Realty Check: Buying and Selling Your Home
posted in: Real Estate
Home is where the heart is, but it can have a big effect on your wallet as well. That’s why you need to make sure the purchase (and sale) of your home goes right. At KMSC Law, our real estate lawyers know everything there is to know about property sales and purchases.
But buying and selling your home is always less stressful when you understand the basics yourself. That’s why we’ve provided this crash course on the basics of real estate transactions in Alberta. Please note that this blog is for informational purposes only and is not a substitute for legal advice.
There are some crucial factors to consider before purchasing your home. Some of these are obvious, but they may also save you a world of trouble.
Before buying your home, ensure it has been inspected by a qualified building inspector. This inspection will prevent nasty surprises and ensure you’re paying a fair sum for the property. When selling, it’s not necessary to have your home inspected, but it could make selling easier and help you get a better price.
Easements, Restrictive Covenants, and Encumbrances:
You should also determine if a property has any restrictive covenants, encumbrances, or easements before buying. Easements are privileges granted to someone who is not the landowner to use the land in a certain way—for example, easements often grant cities the right of way for water lines. Encumbrances include mortgages and builder’s liens against the property. And restrictive covenants will stop the landowner from using the land in a certain way. For instance, a restrictive covenant may forbid you from building duplexes on the land you’re purchasing. Your lawyer will identify all these by obtaining a “Real Property Report” and advise you if they will present an obstacle to your ownership of the property.
Taxes, Insurance, and Mortgage Financing
Before purchasing, you should also ensure you can afford the property’s annual insurance and taxes. You will need home insurance to obtain a mortgage. On that point, you should also check with your bank to ensure you are eligible for the mortgage financing you will need to purchase the house. We will discuss mortgages more below.
Offer to Purchase
When buying or selling your home, you will close the deal with an “Offer to Purchase.” When you sign this document, it becomes a legally binding contract. For that reason, you should always consult a lawyer before signing an Offer to Purchase.
An Offer to Purchase contains some standard information. For example, a standard Offer will always include the legal and municipal title of the property, purchase price, and (of course) the signatures of the vendor, purchaser, witnesses, and real estate agents.
That said, an Offer may also include some more complicated pieces of information. Before signing, always consider:
- The Conditions: Offers to Purchase often contain conditions that must be fulfilled before it becomes binding. For example, you may include a condition that you must sell your current home before purchasing your new home. Once your home is sold, the condition is met and the Offer becomes binding.
- What’s Included: Any items not listed as included in the transaction does not necessarily come with the property. In other words, if you purchase a home, you cannot simply assume the fridge and oven will be left behind by the seller. Instead, you should stipulate in the Offer to Purchase what items in the home are included in the transaction.
- The Possession Date: The possession date is a vital component of any Offer to Purchase, as the purchaser and their lawyer must ensure property insurance is effective for the new home on this date.
When a bank lends you money to buy a home, you must sign documents that are registered on the property title promising to repay them. This is called a mortgage. When searching for a mortgage, start with your bank. But don’t stop there: it’s never a bad idea to shop around for the best deals on interest rates and payment options. There are many types of mortgages, so it is important to obtain legal advice before deciding what kind of mortgage you will sign.
Buying or Selling your Home
While Covid-19 has made life uncertain, and every real estate transaction has complications, KMSC is here to help. We have options, such as video conferencing, to help you through your purchase or sale. Contact the team at KMSC Law to discuss your real estate needs today.