Buyers

The Office of the Superintendent of Financial Institutions known as OSFI (the watchdog for mortgages in Canada) has set new Stress Test for all mortgages, Uninsured and Insured.  This rule started from January 1, 2018 on all mortgages. 

The mortgage limits before 31 December 2017

Uninsured Mortgages currently require a down payment of 20% or more, which means you are entitled to a mortgage approximately 7 times your income. So if you earn $100,000 income, you can qualify for a $700,000 mortgage. These mortgages do not require default insurance.

Insured Mortgages currently represents those mortgages where the down payment is less than 20%, which means you are entitled to a mortgage approximately 5 times your income. So if you earn $100,000 income, you can qualify for a $500,000 mortgage. These mortgages require default insurance from an insurer such as CMHC, Genworth or Canada Guaranty.

The mortgage rules from 1 January 2018 

All Mortgages Uninsured and Insured will have a limit starting January 1, 2018 which will be approximately 5 times your income, regardless of the mortgage being Insured or Uninsured.  So if you earn $100,000 income, you can qualify for a $500,000 mortgage regardless of how much down payment you put.

Paying insurance on your mortgage means that you protect it against default, which means you will pay more to carry the cost of the mortgage.  This insurance can be paid as a one-time premium on closing of your purchase or rolled into the principal amount of your mortgage. 

Homes come in every size, style and price range.  Knowing what you can afford at the beginning of your search will save you and your Agent time and disappointment when looking for the perfect home.

Unless you have a lot of money sitting in a bank account, you are likely to need a mortgage.  The first step is to contact your Bank or a Mortgage Broker to discuss how much down-payment you have to use which will determine what Mortgage rate you are eligible for.

To qualify for a mortgage, you will have to prove to your lender that you can afford the amount you are asking for.  Mortgage lenders or brokers will use your financial information to calculate your total monthly housing costs and total debt load to determine what you can afford.  

Lenders will consider information such as:

– your income (before taxes) 

– your expenses (including utilities and living costs)

– the amount you are borrowing

– your debts

– your credit report and score

– the amortization period e.g. 25 or 30 years

Total monthly housing costs “Gross Debt Service (GDS)”

Your total monthly housing costs should not be more than 32% of your gross household income.  This percentage is also known as the Gross Debt Service (GDS) ratio.  These housing-related costs include: mortgage payments, property taxes, heating, 50% of condo fees (if applicable).

Total Debt Load (TDS)

Your total debt load should not be more than 40% of your gross income.   

This includes your total monthly housing costs plus all of your other debts.  This percentage is also known as the Total Debt Service Ratio (TDS).  Other debts may include the following: credit card payments, car payments, lines of credit, student loans, child or spousal support payments, any other debts.

Qualifying interest rates for mortgages

Credit unions and other lenders that are not federally regulated may choose to use this mortgage stress test.  They are not required to do so.  The qualifying interest rate your bank will use for the stress test depends on whether or not you need to get mortgage loan insurance. 

It is crucial that you speak to someone about a Mortgage as soon as you can so that we can start the process of finding the right property within your budget.  Remember that Banks are only allowed to sell you their financial products and services, and the rates may not be as favourable as other Lenders.

If you would like to speak to an independent (not tied to any one financial organisation), I can put you in contact with a number of Brokers who can ‘shop around’ to get you the best rates and options for you.  Remember that Banks only work Monday – Friday 9-5pm, unlike most Brokers I know who work 24/7 just like Realtors!  So if you need an answer fast on a property because we want to put in an offer before the offer night, who is going to get you the answer faster – the Bank or Broker?  In my opinion Brokers win hands down every time.

The Canada Mortgage and Housing Corporation 

https://www.cmhc-schl.gc.ca/en/ has a variety of tools and calculators that you will find useful to help plan your finances and work out your budget.

If you need mortgage loan insurance, the Bank must use the higher interest rate of either:

– the Bank of Canada’s conventional five-year mortgage rate

– the interest rate you negotiate with your lender

If you don’t need mortgage loan insurance, the bank must use the higher interest rate of either:

– the Bank of Canada’s conventional five-year mortgage rate

– the interest rate you negotiate with your lender plus 2%

For example, say you apply for a mortgage at a bank and that you have a down payment of 5% of the value of the home.  You will need to get mortgage loan insurance since your down payment is less than 20%.

An example;

– the interest rate you negotiate with your lender is 3.00%

– the Bank of Canada’s conventional five-year mortgage rate is 5.14%

You would need to qualify at the higher of the two interest rates, which is the Bank of Canada’s conventional five-year mortgage rate, even if you’ll be paying the lower interest rate in your mortgage contract.

Calculate your gross debt service and total debt service ratios

The maximum amount you calculate may actually overestimate what you can really afford.  Also think about the extra costs associated with buying a property, such as closing costs, mortgage loan insurance premiums, moving costs, unexpected expenses, maintenance costs and major home repairs.

Compare the result with the estimated costs for the home you would like to buy. If the total costs you estimate are lower than the maximum amount you calculated, you will probably qualify for a mortgage with the Lender.

Many affordability calculators are available online, try; www.canada.ca and search for the Mortgage Qualifier Tool

General Mortgage Terms

Amortization: The number of years that you take to fully pay off your mortgage (not the same as your mortgage term). Amortization periods are often 15, 20, or 25 years long.

Assuming a Mortgage: Taking over the obligations of the previous owner’s (or builder’s) mortgage when you buy a property.

Buy Down Rate: The portion of the interest rate on a buyer’s mortgage that you assume when they buy your home. If you’re selling your home and the prospective buyer doesn’t like the interest rate on their mortgage, you can offer to add a certain percentage of it onto your existing mortgage. You can add a maximum of 3%.

Closing Date: The date on which the sale of a property becomes final and the buyer takes possession of the property. 

Down Payment: The money that you pay up front for a house. Typically range from 5%-20% of the total value of the home.

Home Insurance: Insurance to cover both your home and its contents (also referred to as property insurance). This is different from mortgage life insurance, which pays the outstanding balance of your mortgage in full if you die.

Inspection: The process of having a qualified home inspector identify potential repairs to the property you are interested in and their estimated cost.

Lump Sum Payment: An extra payment that you make to reduce the amount of your mortgage principal.

Mortgage: A loan that you take out in order to buy property. The collateral is the property itself.

Mortgage Life Insurance: This form of insurance pays the outstanding balance of your mortgage in full if you die. This is different from home or property insurance, which insures your home and its contents.

Pre-Approved Mortgage Certificate: A written agreement that you will get a mortgage for a set amount of money at a set interest rate. Getting a pre-approved mortgage allows you to shop for a home without worrying how you’ll pay for it.

Offer to Purchase: A legally binding agreement between you and the person who owns the house you want to buy. It includes the price you are offering, what you expect to be included with the house, and the financial conditions of sale (your financing arrangements, the closing date, etc.).

Porting: Transferring an existing mortgage from one home to a new home when you move. This is known as a “portable” mortgage.

Pre-Payment: Repaying part of your mortgage ahead of schedule. Depending on your mortgage agreement, there may be a prepayment cost for pre-paying.

Refinancing: The process of paying out the existing mortgage for purposes of establishing a new mortgage on the same property under new terms and conditions. This is usually done when a client requires additional funds. The client may be subject to a pre-payment cost.

Renewal: Once the original term of your mortgage expires, you have the option of renewing it with the original lender or paying off all of the balance outstanding.

Term: The length of time during which you pay a specific rate on the mortgage loan (i.e., the number of years in your mortgage contract). This is different than amortization; mortgages are amortized over 20-25 years, with a shorter term (typically 6 months to 5 years). After the term expires, the interest rate is usually renegotiated with the lender.

Mortgage Types

Closed Mortgage: This type of mortgage must usually remain unchanged for whatever term you agree to. Prepayment costs will apply if you payout, renegotiate, or refinance before the end of term.

Convertible Mortgage: These offer the same security as a closed mortgage, but allows you to convert that to a longer, closed mortgage at any time – without prepayment costs. Typically associated with fixed rate mortgages.

High-Ratio Mortgage: This is the mortgage obtained when you have less than 20% of the total purchase price to put down as your downpayment. These mortgages must be insured, typically through CMHC, Genworth Financial or Canada Guaranty.

Open Mortgage: This type of mortgage may be repaid, in part or in full, at any time during the term without any prepayment costs.

Rate Types

Fixed Rate Mortgage: An interest rate that does not change during the entire mortgage term.

Variable Rate Mortgage: An interest rate that will fluctuate in accordance with the prevailing market prime rate during the mortgage term.

Mortgage Rate: The percentage interest that you pay on top of the loan principal. For example, you may take out a mortgage of $100,000 at a rate of 12%. Your monthly payments will consist of a portion of the original $100,000, plus 12% interest.

Closing Costs

These are costs that are in addition to the purchase price of a property and which are payable on the closing date, such as the following:

Appraisal: The process of determining the lending value of a property. There is usually a fee to have an appraisal done.

Interest Adjustment: The amount of interest due between the date your mortgage starts and the date the first mortgage payment is calculated from. Sometimes there is a gap between the closing date of your home purchase and the first payment date of your mortgage, so an extra payment may be required to cover this. The payment is generally due on your closing date. You can avoid all this by arranging to make your first mortgage payment exactly one payment period (e.g., one month) after your closing date.

Land Transfer Tax: Tax that is levied (in some provinces) on any property that changes hands.

Legal Fees and Disbursements: Some of the legal costs associated with the sale or purchase of a property. It’s in your best interest to engage the services of a real estate lawyer (or a notary in Quebec).

Prepaid Property Tax and Utility Adjustments: The amount you will owe if the Seller has prepaid any property taxes or utility bills. The amount to reimburse the Seller will be calculated based on the closing date, and pro-rated accordingly.

The Ontario Government in April 2017 introduced a Non-Resident Tax of 15% on the purchase of all homes by someone who is not a Permanent Resident or Canadian Citizen.  This means that if you buy a property in Ontario, you have to pay an additional 15% on top of the purchase price when you close on the property, so you will need to factor that into your budget.  On March 29, 2022, the Ontario government announced changes to the province’s non-resident speculation tax (NRST) that, effective March 30, 2022: increase the rate to 20% (from 15%) expand the tax to apply provincewide. restrict eligibility for exemptions from the tax.

The good news is that if you become a Permanent Resident or Canadian Citizen after you sign the Agreement of Purchase and Sale, and before you close on the property, you do not have to pay the 20% tax. 

• A rebate of NRST may be available for a foreign national who becomes a permanent resident of Canada. To qualify for this rebate, the foreign national must have paid the NRST and:

  • become a permanent resident of Canada within four years from the date of the purchase or acquisition,
  • hold the property alone or with their spouse (as defined above) only, and
  • occupy the property, along with their spouse, if applicable, as their principal residence for the duration of the period that begins within 60 days after the date of purchase and ends when they make an application for the rebate or the rebate conditions have been met, whichever is later.
• To see if you are eligible, click here https://www.ontario.ca/document/land-transfer-tax/non-resident-speculation-tax#section-8

Think of it as a Government savings account with no interest earned! 

Yes, there are some Federal and Provincial options available for first-time Buyers.

The Federal Government offers the Home Buyers’ Plan (HBP). This plan allows you to borrow up to $35,000 from your existing RRSP tax-free and your spouse can also borrow the same amount for a total of $70,000.  The most up to date information can be found here:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html  

To qualify for the plan, you need to have had the money in an RRSP for at least 90 days prior to purchasing your home, and you or your spouse can’t have owned or currently own a home anywhere in the world in the last 5 years.  

You also need to have a signed Agreement of Purchase and Sale to buy or build a home.

This is a great way to get tax-free funds from money that you have already saved and rather than pay back a loan with interest, you get to pay yourself back over a 15 year period.  If you fail to pay back the amount in full over the 15 years, you will be taxed on the remaining balance.

Also in the province of Ontario you can apply for the Land Transfer Tax Refund, which allows you up to $2,000 back on the Land Transfer Tax you pay on your first home purchase.  Other provinces have similar refunds available.

First Time Home Buyers

A refund/ rebate of up to $4,000 of the Provincial Land Transfer Tax for qualifying first time home buyers may be available.

To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund.  The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.

Please note the refund will be reduced if one (or more) of the purchasers is not a first time homebuyer.  The refund will be proportionate to the interest acquired by the individuals who qualify for the refund, for example if your parents or partner is on title for 1% ownership, your rebate will be reduced by 1%. 

The City of Toronto also offers a first-time purchaser rebate on qualifying newly constructed & resale residential properties.            It does not apply to commercial, industrial or multi-residential properties.  A rebate of up to $4,475 is available.  Eligibility for the first-time homebuyers refund program is restricted to Canadian Citizens and Permanent Residents of Canada.  

These provincial and municipal rules may be different from other federal programs for first-time homebuyers (ie. the Canada Revenue Agency Home Buyers’ Plan). https://www.fin.gov.on.ca/en/bulletins/ltt/1_2008.html

Home Buyer’s Tax Credit (Federal)

The Home Buyers’ Tax Credit is a non-refundable credit that allows first-time purchasers of homes, and purchasers with disabilities, to claim a tax refund of up to $750 in the year when they purchase a home.

In order to be eligible for the HBTC, you must meet two criteria:

1. You or your spouse or common-law partner purchased a qualifying home.

2. You are a first time home buyer, which means that you did not live in another home owned by you or your spouse or common-law partner in the year of acquisition or in any of the four preceding years.  As an example of the latter, if you acquired a home in 2018, you must not have owned a home since 2013.

Additionally, persons with disabilities are eligible for the HBTC, even if they are not first time home buyers.  A person with a disability is defined as someone eligible for the disability tax credit.  To be eligible, the disabled person must purchase the home for the purpose of living in a home that is more accessible or better suited to their needs.

If you have family members who are disabled, you may purchase a home for them and claim the credit yourself.  The home must be one that is better suited to the condition of that person.  For you to claim the credit, the disabled person must be a relative, defined by the Canada Revenue Agency as an individual connected by blood relationship, marriage, common-law partnership, or adoption.

Which Homes Qualify for the HBTC?

A qualifying home is almost any type of home as long as it is located in Canada and registered in your or your spouse or common-law partner’s name.  This includes existing homes and homes under construction.  According to the CRA, the following are considered to be qualifying homes;

• Single-family houses
• Semi-detached houses & Townhouses
• Mobile homes Condominium units
• Apartments in duplexes, triplexes, fourplexes, or apartment buildings

For more information on the Ontario Land Transfer tax and rebate qualifications: www.fin.gov.on.ca/en/tax/ltt

For more information on the City of Toronto Municipal Land Transfer Tax and rebates, please visit: www.toronto.ca/municipal-land-transfer-tax-mltt 

Please remember this is for informational purposes only and I recommend you speak with a tax professional ie. your Lawyer or Banker.

This is a tax that the Ontario Government charge all Buyers for the privilege of buying a property!   Unfortunately yes you do have to pay LTT as a Buyer (not as a Seller), and the amount will depend on what the purchase price is of your home.  

To claim a refund, you must be at least 18 years of age, you cannot have owned a home or an interest in a home anywhere in the world, and your spouse cannot have owned a home or interest in a home, anywhere in the world while he or she was your spouse. Previous ownership in a home means you do not qualify for the land transfer tax first-time homebuyers refund. The method of acquiring the home (e.g., purchase, gift or through an inheritance) is not relevant.  More details on this link.

https://www.ontario.ca/document/land-transfer-tax/land-transfer-tax-refunds-first-time-homebuyers

Use this tool to help calculate your LTT, however your real estate Lawyer will be able to confirm the final amount before you close on your new home. https://www.realtor.ca/calculator#v=landtransfertax

What about HST?

Generally speaking, HST does not apply on the purchase price of re-sale homes.

HST does however apply to services such as moving cost, legal fees, home inspection fees, and REALTOR® commissions.

HST does apply to the purchase price of newly constructed homes.

Rebates 

The GST/HST new housing rebate allows an individual to recover some of the goods and services tax (GST) or the federal part of the harmonized sales tax (HST) paid for a new or substantially renovated house that is for use as the individual’s, or their relation’s, primary place of residence, when all of the other conditions are met.  Additionally, other provincial new housing rebates may be available for the provincial part of the HST whether the GST/HST new housing rebate for the federal part of the HST is available or not.

In certain circumstances, a transitional new housing rebate may be available in addition to any GST/HST new housing rebate and provincial new housing rebate for which you may be eligible, even if the house is not your primary place of residence.

Please note: In many “pre-construction” agreements, the Buyer assigns the rebates to the vendor (builder).  Therefore you may not receive a rebate as cash in hand.  It is important to have your lawyer review new construction agreements within the cooling off period and also consult with your accountant.  Both may be able to provide clarification specific to your situation.

For additional information, please visit: www.canada.ca/en/revenue-agency and www.ontario.ca/finance

What is a condo?

It is a valid question, and if you are considering condo ownership, you should know what you are getting into.  A Condominium is creature of statute created under the Condominium Act of Ontario as, amongst other things, a means of consumer protection through the imposition of certain time and disclosure requirements on their purchase and sale.  A Condominium is not necessarily just a high-rise apartment, they can also be Townhouses, semi-detached and detached units.  Condos can be industrial, commercial or residential.  Condos also come int he form of common-element condominiums (where a number of homeowners share a amenities), phased condominium corporations, vacant-land and leasehold condominiums.

How does it get there?

The Developer takes land and plans through many stages, including negotiating agreements with governmental authorities and utilities, and for residential condos, Tarion enrollment.  Only then will the Developer receive the necessary approvals to start construction.  At the same time, the Developer prepares with his Lawyer the Declaration, Description and Disclosure statements.  Once the facility is constructed and passes inspection by the Municipality, purchasers may be given occupancy or possession, but title has to wait. After all the paperwork has been approved, the Ministry of Housing inspects and approves the project for release.  The Developer then registers the appropriate documents and advises purchasers it is time for the final closing, at which point the purchaser gets the deed.

What do I own personally?

In most cases, you own the interior of your unit to halfway through the walls, floors and ceiling, and your proportionate share of the common elements – all of which is outlined in the Condominium documents you receive.

Then there is the question of a parking spot or storage locker.  If these are included in the purchase, do you own them, or do you have an exclusive-use agreement?  In order to get title to these elements it must be specified in the Agreement of Purchase and Sale.  If you get exclusive use of the parking spot or storage locker, they are owned by the Condo Corporation and used exclusively by you pursuant to your Agreement, and subject to the by-laws and rules of the Condo Corporation.

Maintenance fees – these are what you pay to the Condo Corporation on a monthly basis, to cover the costs of running the building (elevators, security staff, building insurance, amenities etc.). As a general rule, older buildings tend to have higher maintenance fees that newer ones, so it is important to ensure that the building you are buying into has maintenance fees that are affordable within your monthly budget – in addition to your Mortgage payment, property taxes and utility costs.

Why a condo?

Condos offer a different lifestyle to the consumer than Freehold home ownership, and their composition is only limited by the imagination of Builders and Developers.  There are lots of options out there, and they offer the ‘lock up and go’ type of living where everything is take care of – no snow removal, no raking leaves, no need to remember to put the rubbish bins out, it’s no hassle living.

What about a house?

Houses offer a very different lifestyle to Condos.  Houses come in all shapes and sizes and forms, and there can be great joy in having a garden, doing DIY, not having to wait for an elevator, or sharing the common space with anyone else.  However they can also be hard work and expensive, as you don’t know when the roof is going to leak, or a pipe is going to burst.

Your lifestyle, time of your life that you are buying a property, and your budget will all be factors in what kind of property you buy.

That depends entirely on you and how soon you will fall in love with your new home.  Some Buyers walk in and within 5 minutes they know that it is ‘the one’, and other Buyers need to see more to compare them.  I often find that Buyers start with a ‘wish-list’ of items they want their home to have, and this list invariably gets changed once they start to look at properties and realise what their budget will/ won’t cover and what they want to compromise on or change.

How do I decide what area of Toronto to live in?

This is better off discussed in person so that I can determine your needs, wants, wish list, must have’s, definitely not’s. 

Good schools may be important to one Buyer and good transit options may be more important to another Buyer, everyone is different.  There are many Toronto websites which blog regularly about neighbourhoods in the city and Toronto Life every year publishes a guide to the Top Neighbourhoods In The City which can be a good starting tool. 

Technically no, you don’t as you can do it yourself with the help of a real estate lawyer.  However it is highly recommended, and I don’t just say that because I am a Realtor.  I say it because buying a home can be fraught with issues, problems, headaches and things which crop up that if you are not aware of how to handle them, they can get you into hot water, especially if you are a First Time Buyer and are not used to the process.  Plus it can be easy to get carried away with the emotion of falling in love with a property and put a high offer in, when sometimes I can get the property for less than the asking price for you.  Unless you are a trained negotiator, it is easier for someone else to negotiate for you as I am not ‘emotionally attached’ to the property and can see all the pros and cons objectively.

As a licensed Realtor, I have passed 6 exams covering a wide range of real estate topics, and I have experience in helping Buyers, Sellers and Investors complete on many real estate transactions.

I will guide you through every step of your property purchase, and will point out things that you may not see or know about, and offer advice and help to ensure that you are fully informed to make the best decision about the property. I will represent you when putting in offers and negotiate on your behalf.

There are many questions I will ask you about your property purchase.  Many of them are because I want to really understand your wish list, and some of the questions will be because I am required to by law.

https://www.oreb.ca/wp-content/uploads/2017/05/Your-REALTOR®-Is-Asking-Questions-Because-Its-The-Law.pdf 

The first thing to remember is that the Seller, not the Buyer, pays the commission on the transaction, so it is in any Buyers interest to use a good Realtor, as our services to you are free!  In Toronto the standard commission is 5% paid by the Seller, of which 2.5% is offered to the Agent who brings in the successful Buyer.

As a Buyer you will have to pay some costs as part of your property purchase, and I will cover these in more detail on another page What are my closing costs as a Buyer?

When looking for a new home, it will probably not be a surprise that the list of wants can sometimes surpass the needs.  Depending on your budget and timelines however, you may need to set priorities and be flexible with some of the features you require. 

This list is designed to help you think about what really matters to you, so that you have a clearer path moving forward.

I will search for all available properties within your criteria and we will go and see them.  I will also set you up to receive alerts from MLS (www.realtor.ca) of new properties as soon as they come onto the market, so that we keep on top of what is available and make appointments as soon as we can.  Time is of the essence in Toronto!

Showings

All Buyer showings are conducted me as your Buyer Agent, as they have to be conducted by a licensed professional.  I will make appointments to see properties at times convenient to you, including evenings and weekends.  

Open Houses

Open Houses are a great way to see properties at the weekend when you have more time.  They are usually between 1-5pm on a Saturday and Sunday (specific times will vary per property), and you don’t have to go with me as your Agent, you can go along on your own.  You will probably be asked if you are working with an Agent and I can give you some business cards to give to the Open House Agent with all my details on. That way if there is any follow up needed, they have my details.

Other Services, depending on your specific search requirements 

• Assist you with securing financing (if you need it) so that you’re ready to make an offer when you find your new home
• Send flyers to residents of the neighbourhood in search of a suitable home to attract properties even before they are listed
• Door-knock homes in the neighbourhood that match your preferences in case Sellers are thinking of moving and with the possibility of providing you with the first opportunity to buy the home 
• Notify the 450+ Agents in our office that you are looking for a home in your preferred neighbourhood
• Recommending a few qualified Home Inspectors for your added peace of mind
• Preview properties to see that they meet your criteria so that you don’t waste valuable time
• Negotiate on your behalf with the Seller(s) and the Listing Agent to get the terms and price that are in your best interests
• Coordinate with your Mortgage Lender and Lawyer to help you with the closing details of the purchase
  

Offers and offer night 

We will discuss the best strategy for your home purchase to ensure the best possible price.  Holding back offers and having an offer night is a popular strategy in this market as it achieves the ‘bidding wars’ that you hear about.          However sometimes properties ask for offers anytime, and each property is different so I will discuss what the options are with you for each property.

All offers submitted by me as your Buying Agent will be presented to the Listing Agent and the Seller for their review and decision.  I will help navigate the pros and cons of what the offer means for you, and I will always conduct the sale with your best interests in mind.  My commitment is to you as my client and your satisfaction.

Closing and beyond

Congratulations!  You have bought your home for a great price.  

It is now time to think about a few other things;

• Do you need a Real Estate Lawyer to complete the transaction for you?
• Would you like a recommendation for a moving company?
• Would a moving checklist help?
• How can I help with other real-estate services to ensure a smooth closing procedure?

After the sold-sign support

I can help with post-closing information, services, advice and pizza on moving day, plus all your future real estate needs. 

You have found your dream home and now it is time to make an offer.   

As part of my role as your Agent, I will guide you through the implications of having conditions as part of your offer.  In some cases it may be that having conditions will work against your offer (the Seller may be put off if you have conditions), and in other cases, it is crucial that you do have them in.  

Every property is different, and I will explain the merits of having conditions or not depending on the situation.

The extra mile

As your Agent I am always looking for ways to ensure that your offer is accepted over another offer.  Sometimes this involves writing a letter to the Seller to see if we can tug on their heartstrings, for example if you are a young couple looking to start a family and create a family home, an older Seller may be keen to sell to you vs. another Buyer, because they want to keep the home as a family home for more generations to come.  Other times we can ‘sweeten’ the deal by being flexible on the closing date, or other conditions to give your offer the edge over another offer.

The more I can position your offer as the best one in terms of your intentions, commitment, financing and conditions, and connection to the property, the more I can hope to achieve a successful outcome for you.

I will prepare an Agreement of Purchase and Sale, including any custom clauses you might require.  Most Buyers will make an offer provided certain conditions are met.  Details to follow;

Elements of an offer

Irrevocable Date

For the offer to be valid, it must contain a number of specific dates and times. Your initial offer will be valid for a specific period of time, usually until midnight of the same day or sometime the following day, after which the offer is deemed to be dead/ null and void if it has not been accepted or signed back with a new irrevocable period.

Completion Date 

This is the date set for the transfer of ownership of the property negotiated between you and the Seller.  This may also be referred to as the Closing Day.

Requisition DateThis is the period of time in which your Lawyer must determine if there are any problems with the title of the property and is usually set approximately 14 days prior to closing.  This may also be referred to as the Title Search Date.  You will need to have chosen a Lawyer prior to this date.

Deposit

A deposit (Bank Draft or Certified Cheque) must accompany the offer (or be provided to the Listing Brokerage within 24 hours of acceptance of your offer).  The amount of the deposit will vary depending upon the value of the property, 

it is usually approximately 5% of the purchase price.

Fixtures

Are any items permanently attached to the property?  For example, a bathtub, sink or toilet permanently plumbed in would be a fixture.  Technically, anything nailed to the building is a fixture while items screwed on (because screws can be removed) are chattels.  This is often an area of contention when buying a resale home.  So be aware of this distinction and if in doubt, put it in the offer. 

Chattels

Unlike fixtures, chattels are not deemed to be part of the property and must be specified in the offer if you want them included in the sale.  The following are some items you may wish to include in the offer: ceiling fans, chandeliers or other light fixtures, window coverings and other accessories, refrigerators, freezers, stoves, ovens, washers and dryers, central vac and equipment, sheds, barbeques and other garden equipment.

Furnaces, Air Conditioners and Hot Water Tanks (if owned, not rented) are also chattels.

I always use this visual reference when explaining the difference between a Fixture and a Chattel – if you picked up the property and turned it upside down and shook it, a Fixture would stay fixed to the property and a Chattel would fall out (as a general rule).

Negotiating an offer

After signing the offer, I will register the offer with the Listing Brokerage. 

A time will be set for the Listing Agent and myself to meet and present the offer to the Seller, or sometimes the offer is sent by email to the Listing Agent.  

The Seller has a number of options available: 

• Reject the offer
• Accept the offer exactly as presented making no changes
• Making a counter offer back to you with any changes the seller feels necessary e.g. price, closing date or conditions.

You then have option of accepting the counter offer, declining the offer, or making your own changes and signing the newly amended offer back to the Seller.  This is where my negotiation skills will come into play.

Multiple Offers

If a situation arises when your offer to purchase a home is one of multiple offers, following these steps can greatly increase the chances of having your offer accepted;

• Submit your best price
• Eliminate the conditions ~ arrange a pre-home and termite inspection and pre-approval on your mortgage
• A bank draft or certified cheque in hand/ emailed with your offer will impress the Seller
• Give the Seller flexibility in the closing date.  Ask for their ideal closing and/or give the Seller the option to close anywhere between 30 and 180 days.
• Ask me to show you what other homes have sold for in a multiple offer situation
• Make arrangements to be close by to where the offer is being presented in case any minor changes require your initials
• If extras are not a big deal, give the Seller the option to keep any chattels (i.e. fridge, stove, washer, dryer)
• If chattels are not included in the sale do not ask for them
• A short personal note to the Seller indicating how much you care for the property and request their consideration of your offer can make the difference in the acceptance of an offer

As part of my role as your Agent, I will guide you through the implications of having conditions as part of your offer.  In some cases it may be that having conditions will work against your offer (the Seller may be put-off if you have conditions), and in other cases, it is crucial that you do have them in.

Every property is different, and I will explain the merits of having conditions or not depending on the situation.

Finance condition 

A Finance condition means that you have usually 3-5 days after an offer has been accepted, to have your Mortgage changed from Pre-Approved, to Approved and you are certain the Lender will give you the money.  Not having a Finance condition means that you take the risk of the Lender saying they won’t give you the money, or not all of it after you have signed the Agreement of Purchase and Sale. This means that if you have signed an Agreement and agreed on a price, and your Lender decides not to give all of the money to you, you will then be liable for the difference yourself out of your own pocket.

Submitting an offer with a Finance condition means that the offer is contingent upon the Financial Lender approving your mortgage for say $1.2MM.  At the moment you have a pre-approved amount of $1,200,000, however until we have an accepted offer in writing, the pre-approved amount is just ‘in theory we will lend you this amount of money to purchase a property’.  Once an offer is accepted, we send the paperwork to your Mortgage Broker or bank the next day, they contact multiple lenders to see which one gives you the best rate and mortgage options, you decide who to go with, and an underwriter has to ‘approve’ your mortgage so that it is official.

Between getting pre-approved and approved, there could be a few weeks/ months and sometimes things change in Buyers lives e.g. you lose your job, you get a pay rise, you inherit some money, your credit score dramatically changes up or down – all of these types of things and more can change what a lender will approve you for because they change your financial situation. 

If you have a large down payment, and if you don’t spend all of your budget of $1,200,000, it is unlikely that a lender will not turn your pre-approval into an approved mortgage.  However this is why Finance Conditions are there to protect you and your offer, so that in case you are not approved for the amount of the offer, you have the opportunity to pull out of the offer without any penalty. 

If you put in an offer without a Finance Condition, it means that if the lender or appraiser doesn’t come back with the right $ number for your approval, then you are on the hook for the full accepted offer amount, and there is no opportunity to pull out of the offer without losing your deposit and a being part of a potential lawsuit from the Seller.

Home Inspection condition

It is usually a good idea to pay for a home inspection before you put in an offer, or before the offer becomes firm.  This will give you peace of mind as to the condition of the property and whether the price you have offered is right. In this market, many Sellers pay for a pre-home inspection just before the property listed, and this is available to anyone interested in the property.  One thing to be aware of is that this inspection has been paid for by the Seller, so you may want to pay for your own inspection for complete peace of mind.

If you do put in a home inspection condition clause that the offer is conditional on a positive inspection, depending on the property, some Sellers may not be as keen on your offer, especially in multiple offer situations.  We will decide on a case-by-case basis what the best options are for you.

There are other conditions and clauses that we can put in with your offer, these will vary according to the property.

Title Insurance is primarily sold through Lawyers because it can be complicated and it is solely based on the condition and Title state of the real property on closing.  It is absolutely imperative that you discuss all the details with your Lawyer before making a decision whether to buy title insurance.  Like any other insurance policy it may have exclusions and exceptions, most notably for environmental and native or aboriginal claims.

“Title” is a legal term to describe the right of ownership to real property.  

When you purchase a home, Title for the land and everything on the land is considered real property and is transferred to the new homeowner on closing.  To clarify – It is not about the house – it is Title to the Land and whatever is on the land is deemed real property.

Buyers always ask me – do I really need Title Insurance when I purchase a property and the answer is always yes because it is a one-time cost and the cheapest form of insurance you can buy to protect a major investment.  For a house the cost is about $350, for a Condominium about half of that,  and it is included in your closing fees.

Your Lawyer has an obligation to make you aware of your Title Insurance options – the Law Society passed a rule that every Lawyer acting in a Real Estate Transaction must advise the client of Title Insurance, the different companies offering it and how it works.  Also, Title Insurance will outlive the certification of your Lawyer, whose insurance stops if he/ she dies or ceases to practice law.

Although you may not be fully aware of the financial benefits of your Title Insurance policy, when a Title claim is made, it is often a very significant amount of money.  All policies include a duty to defend your Title in court with respect to those matters covered under the policy.  The Title Insurer will pay the legal fees required to defend your interest in title, and/ or the insurer can end that duty by paying the claim.

If you are buying a new home you may think you don’t need Title Insurance, but keep in mind that the Insurance is primarily for land and use of the land issues.  Tarion covers your new home warranty but you are not the first person to buy the land.  By the time a sub-division is built, the land may have changed hands a number of times and/ or the builder didn’t pay taxes and levies that he is responsible for.  

This is how Title Insurance policies protect you for as long as you own the property.  It protects against a number of risks that a Lawyers opinion on Title may not cover.   Title insurance is a unique form of insurance in that, with certain exceptions, it covers losses arising from covered matters that exist at the date of your closing of your real estate purchase, but are unknown to you at that time.   

Risks which are usually included in the Insurance: 

• Title Fraud and forgery, including someone taking your Title through fraud, forgery or impersonation.  Title fraud that occurs after closing whereby someone fraudulently mortgages your property is one example of coverage for matters that first arise after closing.
• You are forced to remove Encroachments (other than boundary walls or fences) by the owner of an adjoining parcel of land on which your structure encroaches
• Unregistered Easements (the right acquired for access to or over another person’s property for a specific purpose, such as for a driveway or public utilities).  An Easement may be brought to light after a new survey is done which can show a lack of legal access to the property.
• Zoning non-compliance (i.e. where the property use does not meet the local municipal by-laws), and setback violations
• Someone other than the home owner having an interest in the property, for example a previous owner of the property not being discharged from Title, or missing heirs
• Existing liens against Title – for example:  construction liens
• Undiscovered realty tax arrears
• Existing work orders
• Outstanding municipal utility charges, provided such charges form a lien on Title
• Un-marketability of the land due to adverse matters that would have been revealed by an up-to-date survey 
• Unpaid Condo assessments – to the extent that there are condominium common expenses that were the responsibility of the vendor (and the purchaser was unaware that they were not paid) losses related to those are covered.  In certain circumstances special assessments that should have been disclosed on a status certificate obtained on closing, but which were not disclosed, may be covered under the policy.
• Building Permit Violation Coverage – the insured is forced by the local governmental authority to remove all or part of the structures on the land (other than fences or boundary walls) because of the lack of a building permit for the structure when such a permit would have been required at the time of construction
• Supplemental Taxes – to the extent that they relate to a period of ownership of a prior owner and the insured homeowner did not agree to pay them or was not aware of them

One example for your consideration:

A couple purchased a residence from a widow and her daughter, the only known heirs of the husband and father who died without leaving a will.  Soon after the sale, a man appeared – claiming he was the son of the late owner by a former marriage.  As it turned out, he indeed was the son of the deceased man.  

This legal heir disapproved of his father’s remarriage and had vanished when the wedding took place.  Nonetheless, the son was entitled to a share of the value of the home, which meant an expensive problem for the unwary couple who had purchased the property.  In this case, Title Insurance covered all the costs for the legal defense and an amount that had to be paid to the legal heir.

All for $350!  Now you see why it is worth getting Title Insurance! 

CONDOMINIUM AUTHORITY OF ONTARIO

This website has a wealth of information that is useful when you are considering being a condo owner.

The Government of Ontario has introduced new changes to the Condominium Act, 1998 related to an expansion of the jurisdiction of the Condominium Authority Tribunal (CAT)  – the Province’s virtual tribunal that helps resolve condo-related disputes.

As of January 1st, 2022, the CAT will be granted the authority to handle disputes involving nuisances, annoyances, and disruptions. Specifically, prescribed nuisances under the Condominium Act, 1998 will now include “unreasonable” instances of:

• Odour
• Smoke
• Vapour
• Light
• Vibration

Previously, these issues were dealt with through mediation, arbitration, or the courts, leading to costly and time-consuming proceedings. Under the current rules, landlords and condo owners often have to foot the bill for these types of disputes.

The new rules will provide a faster and more cost-effective dispute resolution mechanism for condo owners and their tenants. It is important to note that the expanded jurisdiction of the CAT will not have a direct impact on eviction proceedings, as those issues are still governed by the Landlord and Tenant Board.

Applications for condominium-related disputes can be found on CAT’s online portal and dispute resolution services are offered at a total cost of $200. For more information about the CAT, visit the Condominium Authority of Ontario’s website at www.condoauthorityontario.ca.

COMMON TERMINOLOGY RELATING TO CONDOS 

​Unit

When you purchase a residential Condominium, you are buying a “unit” in a Condominium project.  The unit number should be identified in your agreement of purchase and sale. 

When you complete the sale transaction, you will be provided by your Lawyer with a transfer/deed of land which confirms the legal description of the unit.  The purchase is then registered in the appropriate Land Registry Office prior to completion of your purchase. 

Common elements

A condominium will also include ‘common elements’, which are shared facilities in the condominium project that every condo owner has access to (e.g., recreational facilities, lobby, elevators, parking garage). 

Exclusive use common elements

Depending on what kind of condo you are buying, you may also have access to ‘exclusive common elements’.  These may be items such as balconies which are only for your use but are actually owned by the Condominium Corporation and covered by the common elements warranty.

HOW YOUR CONDO IS MANAGED

Condominium Corporation Board of Directors

The Board is generally made up of unit owners who are elected by the unit owners to manage the corporation’s business affairs, including policies, finances, maintenance and repairs.

Condominium Manager 

The Condominium Manager (sometimes called Property Manager) reports to the Condo Board and manages the day-to-day operations of the condo project.

Reserve Fund

The reserve fund is a special account, separate from the Condo Corporation’s operating budget, used to pay for common element repairs and replacement.  These are just some of the important terms to understand if you are in the market for a condo.  Knowing what these terms mean will ultimately help you when discussing purchase agreements with the vendor and your real estate Lawyer. 

6 THINGS TO REMEMBER WHEN REVIEWING A CONDO STATUS CERTIFICATE 

Here are 6 top items to look at and questions to ask when reviewing a Status Certificate before making your condo buying decision in Toronto as per Mark Weisleder, a leading Real Estate Lawyer in Toronto. 

Have units sold and closed in this Toronto condo building in the last 3-4 months? 

If units are selling and closing, it means that other Lawyers and Lenders have approved the building, and that CMHC most likely has not refused to lend on the property, which has occurred many times when concerns have been raised.  This should give you some comfort that all is in order in the building.  

What is the Toronto condominium corporation number? 

Toronto Condominiums are registered in numerical order, with the first buildings being registered about 50 years ago.  There are approximately 2700 condominium corporations in the Toronto area.  That means if you are number 2400, your building is likely 2-3 years’ old.  If it is number 1500, then it is likely 12-15 years’ old.  If it is number 200, then it is closer to 45 years’ old. This can give you some clues as to when the roof may need to be repaired and whether there is enough money in the reserve fund for major repairs that may be required.  For example, a roof may need to be replaced every 20-25 years.  This is the major expense for most townhouse projects. 

Who is the Property Manager for this condo building?

When the Property Manager is a familiar name, there is comfort that the Condominium Board is being given the correct advice in how to properly maintain the building now and in the future.  If you hear names such as Brookfield, First Service or Del, this is typically a positive attribute for the corporation.

Does the reserve fund match the reserve fund study for the building?

The reserve fund study should be updated every 3 years.  Be suspicious if there is no current one.  The amount in the reserve fund today should be similar to the amount that was projected in the last reserve fund study. If there is a shortfall, then do the following calculation.  If there are 100 units in the building, it is likely your unit is 1% of the expenses.  That means if the reserve fund is short 1 million dollars, your unit share would be $10,000.00.  If there are 200 units, your share is one half a percent or $5,000.00.  This is likely your worst case scenario.  Just adjust your purchase price accordingly.  You can do the same math if you need to cost a special assessment or lawsuit affecting the building.

Can you rent your condo on AirBNB, is it permitted by the Condo Corporation?

The status certificate will tell you how many units are leased to tenants.  Many buildings have minimum lease periods of 6 months to 1 year, which would prohibit Air BNB.  More and more condominiums are trying to prevent this, due to security and insurance issues.

Pets and Parking rules

Make sure you understand in advance whether pets are permitted at all in the building or whether there are weight restrictions on pets that are permitted. There is no point wasting time on buildings where the buyer has a pet that will not be permitted. 

Parking and Locker spaces

Make sure you physically see the parking space and the locker before signing any offer, so that there is no confusion with what you expect to receive on closing. It is possible that the number on the floor may not be the same as the legal unit number.  That can be determined by just asking the Property Manager for details.

1. Location, location, location.
2. Layout, layout, layout.
3. Actually there are 3….  chose me as your Agent! 🙂

On a scale of 1-10, how motivated are you to buy your new home?

What is your budget?

Do you need Financing?

What’s the price you won’t go above?

If I find you the perfect home in the next 30 days, is that going to be an issue for you?

Do you need the sale of your current home to buy the next home?  

What will happen if your current home does not sell?

Where are you thinking of moving to?

What is important to you in your next home?

When are you going to make a decision about buying your next home?

What is the most important thing you are looking for in your Buying Agent?

What prior real estate experiences have you had?

How can I help to make the experience a 10+ and as smooth as possible?

How would you like to be communicated with?

• Phone, email or both?

How frequently would you like updates on showings, marketing and any issues?

• Hourly, daily, as-and-when?

Please select what you are most concerned about in the buying process;

• Budget Showings
• PricesOpen House
• Negotiations Possession
• Other issues

Other?

Homebuyers Road Map

https://www.crea.ca/wp-content/uploads/2019/05/CREA-0698-RoadMap_ReBranded-ENG_March2019.pdf

CHMC Buyer guides

https://www.cmhc-schl.gc.ca/en/consumers/home-buying/buying-guides