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A Guide To Understanding Property Documents When Buying A Home

The whole process of buying a home is very tedious and can sometimes get very complicated. Property documents are one of the most misunderstood parts of buying a home. People sometimes will turn a blind eye to these documents as they are too excited to buy the house and want to get the whole process over with. Whether you’re buying a property on your own or with a real estate agent, it is very important to understand property documents because this knowledge can help you avoid complications further down the road. To reduce the stress of home buying, here’s a list of important property documents you need to understand when buying a home.

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Real Estate Purchase Agreement

A Real Estate Purchase Agreement is an agreement that outlines the governing principles, rights, obligations, responsibilities, and terms agreed upon by the parties to a real estate, namely, the buyer and the seller. In the various provinces across Canada, it is equally known as a house purchase agreement, a real estate purchase contract, a real estate sales contract or, a home purchase agreement.

The Real Estate Purchase Agreement usually contains the following

  1. Details of the parties to the Real Estate Purchase Agreement.
  2. Details of the property.
  3. Details of the Price for which the property is to be sold.
  4. Details of how the buyer intends to finance the purchase of the property.
  5. Details of any fixtures and fittings that will be included or excluded from the property.
  6. Terms stipulating if the buyer or seller would be responsible for potential defects found in the property. This is also known as Title insurance.
  7. A stipulation as to the property taxes to be imposed on the property.
  8. A stipulation as to the specific date when the title or owners of the real estate will be transferred to the buyer.
  9. Condition precedents to the sale of the property.
  10. Terms as to earnest money or deposit to be made by the buyer to the seller to show the former’s seriousness.
  11. A time-specific termination clause. This helps to avoid unnecessary delays.
  12. Disclosure as to the use of lead-based paint if the homes were constructed before 1960.
  13. Signatures of the parties involved in the agreement.

*It is important to understand a Real Estate Purchase Agreement because it is a legally binding agreement that empowers the innocent party with the right to sue for damages where the other party defaults in performing his obligations.

Property Transfer Documents

Property transfer documents are documents that divest the owner of the property of all their ownership rights and transfer the same to the buyer. You will need a notary or lawyer to draft this agreement as these professionals are especially skilled in what should form the major components of these documents such as whether the property is to be held in joint tenancy or tenancy-in-common. In general, it is important to know that there are 2 major instruments by which a seller transfers their interests or rights to the buyer. They are:

1. Quitclaim Deed

A quitclaim deed is a document that transfers the legal ownership rights from the seller to the buyer without guarantees from the seller that the title is good or free from other encumbrances. This deed shields the seller from liability where the buyer discovers that the seller’s title at the point of sale is defective.

2. Warranty Deed

If you are a buyer, it is in your best interest to insist on a warranty deed as it gives you legal guarantees. Besides stating that the seller has the right to transfer the property, it assures you that it is free of all encumbrances and adverse claims.

Land Transfer Tax Documents

Land Transfer Tax Documents or property transfer tax documents are used to evaluate and pay tax whenever a property is transferred by a seller to the buyer. These taxes are a calculated percentage of the purchase price of a property imposed by the government of certain provinces in Canada and may range from 0.5% to 4.0%. 

However, in some provinces, if it is the first time you are buying a home, you may benefit from some of the exemptions to land transfer tax. Your notary or lawyer is best suited to inform you if you qualify to benefit under the exemption.  It is important to know that these documents are a matter of law and thus, must be complied with.

Statement of Adjustments

Statement of Adjustments is a document that stipulates the monetary consideration in play between the seller and the buyer. This document contains 2 crucial components: the credit and the debit.

The credit part addresses money you have already advanced or will advance on behalf of the seller to another party. Examples of these are the deposit, strata fees, and utility expenses.

The debit part represents things you have to pay for at the end of the agreement. This type of adjustment adds to the amount of money you have to pay. Examples of debits are:

  1. Where a seller has paid some property taxes for the year and subsequently sells the property to the buyer, the latter must pay a sum of the property tax that covers a period when the buyer obtains the title of the land.
  2. Legal fees to be paid to a notary or lawyer and the Land Transfer Tax.

Mortgage Assignment Agreement

A Mortgage Assignment Agreement is a contract between the borrower and a 3rd party by which the former transfers the mortgage liability to the former. In buying a property that is subject to a mortgage, this agreement is important as, by it, the seller transfers who is the original borrower transfers his liabilities in the mortgage to the buyer (a 3rd party). Without this agreement being put in place, the seller remains bound by his initial mortgage agreement with the lender (usually, a bank).

A buyer must go through the proposed Mortgage Assignment Agreement with his bank, notary, or lawyer before appending his signature to prevent dire pecuniary consequences. After signing the Mortgage Assignment Agreement, the buyer has the responsibility of informing the mortgagee or the lender that an assignment has taken place.

Property Survey

A Property Survey or land survey is an important document that outlines the boundaries of the property you want to buy and other important information. A property survey document ensures that you know unequivocally which part of the land on which your property is yours. In a way, the property survey document is a way of marking your territory so that you can rightly and successfully ward off trespassers, and avoid trespassing on a 3rd party’s land as you’re certain of what is yours. A competent Property Survey should reveal the following:

  1. Precise property lines
  2. Easements available on the land
  3. Topographical information
  4. Possible problematic areas
  5. Information contained in the deed
  6. Information from Property Survey Records

Home Inspection Report

One of the most important documents when buying a home is the home inspection report. The home inspection report is a document that is prepared by a qualified professional known as a home inspector who examines a home to ascertain whether or not it is in good condition. A good home inspection report can save you from unexpected expenses from the damage you may find later on if you buy the home without knowing if there is a problem with it. A home inspection report reveals defects will not only help you lower the purchase price but can also help you feel confident about your home.

FAQ - Frequently Asked Questions About Notaries/Real Estate Lawyers and Property Documents in Canada

Can a notary notarize a property document in another language?

Yes, a notary can notarize a property document in another language as long as they have great comprehension of said language. If the notary does not have comprehension of said language, you will need to get the documents translated by a certified translator. If a translation is given to the notary, they will first have to read it to assure that the translation is accurate. If the notary cannot properly understand the translated document, they will not be able to notarize the document. 

Where do you find a notary public?

To find a notary public in Canada, you can either search online by looking at the best reviews, get recommendations from friends and family who have recently bought a property or look on highly recognized websites from each province.

Below are the aforementioned highly recommended websites from each province: 

  • In Quebec, you can find a notary on Trouver un Notaire
  • In Ontario, Alberta, Saskatchewan, and Manitoba, you can find a notary public on Notary Pro.
  • In British Columbia you can find a notary on BC Notaries.

In Canada in general you can find a notary on Red Seal Notary and on Notarize.ca

Who pays the notary: the buyer or seller?

The last and important step in every real estate transaction is carried out at the notary’s office. This is where the buyer and seller legally confirm the bill of sale. It is also when the keys of the home are handed to its new owner. The notary is there to ensure that the transaction is seamless. It is the buyer who picks the notary and therefore will pay the notary fees

How long does a visit at the notary office last and how many notary visits will I need when buying a home?

You will need at most 2 visits to the notary office in the course of buying a home. The first one is for the signing of the mortgage and this is done about a week before the transaction. The second one is for the signing of the sale and the date is up to the buyer to choose.

The first meeting, which is the mortgage signing, lasts for about an hour and a half. Here, the service contract will be discussed with the notary as well as verifications done on the property. Other important discussions will be made as well. The second meeting will take place before the seller and real estate broker. This also doesn’t take long as the notary will read the deed of sale and get it signed. The buyer will receive the keys upon finalization. 

Are notaries mandatory when buying a home in Canada?

In Canada, notaries are important parts of any home-buying process. However, notaries are not mandatory in Canada except for in Quebec and British Columbia. In Quebec and British Columbia, notaries are lawyers and are mandatory during any type of real estate transaction.

Conclusion

Understanding property documents when buying a home is a must as it can help you avoid any issues after settling down in your new home. These documents are sometimes quickly gone over with notaries and lawyers so it is important to understand them first. So whether you’re buying a condo, a house or almost any type of property, make sure you look over this article first. Looking to make an offer on a property? Check out everything you need to know about making an offer to purchase a home.

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