We often get asked by our clients whether purchasing Title Insurance is beneficial when buying a home.
The number of advantages to having Title Insurance outweigh the few disadvantages. Therefore, Title Insurance is beneficial to the Purchasers and are required by the Lender.
- Title Insurance is quicker: it allows the transaction to close quicker as the Purchaser’s Solicitor does not have to wait for responses from the tax and zoning departments or utility companies to close the transaction. Title Insurance insures over any infractions or arrears that would affect title.
- Title insurance is cheaper: the Purchaser does not have to pay the costly tax, zoning, and utility search by your Solicitor. Title Insurance costs less than the cost of completing these searches.
- Title Insurance provides broader coverage than a Solicitor’s option of title: Title Insurance will cover a Purchaser or Lender in the event that the survey is not up-to-date or in the case of fraud and can even insure over problems with your survey or with your title so that your Lender is satisfied and the transaction can still close.
- Title Insurance does not cure or fix the problem: it simply insured over the matter.
- Prior to Title Insurance, if there was a problem with your title or your survey, your Solicitor could not close the transaction unless the problem was rectified or resolved by closing. In most cases the problem was minor. Title Insurance now allows the transaction to close and insures over the minor problem.
If you have further questions about Title Insurance and what to expect, please contact our office directly at 905-427-4886.Read More
What can you do when you are buying a new home firm from a Builder and have not yet sold your house prior to the scheduled closing date? There are at least four options:
- See if the Builder is willing to extend the deal at minimal cost to yourself for a couple of weeks or a month so that you can continue to attempt to sell your home (generally interest on the balance due on closing at prime or prime plus 2%)
- If you can get an offer on your home but the closing date is after the purchase date of your new home, try and arrange bridge financing through your financial institution that you are arranging your mortgage with (ie: your financial institution lends you the funds required from the equity in your sale property in order to close your purchase. This short term loan is paid out on the completion of your sale)
- If option 1 and 2 aren’t viable, arrange a meeting with your financial institution and see if you qualify to borrow the entire balance due on closing, less your deposit and closing costs, by placing mortgages on both the house you are selling, and the house your are buying until such time as you sell your existing home.
- If you don’t qualify to carry a mortgage on both properties, you may need to either increase your down payment via a gift from a family member or add additional guarantors or covenanters to the mortgage on either or both properties.
- The best advice is to never go firm in the first place, unless you have sold your existing house firm.
Note: All information contained herein is not intended to be specific legal advise and is given for informational purposes only. You should always consult with your own lawyer prior to singing any Agreement of Purchase and Sale.Read More
There are at least three unusual clauses that now are appearing the the Builder’s New Home Offers.
Each of the clauses generally allows the Builder to extend the closing date either indefinitely or for up to one year from the closing date.
The three clauses are as follows:
- Economic Feasibility
- Conditional on Registration of a Plan of Subdivision
- Occupancy Date vs. Firm Closing Date
The first clause makes the Offer conditional on the Builder determining whether it is economically feasible to proceed with the subdivision.
The second clause makes your Offer conditional on the Builder obtaining all necessary governmental approvals and registering the Plan of Subdivision.
The third clause states that the closing date in your Offer is not a fixed or real closing date but it is only an estimated occupancy date by your Builder and can be changed at their discretion. This clause typically provides for a firm closing date of not more than one year plus 120 days from the estimated closing date set out in your offer.
What can you do if your Offer contains one or more of these clauses? There are three things:
- Firstly, see if the builder will delete all the above clauses.
- Secondly, go to the Building Department to determine how far along the Builder is from receiving their approval to register the Plan of Subdivision.
- Lastly, have your Lender “CAP” or guarantee your interest rate on your mortgage either until the closing date or for at least 18 months.
Note: All information contained herein is not intended to be specific legal advice and is given for information purposes only. You should always consult with your own lawyer prior to signing any Agreement of Purchase and Sale.Read More
- Always make sure the Agreement is conditional on lawyers’ approval.
- You should also make the Agreement conditional on the sale of your own home and mortgage financing.
- Do not go firm if you are relying on the sale proceeds of your home to buy the new property unless
(i) you have a firm sale offer or
(ii) you have written approval from your bank that you are able to carry both the mortgage on the home you are selling as well as the home you are purchasing.
- Most Agreements have hidden closing costs. Get the Builder to “cap” these costs at the Agreement presentation stage or before you remove the condition of lawyers’ approval, as same can result in substantial savings to yourself as a Purchaser.
- Before you remove the condition on financing, have the Builder’s lender or your own financial institution (if they will do it) “cap” or guarantee your interest rate in writing on your mortgage either until the date of closing (preferred) or for 18 months from the date of the Agreement.
- Verify with the Builder whether the Plan of Subdivision or Condominium Plan has been registered and whether a building permit is available. If it hasn’t been registered, there is a greater risk that your closing date will be extended beyond the date set out in the Agreement.
- Ask the Builder what other subdivisions he has built. Go to that subdivision and ask the current homeowners how they felt about the Builder and the quality of workmanship of their new home or condominium.
- Check with Tarion (formerly the Ontario New Home Warranty Plan) as to your Builder’s rating and whether they have received any complaints about your Builder.
When you purchase a home, whether it is new or resale, the Agreement of Purchase and Sale should always be made conditional on mortgage financing.
Some clients obtain a mortgage pre-approval from a financial institution and are under the mistaken assumption that this approval is sufficient to wait or remove their financing condition in the Agreement of Purchase and Sale.
A mortgage pre-approval is simply a certificate issued by a financial institution stating that you qualify for a mortgage at a certain amount. This certificate is based upon the financial information supplied by yourself as the Purchaser. The financial institution has not verified any of the information you have suppled and until they do so, you are not guaranteed to have a mortgage nor should you waive the condition on financing.
You should ask your financial institution for a firm (no conditional) mortgage commitment guaranteeing the mortgage amount you requested and it should set out all of the terms of the mortgage such as your interest rate, term of mortgage, amortization etc. Per some of our previous editorials, you should also try and get them to guarantee your interest rate to the closing date.
Typical conditions that may be inserted in your mortgage commitment, which you should always try to get removed, are as follows:
- Income verification; or
- Appraisal; or
- CMHC approval.
You should try and give your financial institution all of the information necessary to satisfy the above conditions and ensure they complete their appraisal or CMHC approval prior to the removal of your mortgage condition in your Agreement of Purchase and Sale. You may otherwise end up not being able to close the purchase based upon some of these conditions not being met and you may end up getting sued in the process
Note: All information herein is not intended to be specific legal advice and is given for information purposes only. You should always consult with your own lawyer prior to signing any Agreement of Purchase and Sale.Read More