5 Common Questions
from Home Buyers
By the time buyers arrive at their real estate lawyer’s office, they often feel overloaded with advice about home buying. Unfortunately, not all of that advice comes from their real estate agent and mortgage specialist. Every well-meaning person who has ever purchased a home seems to have something to offer. Some of that advice can be really helpful, some of it will not apply at all to the situation at hand, and it can be difficult to tell the difference. The following are some common questions that both first-time and experienced home buyers ask.
1. How do I get from finding a home to moving in, and how do I know that I won’t forget to do something important?
Your lawyer can help you with the details.
Once buyers have an accepted offer, a whole sequence of events starts to unfold. Initially, the buyers or the buyers' real estate agent will deliver a copy of the offer to the buyers' mortgage specialist. Even if the buyers have been pre-approved, the mortgage company still needs to complete the approval process with respect to the property itself. While that is underway, the buyers are kept busy delivering documentation for the mortgage application, signing the mortgage application, and attending any housing arranged inspections. The buyers will remove conditions on the deal once confident in proceeding with the purchase. This is when the real estate agent will typically engage a lawyer on the buyers' behalf.
The lawyer will receive instructions from the mortgage company and will schedule an appointment with the buyers at some point between when the buyers remove conditions and the possession date. At that appointment, the buyers sign all purchase documents, sign mortgage papers, and their lawyer will add up the financial obligations for closing the deal. This is when the buyers will typically pay the rest of the down payment and closing costs, although it is always possible for something to arise later in the transaction as well. Ideally, this meeting will take place between ten days and two weeks before the possession date. Afterwards, the buyers finalize the home insurance, if not already complete, set up utilities, and make arrangements with the real estate agent to obtain keys to the property on the possession date.
This is quite a process and buyers do not need to begin their real estate transaction with all the knowledge of what to do and when to do it. They can help themselves along the way by hiring professionals who conduct real estate transactions everyday and are prepared to walk them through the transaction. This includes their real estate agent, mortgage specialist, insurance agent, and real estate lawyer. They are most likely to have a happy result when they assemble a team of professionals who are good at what they do.
2. When and how do I hire a lawyer?
Usually, your Real Estate Agent will walk you through it.
In most instances, the real estate agent is going to take care of that initial contact. Once an offer is accepted, the real estate agent will want to know who the buyers intend to hire and if the buyers do not have a specific lawyer in mind, the real estate agent is a great person to ask for a referral. He or she will provide that name to the sellers' real estate agent as it is the sellers' real estate brokerage who sends instructions to both lawyers involved in the deal; this will take place very soon after conditions are removed. The lawyer then receives all the key pieces of information such as the address of the property, names of the parties, possession date, and purchase price and that enables her to take care of preliminary matters and start working on the deal.
Sometimes, a lawyer will be involved earlier.
There are two circumstances when real estate lawyers are typically involved at an earlier stage. The first is in private transactions, when there is no real estate agent involved. This can be an intimidating circumstance when, without a real estate agent working on the details, buyers quickly become aware of the gaps in their own knowledge and contact their real estate lawyer to help fill in those gaps. The second is when the property being purchased is a condominium. This is because part of buying a condominium involves becoming familiar with the business side of the condominium corporation by reviewing a package of information put together by the condominium board or property manager. It contains a lot of detail and buyers often find it helpful to review, at least parts of it, with a real estate lawyer.
3. How is my legal bill calculated?
You will find purchase expenses tied to your legal bill.
Real estate lawyers track expenses incurred and include those in buyers’ legal bills. In Saskatchewan, the biggest of these will be the fees charged by the land titles registry for having new title(s) issued in the buyers’ names. These particular fees vary based on the purchase price of the property. There will also be registration fees charged by the land titles registry for each interest going on the title (such as the mortgage). Real estate lawyers collect funds from buyers to pay those registration charges as well as legal fees for the services provided. While most real estate lawyers charge fees as a flat rate, as opposed to calculating fees on an hourly basis, the amount can vary based on the complexity of the transaction, the risk involved, and the time dedicated to the file. Both GST and PST are payable on legal fees.
4. What costs should I prepare for, other than my legal bill?
A variety of additional purchasing costs can come as a surprise.
For a premium typically around $200, Title Insurance is often purchased to facilitate real estate transactions.
PST on Mortgage Insurance Premiums
While mortgage insurance premiums (CMHC or Genworth) are almost always included in the total mortgage amount, meaning that buyers need not save additional money to pay the premium itself, the PST on that premium is a separate cost that real estate lawyers will include when calculating closing costs.
Most home buyers expect property tax adjustments and they are certainly expenses to be aware of. However, these adjustments are the most commonly misunderstood and best explained in person during the buyers' meeting with their lawyer. This is largely due to how various factors complicate the adjustment. Taxes in the City of Regina must be paid by June 30 unless the owner is enrolled in the City’s monthly payment plan. Depending on when the possession date falls in the calendar year, buyers should be prepared with enough money to pay the taxes from the possession date to the end of the year. This can sometimes be necessary even when buyers elect to pay taxes with their mortgage or through the City of Regina's Tax Installment Payment Plan Service (TIPPS). If buyers decide to enroll in TIPPS and the sellers are also paying taxes on the same monthly payment plan, the up-front tax payment could be smaller.
Water Heater Rent Adjustments
It will often surprise newcomers to the City; but, water heaters are commonly rented in Regina. The annual rent is low enough that homeowners often find renting to be a cost-efficient alternative to purchasing a water heater outright.
Other costs can include those to compensate the mortgage company for any expenditures they have made in approving the deal and fees charged by any service providers engaged by the mortgage company or lawyer that help to facilitate the deal.
5. should I get my boyfriend/girlfriend to sign something if they move in with me?
Talk to a lawyer if you are concerned about protecting your investment.
Today's home buyers do not necessarily follow the same sequence of events that earlier generations did when it came to milestones in adult life. A traditional sequence of adult life events might have started with getting a job and moved towards getting married, buying a house, and so on. The idea being that couples met when they were very young and built their assets together. As we know, couples now often meet much later in life and one or both may begin to build assets on their own.
If someone buys a home while they are single and later gets married or lives common-law, then their spouse may acquire rights in their property. This is also the case when only one person in a couple buys a home, whether by choice or necessity. For some couples starting a new relationship or living in an established one, that might seem perfectly acceptable. For other couples, that prospect might seem unfair. Those couples should consider consulting a lawyer to deal with those rights in such a way that everyone is happy.