The first step in any real estate deal is to list your home for sale or find one you want to buy. The next step is to enter negotiations over price and date of closing. This agreement must be writing. If you use a realtor, you will likely sign a standard form agreement which allocates responsibilities between the buyer and seller and sets the price, the deposit, what is included in the agreement, the closing date and the buyer’s conditions.
Often the buyer will put in an offer subject to the conditions such as being able to obtain the necessary financing and a property inspection. If it is a condominium then one generally has the condominium documents reviewed as a condition. The agreement typically gives the buyer a number of days in which to either satisfy all of their conditions. Only if the buyer’s conditions are satisfied (or waived) is the agreement a “firm deal”. A deposit is typically payable by the buyer as soon the buyer and seller have both signed the agreement. If the buyer’s conditions are not satisfied, or waived, the buyer’s deposit is returned. Good faith and reasonableness govern this part of the purchase and sale relationship. This part of the process is generally handled by a realtor.
Once you have a firm deal (all conditions are waived), then that is when your lawyer usually gets involved. The role of the lawyer is to take the firm contract and make sure it gets fulfilled and to give an opinion on the title. In particular, the title gets conveyed from the seller to the buyer. Also, if acting for a buyer and if there is to be a mortgage put in place for a portion of the purchase price, then the lawyer will also prepare mortgage documents on behalf of a bank. The bank sends its instructions to the buyer’s lawyer and asks him or her to prepare the documents, and register the mortgage with the Land Titles Office for the bank.
It is the responsibility of the buyer to arrange the funds needed to purchase the house. It is possible to pre-qualify with your bank, but once you have a firm agreement the buyer must come up with the rest of the purchase price (less the deposit already paid). For most people, that means going to your bank and getting a mortgage.
A mortgage is an agreement with your lender to give you the money you need to buy your house and to pay it back over time with interest. The mortgage documents are usually signed at your lawyer’s office.
Within a week or two before the closing date, the seller or buyer meets with his or her lawyer to sign the necessary documents for the closing. If buying, then the balance of any money which is required for the purchase price over and above what the mortgage provides is brought to the lawyer at that time.
The last step is the closing. The closing date is the day which the money to buy the house is delivered and the seller gives possession of the home to the buyer. Once the money is delivered, keys are releasable. The transfer of keys is generally done by the realtors after confirming with the lawyers that everything is in place. This transfer is most often scheduled to take place at noon on the closing date.
As soon as possible before the closing, the buyer will do a walk-through of the property. The property must be in the same condition as when the buyer waived the conditions, subject to reasonable wear and tear. The general rule in Calgary is that there are “no hold backs” to accommodate for deficiencies discovered during the walk-through. This means that if there are any problems discovered during the walk-through, then the buyer cannot unilaterally hold back any portion of the purchase price. If there is a problem and the seller agrees that it arose after the conditions had been waived and the deal had become firm, the seller will sometimes agree to a reasonable hold back. If the seller refuses to do this, the buyer may have to sue the seller. Nobody wants a lawsuit so the parties are generally reasonable on closing.
Another area of concern on closing is the Real Property Report (“RPR”), also known as the survey. If a person is selling a house or some types of condos then he or she must supply an up-to-date RPR 10 days, complete with a City of Calgary stamp of compliance, before closing. The RPR must show the current state of the exterior structures.
Sometimes the seller cannot supply the RPR on time because the surveyor could not get it done on time. The City of Calgary stamp of compliance means that all the structures comply with City bylaws, and the property is free of encroachments.
If there is no current RPR, there is no City of Calgary stamp of compliance or there is some deficiency noted on the RPR, then the buyer cannot be compelled to complete the transaction. This usually means that the closing is delayed or there is a hold back of money by the buyer’s lawyer. The amount of the holdback is agreed upon between the lawyers.
RPR problems are common. Anyone selling their home should ensure there is an up-to-date, compliant RPR in place early in the process, and, if there is an issue, to deal with it well in advance of the closing date to avoid closing delays or holdbacks.
Once the seller has released keys to the buyer and the buyer has taken possession of the home it is the job of the lawyer representing the buyer to ensure that the Land Transfer documents and the buyer’s mortgage are all registered with the Land Titles Office, and to provide the buyer with his or her Land Title Certificate. It can often take up to a month after the closing date for a new Land Title Certificate to be delivered, depending on how busy the Land Titles office is at the time of registration.