration of both the transfer and mortgage. There may be other post-closing items that need attention (ensuring the seller’s mortgage is cleared from title, etc.) and your lawyer will then report to you once registration is complete. Your report will contain a detailed record of the transaction, will enclose all pertinent signed documentation, a copy of the Real Property Report with compliance letter (you will want to ensure your lawyer also retains a copy so you can always retrieve one when you are selling the home in the future, in the event you ever lose your copy), and a copy of your legal account which has been paid in full.
- Expect your lawyer to thoroughly explain each document to you and answer all of your questions. Expect that your lawyer will be accessible for any questions you may have. And overall, expect that your lawyer will do everything possible to ensure the transaction is as stress-free as possible. After all, purchasing a house is one of the biggest investments you will ever make. However, do not expect your lawyer to move boxes or pianos, or babysit your children on moving day – we’re not that amazing!