BUYING YOUR HOME:
THE STEPS FOLLOWING THE AGREEMENT

Introduction
Our brochure entitled "Buying Your Home - The First Steps to an Agreement" discusses some of the major steps and decisions made by you in consultation with your real estate agent and/or lawyer leading up to the final execution of an Agreement of Purchase and Sale. The information provide here in this brochure discusses some of the major steps and decisions made by you and your lawyer from the time at which the Agreement of Purchase and Sale is signed to the time at which the transaction will close.

It is important to ensure that either you or your agent delivers a copy of the signed Agreement of Purchase and Sale to your lawyer as soon as possible in order that your lawyer may have sufficient time to conduct all relevant searches and inquiries.

How to Take Title
Whose name will be on the title? If you are married or have a common-law spouse, you may own your home in one name alone or in the name of both spouses, jointly. We often recommend that couples own their home as joint tenants; this makes them equal owners and the survivor automatically becomes the sole owner. Substantial cost savings are available on death for joint tenants if one owner dies. Nevertheless, business or other reasons may require the home to be owned by one spouse alone. Please discuss these with us.

Surveys and Title Insurance
A survey shows the location of the home and any other buildings or structures and the boundaries of the property. Encroachments of the house you are buying onto other properties, or of other buildings onto your proposed property, are revealed by the survey. Zoning bylaw requirements can be checked and fixed before closing. The law says "BUYER BEWARE!". If there is no survey you take the property as is and accept the encroachments or other defects the survey could have revealed.

Banks and Trust Companies providing mortgages usually require an up to date survey or title insurance. Title insurance is often used as a substitute for a survey. The insurance covers defects that may not be discovered because there is no survey. It is not a complete substitute for a survey, but can be less expensive. It may also protect against any defects in title. Sometimes these are not discovered before closing; sometimes they are discovered but are minor and title insurance is a method of dealing with them. Title insurance costs $200-$300.

Hydro, Gas and Telephone
The lawyer for each of the Buyer (the "Purchaser") and the Seller (the "Vendor") usually requests meter readings for the day of closing. Both the hydro and gas utilities like you to call and confirm the purchase and give your new mailing address and credit information. Also, contact Bell Canada, which will attempt to connect the new phone as close to the closing day as possible, and often can give you the new number in advance.

Insurance
Arrange fire insurance with your agent as soon as possible. It must be for at least the amount of your mortgage; consider replacement value insurance. Please advise your insurance agent we are acting for you. We will confirm the coverage and the details of it and ensure that you and the mortgagee are correctly shown.

Adjustments
The Agreement of Purchase and Sale says in the fine print that adjustments will be made for taxes, fuel oil and any other prepaid expenses. If the Vendor has paid the taxes for the whole year, he will be entitled to be reimbursed for the portion of the taxes for the part of the year that you own the house. Partial payments and arrears are adjusted accordingly. The adjustment is added to or subtracted from the purchase price. The Vendor's lawyer prepares a Statement of Adjustments setting out the adjustments and the adjusted Purchase Price.

For fuel oil it is customary for the Vendor to leave the tank as empty as possible (in the summer only!) and make no adjustment, or for the Vendor to fill the tank at closing, pay the oil agent for the fill-up, and the price of a full tank is added to the purchase price as an adjustment. This can amount to several hundred dollars!

Inspection Before Closing
The Purchaser has limited rights to inspect the house to see if it is in the same condition as it was when the Agreement of Purchase and Sale was signed. Most Vendors will cooperate and show you through the house a day or two before closing and explain to you any things peculiar to the house, such as how to change fuses, reset circuit breakers, set the water heater, etc. This is a valid excuse to ask the Vendor to take you through the house and while there you can be alert for any damage or for fixtures that have been removed. Often the Agreement of Purchase and Sale permits an inspection which the real estate agent will arrange. Advise us of any significant defects you discover so we can advise you and assist you if possible.

Mortgages
The loan that the Bank or Trust Company gives you to purchase the house is called a mortgage or charge. The lender is called the "mortgagee" and you are the "mortgagor". (Sometimes "chargor" and "chargee"). It is a security to ensure that the mortgagee gets paid, and gives the mortgagee substantial rights and control over the property. You must make the necessary financial arrangements directly with your Bank or Trust Company, which will then provide your lawyer with all necessary instructions for closing the transaction.

Closing and Legal Fees
Closing and legal fees will depend on the purchase price and the complexity of the purchase. Typical costs are (in approximate): legal fees for professional services ($600 to $750 – please contact us for a quote); title search ($200); tax certificate ($35); execution certificates ($100) utilities confirmation ($30); building/zoning compliance ($50); miscellaneous supplies and closing fees ($100); registrations ($60 to $120); and Law Society levy ($50). In addition, you must pay Land Transfer Tax on every purchase, which is 1/2% on the first $55,000 of the purchase price ($275) plus 1% on the balance. Please note that, the purchase of title insurance will eliminate the necessity for a number of the above costs.

A certified cheque or bank draft for the adjusted purchase price and closing costs should be delivered to our office at least one day before the closing.

Tenants
Tenants are protected by The Tenant Protection Act. If the home you are buying is rented, discuss with us what happens if the tenant does not move. If you are a tenant and will be moving out, you must give your landlord the proper notice or you may be liable for rent for the proper period of notice. If you have a lease, check it or bring it to us to review the cancellation provisions. Further information can be obtained from the Ontario Rental Housing Tribunal at http://www.orht.gov.on.ca.

Goods and Services Tax
Used homes, and some vacant properties,are not subject to GST. However legal fees, survey costs and some expenses are taxable. Please discuss with us.

Closing and Possession
We will arrange to meet with you a day or two before closing in order to review and sign all of the necessary documents for the purchase and the mortgage. On the actual closing day, the legal documents, money and keys will be exchanged between us and the Vendor's lawyer.

The law as to when the buyer can move into the new home on the closing date is most unsatisfactory. Often the parties discuss this between themselves and arrange for moving at convenient times. We try to arrange for the closing to take place and the keys available to you as early in the day as possible. This is not always possible. Please leave a telephone number with us so we can contact you on closing day if difficulties arise.

For more information on buying your home, please see our brochure for The First Steps to an Agreement.

Revision Date: November 9, 2001

Your choice of legal counsel is a critical and personal decision. The firm you select should be committed to your business and personal needs.

Since 1922, Pavey, Law has been providing its clients - large and small - with quality legal advice and services. Our purpose as a firm is twofold - to assist our business clients in the successful performance of their business, and to provide our individual clients with peace of mind through sound, understandable advice and advocacy.

We are a results-oriented firm. Our business clients receive our superior legal counsel that is practical, and guided as much by the potential impact on their businesses as by the law.

Equally, our individual clients are treated with respect and receive clear legal advice geared to resolve issues and find solutions.

For all of our clients, Pavey, Law is committed to delivering superior representation in a prompt, efficient and cost effective manner.

NOTE: This brochure provides general information and is not intended to be a legal opinion. Readers are cautioned not to rely on this information without obtaining legal advice with respect to their own circumstances.