Buying a Home
Buying a Home in Ottawa, Ontario.
Before making an offer on a home, you should obtain pre-approval on a loan through a bank, mortgage company, or other lender. Obtaining a mortgage commitment from your financial institution helps give you an idea of how much you can borrow and how much money you need to contribute personally. The rates and terms vary slightly among institutions, so compare terms to get the best mortgage for you. Once you receive a conditional commitment from the bank, you can contact a seller or builder directly or through an agent. Real estate agents charge a commission to the vendor on the sale of their home, a fee which is ultimately passed on to the purchaser by becoming part of the sale price, but a buyer does not pay an agent’s fees directly. Remember, a conditional mortgage approval is not final, so for your protection your offer must have financing as a condition.
An ‘Agreement of Purchase and Sale’ will be prepared by your lawyer, agent, or builder once you are ready to make an offer on a home. This contract sets out a number of important promises and representations made by the purchaser and vendor to each other. In addition, important information pertaining to the sale, including the selling price, the amount of your deposit, and the closing date (the date you move in) are listed in this contract. It is always recommended that your lawyer review an offer before you sign it and submit it. In some cases, contractors ask you to sign first and put a clause in the agreement giving the purchaser three to five days to have their lawyer review the agreement before the agreement becomes binding.
The deposit you pay is negotiable between you and the vendor, but is commonly between $1000.00 and $3000.00. It is intended to evidence the serious intent of the offer. If you have signed an agreement and then fail to complete the purchase, you could forfeit the deposit to the vendor if the default is caused by you. You may also be liable for damages if the vendor cannot sell the house for the same price you had offered. You can avoid this by including in the contract a specific date that the deposit will be returned without interest or deduction if certain prerequisites are not met by the vendor. You should not make a deposit without having your lawyer review the contract first.
You should request in the contract an up to date survey from the vendor. If the vendor is unable to provide you with one, you may have to pay to have an up to date building location plan of survey prepared for you. This may cost up to $1000.00 or more. Since preparing a new survey is costly, and since the lender may request an up to date survey, and since the vendor often only has an older survey on hand, title insurance is now accepted in most cases as a substitute for the up to date survey.
After you and the vendor have signed the contract, you should take a signed copy of it to your lawyer. Your lawyer will have to conduct searches on such matters as title, zoning, building code compliance, taxes and hydro arrears. Title insurance is a frequently relied upon substitute for searches in these areas and is generally less expensive to obtain. In addition to the cost of these searches, you will also have to pay your lawyer’s fees and also expenses known as disbursements, such as deed and mortgage registration fees. Land Transfer Tax, based on a specific formula and is slightly less than 1% of the purchase price, is usually the largest single disbursement incurred in a purchase.
Your purchase will be conducted by electronic registration if it is a property within the City of Ottawa. Some rural jurisdictions have not yet converted. After closing, your lawyer or the firm real estate clerk will contact you and give you the keys to your new home. Since this will most often be in the late afternoon of the closing date, it is not good practice to plan your move into your new home before the end of the closing day or on the day following.
Should you have any questions about buying a new home, please contact Alan Clausi who would be happy to discuss with you your plans.
For More Information Contact:
McLeod Clermont & Associates
1447 Woodroffe Avenue,
Ottawa, Ontario K2G 1W1
Tel: 613.225.0037
FAX: 613.225.0921