Recommended link: www.firstcanadiantitle.com
You may or may not have heard of title insurance. This type of insurance will protect you and your mortgage company from title related deficiencies associated with the property you are purchasing. Title insurance eliminates the need for an up-to-date survey of the property that you would like to purchase.
Most banks require an up-to-date survey to ensure that the buildings on the property are situated within the property lines and are in accordance with the municipal and zoning bylaws.
Ms. Maidenberg is a member of First Canadian Title's Home Closing
Service Program.
When purchasing a property, a lawyer is required to make inquiries of the local municipal office to ensure that there are no outstanding work orders that have been registered against the property. These work orders can form a lien against the property for work performed by the municipality on the property because the property owner did not ensure the municipal standard was met. These items can include, but are not limited to, grass cutting, snowplowing, weed and pest control.
The local building department also keeps a record of any and all building permits issued for each property in its jurisdiction. That quaint porch the owner just built may not have been constructed with a valid building permit or perhaps it was not inspected to ensure that it complied with the building requirements of the municipality. This is just one example of why it is necessary to perform this type of search. Other examples of improvements that require compliance with building/zoning bylaws can also include, but are not limited to, additions, decks, stairs, hedges, trees, pools and patios.
Be aware of these types of common inducements/improvements and ask questions relating to the construction and inspection of these items when viewing potential properties. Your mortgage company will require that this information is obtained prior to closing to protect your and their interest in the property.
A search of the local municipality's records will reveal if the Vendor has kept his/her tax and water account payments up-to-date. Unpaid water bills can be added to the tax bill of the property and we must request that these items be paid paid by the Vendor prior to closing.
You may have read in the paper that many rural areas are installing municipal water and sanitary sewers. This cost is split between the properties serviced and added to the tax account for each property receiving this new service. Also if the municipality is contemplating any local improvements to the property
that you are considering purchasing, then this information will be revealed when we make our inquiries on your behalf. We can then advise you of these additional potential costs. This is also the type of inquiry that you may ask your realtor about when you are looking at properties.
Many new subdivisions are advertising that some of the more desirable locations may be backing onto a conservation area. We will make inquiries with the local conservation authority to see what, if any, restrictions may be placed on your new backyard. We will also enquire if there are plans for walking trails or recreation areas proposed for the area.
Wells and Septic Systems/Water Potability
If the property you are buying has an existing septic system or well, we will contact the local health authority to inquire if there is any record of water potability problems in the area or with your specific property. Your realtor can assist you with obtaining a series of water samples, over several weeks, for submission to the local health department for testing for e-coli and other harmful bacteria. The results of this type of test can be incorporated as a condition to be satisfied in your Agreement of Purchase and Sale.
Land Transfer Tax is payable by the Purchaser of used residential property. This will be your most costly "hidden fee".
Land Transfer Tax is calculated based on the cost of the property as follows:
|
Purchase Price |
Formula |
Example |
| Ist tier |
Purchase Price of $0.00 - $55,000.00 |
Purchase Price x 0.005 = Land Transfer Tax |
$45,000.00 multiplied by 0.005 = LTT payable of
$225.00 |
| 2nd tier |
$55,001.00 - $250,000.00 |
Purchase Price x 0.010 - $275.00 = Land Transfer Tax |
$100,000.00 multiplied by 0.010 subtract $275.00 = LTT payable of
$725.00 |
| 3rd tier |
$250,001.00 - $399,999.00 |
Purchase Price x 0.015 - $1,525.00 = Land Transfer Tax |
$275,000.00 multiplied by 0.015 subtract $1,525.00 = LTT payable of
$2,600.00 |
| 4th tier |
$400,000.00 and up |
Purchase Price x 0.020 - $3,525.00 = Land Transfer Tax |
$450,000.00 multiplied by 0.20 subtract $3,525.00 = LTT payable of
$5,475.00 |
There are some exemptions from payment of Land Transfer Tax and we will advise you if you are eligible during your initial consultation.
It is less expensive to perform a title search of a whole lot of a plan
of subdivision than if you purchase a part lot. If you purchase a part lot, we will be required to perform a search of the adjacent part lots to ensure that the Vendor does not own these adjacent properties. This is required by the Planning Act. If the Vendor does own an adjacent property, then he will have to apply for and obtain a severance from the local municipality. This can take time to receive approval and could potentially delay your closing.
This search has a cost of $11.00 per name, your name and the vendor's, to ensure that a creditor has not registered an unpaid debt with the sheriff's office. This search is completed with the initial title search and is also required to be performed on the day of closing. This will eliminate any hidden surprises before the requisition date has passed. Any debt registered against either your name or the vendor must be satisfied before the property can be transferred or the debt will take priority on title to the property. The bank will not allow any debt to take priority over their mortgage.
Canada Mortgage and Housing Corporation (CMHC) Mortgages and Mortgages in general
When you are discussing your financing with your mortgage specialist, ensure that you calculate the legal fees outlined herein, as well as any fees charged by the bank. A CMHC mortgage is guaranteed by the Canadian Mortgage and Housing Corporation and is preferred by most banks. There is a fee for this type of mortgage
that is deducted from the mortgage amount for which you are approved, plus applicable taxes (PST), as well as the home appraisal and application fees. Speak to your mortgage specialist regarding these fees and budget for your closing costs accordingly.
You might also want to speak to your mortgage specialist about the different types of mortgages and interest rates available.
You must arrange and obtain a policy of fire insurance with loss payable to the mortgage company for the full insurable value of the property before closing.
When buying a new home there are several special considerations.
If you are a first time/new home buyer, then your transaction will be exempt from payment of Land Transfer Tax. We can advise you if you qualify for this exemption.
GST is payable on the purchase price of a new home and it is important to remember to factor this cost in. When reviewing the Agreement of Purchase and Sale for the purchase of a new home, it can be particularly important to note if GST is "included in" the price or if you must pay this "in addition to".
GST is also payable on any extras that you decide to order from the builder for your new home. Make sure that you add these costs and the GST payable when calculating your closing funds needed.
We will ensure that your property has been registered with the ONWHP program. When you perform your final inspection of the property, it is particularly important to note, in writing, any work that still needs to be completed. A verbal agreement/assurance with the builder could leave you with unfinished work that will not be covered by the program. Also the builder will be moving on to other projects and your home may not be a priority as your closing has already been completed.
Prior to closing of a new home, we will obtain an Occupancy Permit after the final inspection of the property is performed by the local municipality's building inspector. This will ensure that all safety aspects of the construction have been completed and your new home is fit for occupancy. The purchase of your property cannot be completed until the Occupancy Permit has been obtained.
One final consideration when buying a new home is that it may be the case that your new home is not completed in time for closing. You should ensure that you have made flexible arrangements for temporary housing should your closing be delayed.
Certain restrictions on a property's use are generally registered on homes in subdivisions, but can be found on any property. They can affect new and used properties. Our search of title will reveal any restrictions that you will have to comply with once you are the owner of your new property. These can include restrictions on the placement or installation of items such as: satellite dishes, clotheslines, trees, fences, shrubs, gardens and sheds. Most often you will see agreements registered on title which deal with subjects such as the future development/construction, drainage and landscaping requirements. These agreements are generally globally
registered against each property in the subdivision and are designed to protect the property owners.
It is useful to know if one of these types of documents has been registered against the property you are planning to buy as they usually detail what part of the property is affected and therefore you will be able to plan the placement of your new garden, pool, trees, hedges, etc., on your new property with confidence. These types of documents are commonly registered on title and will be revealed when we conduct the title search to your property.
