How are lawyers involved when purchasing a home?

For many first time home buyers, purchasing a home can take a lot more time and effort than anticipated.  Finding a home is hard enough, but what needs to be completed afterward can be confusing and time-consuming.

This article will discuss the steps involved in completing a real-estate transaction after a deal has been reached, and things to bear in mind.

After your offer is accepted on a home, you need a lawyer to ensure all necessary paperwork is completed prior to your possession day.  You do not want to be a purchaser scrambling the day before possession to meet the requirements of your lender.

Concurrent or prior to making an offer on a home, you will usually deal with a mortgage broker or bank directly to obtain a mortgage. Once your financing is in place, the following is a list of the steps and documents involved leading up to possession day from a legal perspective:

  • Confirmation of financing and mortgage instructions from the lender must be provided to the lawyer. If you are dealing through a mortgage broker, the lawyer and mortgage broker will usually work together to ensure instructions are received. If not, you will need to follow up with the lender to have mortgage instructions sent to your lawyer.
  • Confirmation that adequate insurance is in place for the home on your possession day. This is always required by the lender, or else mortgage funds will not be advanced.
  • An estoppel certificate is required if the property is a condominium.
  • Once the lawyer receives the mortgage instructions, the mortgage and all required paperwork is prepared. Bear in mind that this takes time to do i.e. the lawyer will need the mortgage instructions at least several days prior to the possession date, ideally a week or more.
  • The lawyer then determines the “cash to mortgage”. This is the amount of funds over and above the mortgage you will have to pay for the home, legal fees, property taxes, land title fees to transfer title, Canada Mortgage and Housing insurance premiums (if applicable), etc.
  • A component of “cash to mortgage” is interest that will be paid to the seller. Interest generally must be paid on any purchase where a mortgage registered and the sale agreement provides for the same. On the possession date of your new home, your lawyer will have the “cash to mortgage” but he/she will not yet have the mortgage funds. The mortgage funds cannot be requisitioned until the title has registered in your name. As a result, most real estate agreements require the purchaser to pay the lender interest for the short time period when the seller does not have the sale proceeds in their entirety. Therefore, you pay interest on the amount they are owed during the first few days that you have possession. This does not result in double payment of interest, as interest does not accrue on your mortgage until it is registered.
  • You then meet with the lawyer to sign all requisite documents and provide the cash to mortgage to the lawyer. You will have to bring identification, a certified cheque/bank draft for the cash to mortgage, and banking information for property taxes and mortgage payments and proof of insurance.  The lawyer handles registering you for monthly tax installment payments to come directly from your account, interest free, if the municipality you are purchasing in offers such a program.  However, there are certain instances where property taxes must be paid to the mortgage company, who then pays the taxes on your behalf.
  • The lawyer then transmits the cash to mortgage to the seller’s lawyer. Once the cash to mortgage is received by the seller’s lawyer, you are generally good to go for possession day.
  • The lawyer then registers the transfer of title. Once title issues in your name, the lawyer requests the mortgage funds, which are then provided to the seller’s lawyer. This largely completes the transaction.

As you can see, it takes some time to ensure all the pieces are in place before you can take possession of your new home.  It is important to give yourself adequate time prior to possession day to ensure these things are complete, or else you risk possession day being pushed back or losing your deposit for failing to complete the transaction as agreed

For further information, please contact:

Curtis P. Clavelle
Direct: 306-933-1341
Email: c.clavelle@rslaw.com

Witnessing of Legal Documents

If you have ever been involved with a legal matter such as a transaction involving real property, the granting of a power of attorney, or execution of a Will, you may be aware that certain legal documents require the personal attendance of a lawyer to witness its execution. The COVID-19 pandemic presents obvious challenges for lawyers and clients to comply with the legal requirement to have a lawyer physically meet with his/her client to witness the signing of a document.

On March 26, 2020, the Government of Saskatchewan enacted emergency regulations to enable lawyers to execute and witness certain documents by video conferencing (through applications such as Skype, Facetime, or Zoom, for example) to allow lawyers to assist clients while maintaining social distancing so as not to put clients, staff or lawyers at risk. These emergency regulations apply to real estate transaction documents that must be filed with the Land Titles Registry, Powers of Attorney, and affidavits and other sworn documents. While certain strict procedural steps must be followed,  our lawyers are committed and remain available to help you in getting important documents signed and witnessed to ensure they will be legally valid in accordance with the emergency provisions that have been put in force by the government.

These emergency regulations do not apply to the signing of Wills and Health Care Directives. The Government of Saskatchewan enacted additional regulations on April 16, 2020 that address the virtual witnessing of Wills. However, these regulations impose additional procedural steps that must be carefully followed. Please contact us for further information and advice respecting getting properly executed estate planning documents in place. Our office is committed to finding practical solutions to ensuring Wills and other estate planning documents can be witnessed in a safe manner. To this end, Robertson Stromberg has commenced several initiatives relating to workplace hygiene, monitoring lawyers’ and employees’ health, and following all Health Canada, CDC, and SaskHealth recommendations to maintain the safety of its clients who are required to meet with our lawyers.

For more information, please contact:

 

Jon M. Ponath

306.933.1365

Email: j.ponath@rslaw.com

Area of Expertise Residential Real Estate