- Initial Offer
Upon viewing a property and wanting to buy it, a potential buyer will make an offer. The seller may reject or accept the offer, or they may make a counter offer and negotiations will follow. The document containing the offer is called a Contract of Purchase and Sale, and will be amended based on the negotiations. It will also include any subject conditions that must be satisfied before the contract becomes binding.
The subject conditions in the contract allow the potential buyer to undertake certain investigations, and confirm the availability of things like financing and insurance, prior to entering into a binding contract. Investigations may include having a home inspection, reviewing a well report, reviewing the title to the property, a property disclosure statement, and a survey, if available.
Buyers are normally required to pay deposit towards the purchase prior to completion. The deposit is often paid within a specified timeframe following acceptance of an offer, or following final subject removal.
- Subject Removal
After the buyers have satisfied their subject conditions, the conditions will be removed and the contract will be binding. In the event that the buyers are unable to satisfy a condition, such as a satisfactory inspection, they may elect to terminate the contract.
- Document Preparation and Execution
The buyer and seller must retain separate lawyers or notaries to act on their behalf to close the transaction.
The buyer’s lawyer is responsible for preparing the majority of the documents, and will send the documents that the seller must sign to their lawyer.
The buyer’s lawyer will receive instructions from their lender, and will prepare the required mortgage documents for execution and registration. They will confirm that appropriate insurance coverage will be in place, and arrange for title insurance, if required.
Appointments for signing usually occur one to two weeks prior to the completion date. It is important for buyers and sellers to let their lawyer know in advance if they will be away prior to complete, or will be signing out of province, as additional arrangements may need to be made.
On the completion date, the buyer’s lawyer will attend to registration of the transfer and mortgage, if applicable, and supporting documents. The sale proceeds will be sent to the seller’s lawyer on their undertaking to payout any existing mortgages or financial charges, if applicable, prior to releasing the balance of the funds to the seller.
The lawyers also attend to payment of the other associated costs on behalf of their clients, including outstanding property transfer tax and real estate commissions.
The lawyers will notify the real estate agents that the sale has completed, and the real estate agents will arrange for possession and exchange of keys.
- Clearing Title
If an existing mortgage or other financial charge, such as a judgment, was registered against title, the seller’s lawyer will be responsible for ensuring that these charges are paid out and removed. They will provide the buyer’s lawyer with confirmation following the discharge of any financial charges.
It often takes between 30 – 60 days for the seller’s lender to provide the seller’s lawyer with the executed discharge of mortgage. It is important for buyers to be aware of this, as it could restrict their ability to immediately sell or transfer the property following their purchase.
- Report on Title
Upon clearing the seller’s financial charges, the buyer’s lawyer will report to the buyer and the lender, if applicable, and will provide a State of Title Certificate. The State of Title Certificate will show that the buyer is now the registered own of the property, that any prior financial charges have been discharged, and that the new mortgage, if applicable, appears on title.