Navigating End-of-Month Closings in Real Estate: Your Essential Guide

In the realm of real estate transactions, the first and last week of each month emerges as the peak period for legal activities. This pattern aligns with the preference of many people to schedule recurring payments, such as for utilities, around these times, aiding in effective budgeting.

Given this context, it’s essential to recognize the heightened demands on legal professionals during these peak periods. Whether commencing or concluding a real estate deal, understanding the intricacies becomes paramount to circumvent potential delays or complications. This guide delves into five pivotal elements to consider when navigating the closure of a real estate deal at the end of the month.

Steering Clear of Simultaneous Property Transactions: Buying and Selling on the Same Day

Attempting to conduct both a property purchase and sale on the same day poses logistical and financial intricacies. Balancing the timelines for two transactions, managing legal formalities, and aligning moving schedules can be immensely challenging. Delays or complications in one transaction can trigger a domino effect, resulting in financial and emotional stress.

Simultaneously buying and selling property on the same day introduces intricate logistical and financial challenges. Coordinating the timelines of both transactions, managing moving schedules, and navigating legal formalities can be a formidable task.

The real problem lies in the fact that each transaction has a deadline of 6 PM. However, closing two transactions simultaneously is impractical. The sale must close first to utilize the funds for the purchase.

This necessitates time between lawyers to transfer and clear funds before the sale can close, allowing the release of funds for the subsequent purchase. If a sale closes at the 6 PM deadline, there is insufficient time to clear funds for the purchase before the 6 PM purchase deadline.

Consider the case where Sonia planned to close the sale of her current home and the purchase of her new home on the same day. However, an unexpected delay in the sale process led to complications in the purchase transaction, incurring additional expenses and emotional strain.

Ensuring Early Fulfillment of Mortgage Conditions

Securing a timely and smooth closure for your real estate deal hinges significantly on meeting the conditions outlined by your mortgage lender. These conditions often involve providing specific financial documents or fulfilling other requisites set by the lender. Failing to address these requirements promptly can introduce unnecessary complications and, more critically, pose a threat to the entire transaction.

To illustrate, consider David’s situation. A week prior to the scheduled closing date, his lender requested additional financial documentation. Unfortunately, delayed submission of these crucial documents led to a postponement in the closing process, causing disruptions to David’s planned moving arrangements. Therefore, proactively satisfying mortgage conditions becomes imperative to circumvent such setbacks.

The importance of this proactive approach is underscored by the fact that many individuals tend to address their mortgage requirements at the eleventh hour, leading to a rushed scramble to fulfill conditions just before the closing. To mitigate this risk, it is advised to obtain mortgage instructions well in advance, allowing sufficient time to formulate a comprehensive plan for meeting all conditions. While the 6 PM deadline serves as a crucial milestone, it’s reassuring to know that the option of escrow closing exists for situations where the deadline cannot be met, albeit as a last resort.

To navigate this aspect successfully, proactive communication with both your mortgage broker and lawyer is key. Seek clarity on the specific actions required to fulfill lender conditions and review your mortgage documents early in the process. This foresighted approach not only helps in avoiding last-minute hassles but also contributes to a seamless and efficient closing process.

Understanding the Comprehensive Closing Costs

Comprehending the full scope of closing costs is essential. These expenses encompass a wide range of fees such as legal charges, taxes, insurance, and more. Effective financial planning and a clear breakdown of these costs are crucial to avoid last-minute financial surprises.

Grasping the entirety of closing costs is a pivotal step in the real estate closing process. These costs extend beyond the purchase price and include a diverse array of fees, encompassing legal charges, taxes, insurance, and various other expenses. Achieving a comprehensive understanding of these costs is fundamental for effective financial planning, ensuring that you are well-prepared and avoiding any last-minute financial surprises.

To delve into the specifics, it is advisable to request your lawyer to furnish you with the Statement of Adjustments (SOA) as early as possible. This document sheds light on anticipated property taxes and common expenses, providing valuable insight into the financial landscape of your closing. Simultaneously, obtaining your Trust Ledger (TL) is essential, as it offers a comprehensive overview of the total legal fees associated with the closing. This proactive approach not only facilitates budgeting but also empowers you to make informed financial decisions.

It’s worth noting that the Trust Ledger is typically provided after receiving your mortgage documents. This sequential process ensures that you have a clear understanding of the financial components involved in the closing, allowing you to plan accordingly.

A real-life example underscores the importance of this financial foresight. In Sonia’s case, a lack of awareness regarding additional closing costs related to property taxes and insurance resulted in unforeseen budget constraints and financial strain at the time of closing. Therefore, proactively seeking and comprehending these financial details early in the process is not just a best practice; it’s a strategic move to navigate the closing process with financial confidence.

For instance, in Sonia’s case, she was unaware of additional closing costs associated with property taxes and insurance. This lack of foresight led to budget constraints and unexpected financial strain at the time of closing.

Timely Acquisition of Keys

Planning for your move-in day involves more than just the physical act of relocating; it necessitates a thoughtful consideration of key logistical details. A crucial aspect of this planning is a conversation with your lawyer regarding the acquisition of keys for your new property and their designated collection point. The timing and location of key pickup can significantly impact the smoothness of your move, making it imperative to align these details with your moving schedule.

In the context of an Interim Occupancy, where the keys are typically released by the Builder, your lawyer plays a pivotal role. They receive pertinent details about the key release once they have the Builder’s closing documents in hand. This underscores the importance of timely communication between you, your lawyer, and any relevant parties to ensure a seamless transition.

Moreover, for those moving into condominiums, another critical consideration is the booking of elevators. Advance coordination with the property manager is essential to reserve the elevator for your move. Often, a security deposit, averaging around $500, is requested for this purpose. Planning ahead and adhering to the designated elevator booking times can prevent logistical hiccups and facilitate a smooth transition.

The significance of these considerations is highlighted in David’s scenario. By organizing his move before securing the keys, he faced unexpected challenges, including additional expenses for rescheduling movers and accommodations. This unforeseen strain on his budget emphasizes the importance of meticulous planning and coordination to ensure that key collection aligns seamlessly with your move-in timeline.

Sellers’ Vacating Timeline Awareness

Achieving a smooth transition into your new home involves more than just the logistics of moving; it requires clear communication with the sellers regarding their vacating schedule. The last thing you want is to arrive at your new property only to find the previous owner still in the process of removing their belongings. To avoid potentially awkward situations like this, initiating a conversation with the seller about their expected timeline for providing a fully vacated property is essential.

Understanding the sellers’ planned vacating schedule is a key factor in orchestrating your moving process seamlessly. By establishing a clear timeline, you can coordinate your moving arrangements, including scheduling movers, trucks, and elevator booking times, in alignment with the seller’s timeline.

Sonia’s experience serves as a poignant example of the importance of this communication. Assuming the sellers would vacate on the closing day, she encountered a miscommunication that led to a request for an additional two days from the sellers. This unexpected change disrupted Sonia’s moving schedule, resulting in added expenses and inconvenience.

Therefore, proactive communication with the sellers regarding their vacating plans is not only a courteous practice but also a strategic move to avoid potential disruptions and ensure a hassle-free moving process. By aligning your moving activities with the sellers’ planned timeline, you contribute to a smoother transition into your new home.

To Conclude

In the intricate dance of real estate closures, mastering the end-of-month process demands careful consideration of various critical factors. From navigating mortgage conditions to comprehending closing costs and orchestrating the logistics of your move-in day, each step plays a pivotal role in ensuring a seamless transition into your new property.

Understanding the intricacies of mortgage conditions and satisfying them proactively is crucial to avoid last-minute rushes and potential setbacks. Comprehending the full scope of closing costs, including legal charges, taxes, and insurance, empowers you to plan effectively and avert any unexpected financial surprises.

Strategizing your move-in day logistics, from acquiring keys to coordinating elevator bookings, requires foresight and communication. Clear communication with sellers regarding their vacating schedule is equally vital, preventing awkward situations and streamlining your moving process.

Mastering these elements can make the difference between a stress-free closing and one fraught with challenges. However, this journey need not be navigated alone. Seeking professional guidance from WeAreLaw can ensure a smooth and successful closing. Our team is dedicated to providing expert advice and tailored assistance for your real estate endeavors.

Embarking on a real estate transaction is a significant undertaking, and having the right support is key to a successful outcome. Contact our team today for expert guidance and personalized assistance in navigating the complexities of the end-of-month real estate closure process. Our team is committed to making your real estate journey as smooth and seamless as possible.

Unlocking the Power of an Experienced Real Estate Lawyer: Your Key to a Hassle-Free Transaction

In the ever-evolving world of real estate, one crucial aspect often gets overlooked in the excitement of buying or selling a property: the need for an experienced real estate lawyer.

While some may be tempted to cut corners and opt for the cheapest legal services available, it’s essential to understand that real estate transactions can be riddled with complexities and potential pitfalls. In this blog, we’ll delve into the reasons why you need an experienced real estate lawyer on your side. We’ll explore scenarios like title insurance procedures, simultaneous buying and selling, and disputes over property conditions. Plus, we’ll reveal how an experienced lawyer can save you money and provide a seamless closing process.

Investing Wisely: Quality Over Price When Choosing a Real Estate Lawyer

When you’re embarking on a real estate journey, it’s natural to want to keep costs down. However, the first rule of thumb should always be to prioritize quality over price when selecting a real estate lawyer. Opting for the cheapest legal services might seem like a cost-effective strategy, but it can lead to a cascade of problems down the line.

Experienced real estate lawyers are seasoned professionals who possess a wealth of knowledge and expertise in navigating the intricate world of property transactions. They’ve dealt with various cases and understand the nuances that might not be apparent to less-experienced attorneys.

To elaborate, consider this scenario: You’ve chosen a budget-friendly lawyer to handle your real estate transaction. At first, everything seems fine. But as the process unfolds, unexpected complications arise. Perhaps the property’s title has hidden issues or the seller isn’t disclosing crucial information. Inexperienced lawyers may struggle to identify these red flags or may not know how to address them effectively. This can lead to delays, legal disputes, and ultimately, financial losses.

On the other hand, an experienced real estate lawyer can spot potential pitfalls from a mile away. They know how to conduct thorough due diligence, ensuring that all aspects of the transaction are scrutinized to protect your interests. Their ability to anticipate issues and handle them proactively can save you time, money, and headaches.

A recent case illustrates the importance of having an experienced real estate lawyer by your side. In this instance, we encountered a situation where a builder had inaccurately charged an additional $30,000 in the statement of adjustments. While many lawyers might have simply proceeded with the transaction, resulting in their clients bearing the burden of this extra $30,000, our firm took a different approach. Recognizing the impropriety of the seller and their lawyer’s actions, our firm intervened.

By addressing the issue head-on, we successfully saved our client from this hefty overcharge. This case serves as a testament to the value of experience in real estate law. It reinforces the idea that in such situations, having an experienced lawyer can make all the difference, ultimately securing a more favorable outcome for the client. Experience, as demonstrated in this instance, triumphs over inexperience.

While it may be tempting to cut costs by choosing an inexperienced attorney, the adage “you get what you pay for” holds true in real estate law. Prioritizing experience over price is the smartest investment you can make to secure a smooth and successful property transaction.

Solving the Puzzle: Addressing Issues for a Smooth Closing

Imagine you’re in the final stages of buying your dream home. You’ve gone through the negotiations, inspections, and all the formalities of the Agreement of Purchase and Sale. However, just when you think you’re almost there, a title issue surfaces. Perhaps there’s a dispute over property boundaries or an unexpected lien on the property’s title. This is where your real estate lawyer shines.

Your lawyer steps in to navigate these challenges. They work meticulously to resolve title issues, ensuring that the property’s title is clear and unencumbered as stipulated in the Agreement of Purchase and Sale, paving the way for a smooth transition of ownership to the purchaser. Their expertise in property law and real estate transactions becomes your invaluable asset during this critical phase, as they strive to overcome hurdles and facilitate a successful closing.

Let’s illustrate this with an example: Sarah, a homebuyer, was thrilled to finally close the deal on her first home. All seemed set for a straightforward transition until her lawyer discovered a title issue. An old property boundary dispute from the previous owner’s history had resurfaced, threatening to delay the closing process. Sarah’s lawyer, well-versed in handling such situations, immediately set to work. They engaged in negotiations with the involved parties, ultimately reaching a resolution that allowed the closing to proceed as planned. Thanks to the lawyer’s expertise and dedication, Sarah’s dream of homeownership remained intact.

Decoding Title Insurance: A Lawyer’s Role in Protecting Your Real Estate Investment

In the labyrinth of real estate transactions, title insurance often stands as a formidable guardian, providing protection against unforeseen title-related issues. However, there are several aspects to this essential coverage that deserve closer scrutiny, especially concerning the role of a diligent real estate lawyer.

Let’s embark on a journey to understand how a lawyer and title insurance coexist in safeguarding your real estate investment.

First and foremost, it’s crucial to establish that title insurance does not diminish the significance of having a competent lawyer by your side. Both elements play distinct yet complementary roles in ensuring the security of your real estate transaction. While title insurance is a robust safety net against various title issues, it doesn’t negate the necessity of a skilled lawyer. Your lawyer’s responsibilities go beyond what title insurance covers. They scrutinize every aspect of the deal, conduct due diligence, and handle the legal intricacies that title insurance may not encompass. From ensuring the authenticity of the sale to drafting essential legal documents, your lawyer is the conductor, orchestrating a harmonious real estate transaction.

So, what’s the bottom line? Even with the protective shield of title insurance, you still require the expertise of a proficient lawyer to shield your interests and guarantee that your real estate journey sails smoothly. These two components, lawyer and title insurance, work in tandem, offering comprehensive protection.

Additionally, it’s essential to acknowledge that it’s uncommon to find a reputable law firm willing to close a real estate deal without title insurance. This is because title insurance is deemed a standard safeguard in the industry. Moreover, it’s typically included in law firms’ all-inclusive fees. However, it’s advisable to double-check this inclusion with your chosen law firm to avoid any unexpected surprises. Title insurance and a lawyer’s services often come as a package deal to provide clients with comprehensive protection.

Now, let’s explore a fascinating feature that some title insurance policies offer— inflationary coverage. This is like having a financial parachute for your property’s value. With inflationary coverage, you can have protection for double, which amounts to 200%, the original value of your property.

To illustrate this, imagine you purchased a property for $500,000, and your insurance policy includes inflationary coverage. If you decide to sell the property and title issues surface, your insurance policy would come to the rescue. It would cover up to double the original value of the property, which is $1,000,000.

However, it’s essential to note that the potential limitations of inflationary coverage. For example, suppose you bought your house a decade ago for $500,000, and the property’s current market value might be around $1,200,000. In this scenario, your insurance policy, with inflationary coverage, would only cover double of the original value ($1,000,000). This means you have $200,000 in underinsured coverage, meaning you won’t be covered for the entirety of the property’s market value. Nevertheless, the option of inflationary coverage provides valuable protection against property value fluctuations.

Another point of interest regarding title insurance is the range of covered title risks. Typically, an average title insurance policy encompasses around 30 title risks. The specifics of your coverage can often be found at the start of your owner’s policy. It’s advisable to peruse your policy to get a comprehensive understanding of what’s protected, providing transparency on potential issues that may arise during your real estate journey.

Lastly, it’s important to highlight the simplicity of title insurance policies in terms of payment. Title insurance premiums are typically a single, one-time payment. Unlike other insurance types, there are no ongoing premiums or deductibles to worry about. This straightforward, upfront payment structure makes title insurance an attractive option for homeowners and buyers looking for comprehensive protection without long-term financial commitments.

The cost of title insurance premiums is another factor to consider, as it can vary based on the purchase price of the property. For example, if you’re purchasing a property with a $1,000,000 price tag, the insurance premium cost would typically amount to $1,000. This cost is typically divided into a $500 base cost and an additional $500 for the increased insurance premium, offering buyers and homeowners flexibility in their choice of coverage.

In summary, title insurance is a vital component in the realm of real estate transactions, but it’s not a substitute for the legal expertise provided by a skilled real estate lawyer. Instead, they work in synergy to ensure the smooth and secure progression of your property deals. The coexistence of title insurance and a lawyer offers a comprehensive safety net, guaranteeing your real estate investments are safeguarded from unexpected title-related issues.

Buying and Selling at the Same Time: How an Experienced Real Estate Lawyer Coordinates your Closing

The real estate world often demands buying and selling a home at the same time, commonly referred to as “double closings.” While these transactions can be financially advantageous, they also come with a unique set of challenges that require precise coordination. An experienced real estate lawyer is your indispensable partner in ensuring a smooth process.

Picture this scenario: You’ve sold your current property and are set to buy a new one on the same day. The timing must be impeccable to avoid being left in a financial limbo between the two transactions. Inexperienced lawyers may struggle to orchestrate these complex maneuvers, potentially causing delays, financial stress, and even contractual breaches.

An experienced real estate lawyer, on the other hand, excels at managing such scenarios. They have the expertise to synchronize the buying and selling processes, ensuring that funds are available when needed, and all legal obligations are met promptly. They also have contingency plans in place to address unexpected hiccups, such as delays in the sale of your old property.

To conclude, simultaneous buying and selling necessitate a level of expertise that only an experienced real estate lawyer can provide. Their ability to coordinate these transactions effectively and minimize risks makes them an invaluable asset in your real estate endeavors. With their guidance, you can confidently navigate the complex dance of double closings, knowing that your financial interests are secure.

Property Condition Disputes: How an Experienced Real Estate Lawyer Safeguards Your Investment

Let’s consider this: You’ve signed a purchase agreement for your dream property, eagerly anticipating the keys to your new home. However, upon your final walkthrough, you discover that the property is not in the condition you expected. The floors are damaged, appliances are missing, and the seller has left a mess behind. What do you do?

This situation highlights the critical role of an experienced real estate lawyer in safeguarding your investment. When a buyer refuses to close a deal due to discrepancies in the property’s condition, an experienced lawyer becomes your advocate, ensuring that your interests are protected.

Inexperienced lawyers may fumble when facing such disputes, potentially leaving you in a state of uncertainty and financial limbo. They might lack the knowledge and negotiation skills necessary to address these issues effectively.

In contrast, an experienced real estate lawyer knows how to handle property condition disputes with finesse. They can initiate negotiations with the seller, seeking remedies that align with the terms of the purchase agreement. If necessary, they can also explore legal avenues to enforce your rights and ensure that you receive what you bargained for.

Therefore, property condition disputes can be complex and emotionally charged. An experienced real estate lawyer acts as your shield, leveraging their knowledge and negotiation prowess to resolve these issues and protect your investment. With their guidance, you can navigate these challenging situations with confidence, knowing that your interests are in capable hands.

The Early Bird Lawyer: How Timely Document Review Safeguards Your Interests

Imagine you’re on the verge of buying your dream home or investment property. You’ve found the perfect place, and the excitement is building. But before you dive headfirst into the deal, there’s a critical step that a good lawyer never skips – early document review.

Let’s meet Sarah, a first-time homebuyer who, like you, was eager to close the deal on her ideal condo. Sarah had chosen a highly regarded real estate lawyer, Sonia, who was known for her proactive approach. Instead of waiting for the ink to dry on the agreement, Sonia dived into the paperwork right away.

During her diligent document review, Sonia discovered a clause that allowed for hidden additional charges that could significantly increase Sarah’s financial burden. Sonia didn’t keep this revelation to herself. She immediately alerted Sarah, giving her ample time to evaluate her options, request caps on these additional charges, and decide whether to proceed with the deal. Thanks to Sonia’s timely intervention, Sarah was spared from unexpected financial stress.

This story illustrates the importance of a lawyer who understands that the early bird catches the worm. Timely document review is not just about skimming through pages; it’s about having the foresight to anticipate potential issues and protect your interests. In real estate, thorough document examination is a crucial step that should never be rushed. An experienced lawyer will ensure a timely evaluation is done.

Navigating Pre-construction’s Contract Maze: How an Experienced Real Estate Lawyer can Help

Pre-construction properties are a realm of opportunity and potential pitfalls. When you’re considering such properties, it’s vital to have a lawyer who understands the specific contracts of various builders.

Picture John, an investor looking to purchase multiple pre-construction units. He sought the expertise of Sonia, a real estate lawyer with a reputation for excelling in pre-construction deals. Sonia’s extensive experience meant she knew the contracts and terms of various builders like the back of her hand. Sonia recognized that each builder had their own set of contracts, terms, and idiosyncrasies.

When John presented her with contracts from different builders, Sonia seamlessly identified potential pitfalls and opportunities within each one. This allowed John to have a clear understanding of the implications of each contract.

Sonia’s background in handling a high volume of pre-construction deals also provided her with a network of connections in the industry. This network became invaluable in ensuring smoother transactions and rapid problem-solving. Her extensive experience navigating the world of pre-construction properties set her apart as a top-notch real estate lawyer, who could guide her clients through the maze of contracts.

Catering to the Unique Needs of Clients: Living there versus Investing

Real estate transactions aren’t one-size-fits-all; they vary depending on individual needs. A skilled lawyer knows how to adapt to these unique requirements, whether they’re serving end-users or investors.

Let’s meet Mike, an investor seeking to expand his property portfolio. He turned to David, a real estate lawyer known for his expertise in catering to the needs of investors. Investors like Mike often view construction delays as opportunities to accumulate funds or secure favorable market conditions. David understands this and tailors his advice accordingly. He helps Mike navigate the legal landscape to ensure his interests align with his investment goals.

On the other hand, we have Lisa, a first-time homebuyer eager to move into her dream house. Her real estate lawyer, David, recognizes that end-users like Lisa don’t like delays. David guides Lisa through the process, ensuring she understands her rights and options in case of construction delays. He offers the support she needs during this significant life transition.

A good real estate lawyer’s ability to understand and cater to diverse client needs is a hallmark of their professionalism. They can tailor their advice and approach to ensure both investors and end-users receive the best possible guidance.

Number Cruncher Extraordinaire: Understanding the Financial Side of Real Estate

Real estate transactions come with a labyrinth of numbers, spreadsheets, and financial intricacies. A good lawyer doesn’t provide tax advice, but they understand the financial aspects of the deal and the tax implications involved.

Imagine you’re like Sarah, a homeowner looking to downsize. You’re concerned about the tax implications of Home Sales Tax (HST) rebates and how they might affect your finances. Your real estate lawyer, Mark, is well-versed in the numbers and spreadsheets involved in real estate transactions.

Mark doesn’t provide tax advice, but he explains to you how HST rebates work and what potential tax implications you might face. This knowledge empowers you to make informed decisions about your property sale, from setting the right price to understanding the financial outcomes.

In summary, a good real estate lawyer’s ability to understand the numbers and spreadsheets involved in a transaction can make a world of difference for their clients. It provides a clear picture of the financial implications and empowers clients to make well-informed choices, even if they don’t offer direct tax advice. It’s this holistic understanding of the transaction that sets good lawyers apart in the real estate world.

Champion of Your Interests: Ensuring Fairness in Transactions

In the complex world of real estate transactions, it’s crucial to have an advocate who genuinely has your best interests at heart. This advocate is your real estate lawyer, who serves as a guardian of your rights and ensures that you’re not misled during the transaction process. They review purchase agreements and offers on your behalf to guarantee that the documents protect your rights and uphold fairness in the deal.

Consider a scenario where you’ve found the perfect property and are eager to submit an offer. However, you’re not entirely sure about the terms and conditions presented in the purchase agreement. This is where your lawyer’s role becomes paramount. They meticulously review the agreement to ensure that you’re not being misled or disadvantaged in any way. Your lawyer’s keen eye can spot clauses or terms that may be unfavorable to you and offer recommendations to address them. They make certain that the purchase agreement aligns with your interests and that it adheres to the legal framework governing real estate transactions.

Here’s a real-life example: John, a prospective homebuyer, was excited about purchasing a property in a competitive market. He presented his offer, which included a clause that was unclear and potentially posed a risk to his financial interests. John’s real estate lawyer, an experienced professional, immediately identified the issue and proposed a revision to the clause that would protect John’s rights and reduce potential financial liability.

By having a dedicated lawyer on his side, John not only safeguarded his interests but also gained peace of mind, knowing that he was entering into a fair and transparent transaction. Your lawyer’s commitment to your well-being throughout the transaction process ensures that you’re making informed decisions and that your rights are protected at every step of the journey.

To Conclude

In the world of real estate, the decision to hire an experienced real estate lawyer is not a luxury; it’s a necessity. From handling landlord-tenant issues to navigating simultaneous buying and selling, these legal experts play a pivotal role in ensuring the success of your real estate transactions.

They save you money, protect your interests, and provide peace of mind throughout the process. Also an experienced lawyer’s ability to understand the numbers and spreadsheets involved in a transaction can make a world of difference for their clients. It provides a clear picture of the financial implications and empowers clients to make well-informed choices, even if they don’t offer direct tax advice. It’s this holistic understanding of the transaction that sets good lawyers apart in the real estate world.

So, when it comes to your next real estate endeavor, remember that experience wins the day, making an experienced real estate lawyer your most valuable asset.

For your next purchase or sale, you could contact us at our firm with experienced lawyers in the real estate industry on our email. Alternatively, you could visit our website to learn more.

What to Know

Interested in entering the pre-construction condo market but not sure where to start? You are certainly not alone! The idea can seem a bit daunting at first. Hundreds of pages of legalese to go through. Uncertain construction timelines to deal with. An ever-changing market. There are many factors to consider before putting pen to paper. Here we break down some of the biggest ones to help make that decision just a little bit easier.

The Signing Process

If you are feeling a little bit intimidated by the prospects of signing on the dotted line no one would blame you. Depending on the nature of the project you may have to act very quickly to secure a spot, and you might be a bit worried that somewhere in that abundance of carefully constructed clauses are a few words that may come back to bite you. Thoughts like this are perfectly natural, and thankfully, there are some safeguards in place to help.

Every condominium project in the province of Ontario is subject to the rules of the government-legislated Condominium Act. One of the most important of those rules is the designated 10-day “cooling-off” period that every purchaser of a condominium unit is entitled to.

This 10-day period gives every purchaser a chance to review their contract with their lawyer with an eye out for any pitfalls. Some first-time pre-construction purchasers may be surprised to find that the purchase price of the unit does not make up the totality of the funds that will be needed for closing. Each pre-construction contract comes with an “adjustments” section where the builder may charge additional fees to cover some of their costs.

During the 10-day cooling-off window, you and your lawyer may request certain fees be capped at a maximum amount or deleted from the contract entirely. Additional negotiated terms may be the right to lease during the occupancy period or the right to do an assignment sale to a 3rd party prior to closing. If the builder is agreeable with any of the changes, amendments to the contract will be signed by both parties so that these negotiated terms officially become part of the deal.

It is important to remember that it is the builder’s final decision on what they will or will not agree to. But the 10-day cooling-off period allows you to cancel your agreement and receive any deposits already submitted back in the event that you do not like what you hear.

The Occupancy Period

After the 10-day cooling-off period has expired, if you have not decided to cancel your agreement in the time period allotted then your deal becomes firm. Congratulations! You have now officially committed to purchasing your pre-construction condo.

What happens next you might ask? The answer is mostly a lot of waiting as the condominium physically gets built. During this time, the builder should be providing updates on how construction is progressing, and advise on any delays within the timelines noted in your Tarion Warranty.

Eventually, the builder will advise you and your lawyer that your unit is ready for occupancy. This is one of the most exciting steps in the process as it means it is almost time to get your keys! Just before occupancy, depending on the nature of your contract, you and your lawyer may be asked amongst other things, to get insurance for your unit, provide a mortgage pre-approval, write out a set of post-dated cheques to pay for your monthly occupancy fees, pay your final deposit, and sign the builder’s interim closing documents, amongst other things.

Once all of the required documents and funds have been submitted to the builder’s law firm by your lawyer, your keys will be released for pick-up. You can now officially move into your new unit (or begin to lease the unit with the builder’s permission)! During the occupancy period, which usually lasts on average between 6-12 months, there may be some minor touch-ups that need to be done within your unit. This is very normal and the builder’s representatives will return to fix any issues you or your appointee noted during your pre-delivery inspection. It is also important to submit your list of issues to Tarion during the 30-day window at the beginning of your occupancy period to ensure proper coverage of any deficiencies noted.

The Final Closing

The occupancy period is an exciting time because it is the first chance to get your keys, but you might be wondering, wait, when do I pay off the rest of the purchase price and any adjustments? The answer is at the final closing stage.

During your occupancy period, the builder will often give hints that the final closing may be approaching. You may hear things like “the building is almost registered with the city”, and see things like the completion of the top floor and amenities. Your contract should often state how much notice the builder is required to give prior to assigning a final closing date. Typically, this is between 20-30 days.

Once you have received your final closing date, it is important to notify your lender immediately so that all of the mortgage paperwork may be signed and your lawyer can receive the mortgage instructions. Typically, the mortgage will cover 80% of the purchase price, which is also often the remaining balance left on the purchase price. It is also advisable to start shopping for a lender well in advance to avoid any last-minute complications or a rushed timeline.

Just before the final closing, you will meet once again with your lawyer to sign any final closing documents the builder requires, and also wire any money required from your personal funds for the closing (remember adjustments!). After that, your lawyer will take care of the registration and the transfer of funds on the final closing date. Once everything has been finalized, you are now officially the owner of a brand-new condo!

In Summary

Purchasing a pre-construction condo may not be for everyone, and that is OK! But those who have entered the market will also tell you it can be very rewarding. Whether the goal is to use the property for investment purposes or have a brand-new unit customized just for you, there are many great opportunities pre-construction presents. With a little patience and the guidance of a great team, the property you desire may just be a few steps away.

What is the Foreign Buyer Ban?

Effective January 1, 2023, the Government of Canada is implementing a two (2) year foreign buyer ban. This means that ONLY Canadian citizens/permanent residents will be allowed to buy residential property in Canada. There are some exceptions to the ban. For example, if a non-Canadian is purchasing with their Canadian spouse, or the agreement to purchase was signed prior to January 1, 2023.

Assuming the non-Canadian is allowed to purchase due to an exception, the non-Canadian must still pay a Non-Resident Speculation Tax (NRST).

Non-Resident Speculation Tax (NRST)

The NRST is an additional tax that applies in Ontario to non-Canadian owners only. The tax is expected to reduce the number of properties being purchased by non-Canadians, thereby increasing the housing supply for Canadians.

When the NRST was first introduced in Ontario, it was 15% of the purchase price and applied only to properties within the Greater Golden Horseshoe. Then in early 2022, the NRST was increased to 20% and the scope of applicable properties was broadened to include all of Ontario. Less than 7 months later, the NRST was again increased, to 25%.

The rate of NRST that a foreign buyer pays depends on when the agreement to purchase was signed. Non-Canadian buyers who signed agreements on/after October 25, 2022 will pay an additional 25% of the purchase price; those who signed agreements between March 30, 2022-October 24, 2022 will pay 20%; and those who signed agreements on/before March 29, 2022 will pay 15% only if the property is within the Greater Golden Horseshoe (if not, then there will be no NRST payable).

Exemptions to the NRST – NRST is Not Paid at All

An exemption from the NRST may be available if the non-Canadian is buying a property with their Canadian spouse. In order to qualify for this exemption, both spouses must own the property together, with no other non-Canadians, and all owners must certify that they will occupy the property as their principal residence.

There are two other exemptions, one for those in the Ontario Immigrant Nominee Program, and another for those who have protected person status under the Immigration and Refugee Protection Act (Canada). The criteria to qualify is similar to the spousal exemption.

Rebates of the NRST – NRST is Paid Upfront, but then Apply to Get it Back

In some cases, the NRST must be paid to the Ministry at the time of purchase, but if the non-Canadian becomes a permanent resident within four years, they may apply to get this tax back. In order to qualify for this rebate, the non-Canadian must hold the property alone or with their spouse only, and occupy the property as their principal residence the whole time. The application for the rebate must be made within 90 days of becoming a permanent resident.

The NRST rules have changed a number of times over the last 7 months. As a foreign buyer, it is important to know how much you will potentially pay, and even more important to know whether you qualify for any exemptions or rebates.

If you have any questions about the foreign buyer ban or if you wish to apply for a rebate of the NRST, please contact us at (416) 203-6347 or info@wearelaw.ca for a quote. We invite you to try our easy-to-use Closing Cost Calculator.

You can also follow us on any social media channel to stay up-to-date and informed about everything real estate – just click here!

Written by Rishi Sharma, Lawyer at We Are Law.

Why choose the WeAreLaw team?

Whether you are a first time home buyer or an investor we are here for you.

Our Experience

We handle purchases and sales (resale, preconstruction and commercial), refinances, title transfers, assignments and wills and estates. We have been practicing for almost 20 years and have closed over 15,000 real estate transactions throughout Ontario.

Our People

In today’s world, it is increasingly hard to find someone, let alone a company, that cares and is passionate. That’s where WeAreLaw comes in. Our dedicated team wants to ensure that your experience is stress-free from beginning to end while providing you with a swift, accurate and smooth closing. We are in it for the long haul and want to develop a lasting relationship with you.

Let’s be real…when it comes to one of the most valuable assets in your life, you want to be supported by a stellar group of professionals.

Our Fees

Our fees are ALL-INCLUSIVE. What does that really mean? We give you the total costs upfront, with no hidden legal fees popping up on the day of closing. We are straightforward.

Our all-inclusive quote includes your title insurance premium (which is one of the biggest costs in your legal fees). Title insurance protects properties against losses related to the property’s title or ownership and is mandatory in most cases.

Our Convenient Services

Our online cost calculator is available 24/7. You can visit our website at www.WeAreLaw.ca to receive a quote OR feel free to email us at info@wearelaw.ca or call us at 416-203-6347.

We offer easy-to-use remote signing, so you can safely sign your closing documents from anywhere in the world, as long as you have access to the internet (certain conditions apply; i.e. your lender/builder allows remote signing as well).

Our Status Certificate Reviews

If you’re buying a condominium unit, you’re going to need your status certificate reviewed. Our timely and detailed review includes a breakdown of the condominium’s legal and financial health. You will know if there are any existing lawsuits against or by the condominium corporation. You’ll know if your condominium has a healthy budget, if they don’t have a healthy budget then you might potentially be finding yourself paying special assessment fees at some point during your ownership. If you’d like to read more about our status certificate reviews, don’t hesitate to read our blog on that here.

Our Preconstruction/New Construction Agreement Reviews

Bought a new construction unit or home? We offer a comprehensive one-on-one video review with you and one of our lawyers, which includes a detailed cost breakdown (estimate) in one of our famous spreadsheets. There you will learn what you are expected to pay on Interim and Final Closing and also what taxes (land transfer taxes and HST Rebates) you’ll have to pay. We will also advise you of the rebates available to help you get some of this money back.

As an added service, we may make requests to the Builder’s lawyer to further negotiate your closing costs. Often, buyers don’t know their lawyer can make further requests (during the cooling-off period), even if their agent has already negotiated incentives!

Our team has closed thousands of pre-construction and assignment transactions and they have knowledge of most of the major development projects across the GTA. We know what we are talking about.

Our HST Rebate Applications

If you are purchasing a preconstruction property (or have in the past two years), you may be eligible for an HST Rebate. You want to use a team that has experience working with the CRA. We’ve completed over 400 successful HST Rebate Applications for our clients. We know what the CRA’s is looking for in these applications and the criteria for getting the application approved. You only get one shot at filing this application, so you want to ensure you don’t make any mistakes.

If you like what you’re hearing, don’t hesitate to get a quote here; or contact us at 416-203-6374 or info@wearelaw.ca. We are excited to work with you!

What is a Status Certificate?

A Status Certificate is a document that discloses certain information about a specific condominium unit (dwelling, parking, and locker units, as applicable). The Status Certificate includes a package of documents outlining the current financial and legal “health” of the unit(s) and building, and the rules and regulations unit owners must abide by. The package contains important information that should be reviewed by a lawyer before presenting an offer or during the conditional period.

Do I need a Status Certificate?

Yes, for your own due diligence! If you are purchasing a resale condominium unit, you should obtain a Status Certificate for your lawyer’s review. Reviewing the Status Certificate is part of your due diligence. It lets you know if there are any issues that need to be rectified. If a lawyer reviews the Status Certificate before an offer is presented or during the conditional period and finds a red flag, this is the best time to address it. Depending on what is discovered, this gives you the opportunity to amend or rescind your offer.

Yes, for your lender/title insurer’s required due diligence! Your lender (and the title insurer) will want the Status Certificate to be reviewed by your lawyer, and for your lawyer to confirm there are no red flags. The lender will not advance funds for your mortgage, and the title insurer will not insure your transaction, without this.

How much does it Cost? Where do I get one?

Under the Condominium Act, 1998, the cost of a Status Certificate is $100.00 + HST and must be delivered within 10 days. The Status Certificate is ordered through Property Management, who may charge additional fees if you are requesting a rush certificate, based on the timelines their office has for drafting and issuing the document.

Condominium Rules/Lifestyle Restrictions

The condominium documents will also outline any rules or lifestyle restrictions. Some of the more common ones include restrictions surrounding pets, the use of barbeques, and leasing the unit on certain platforms (Airbnb, Vrbo, etc.). Rules often impact lifestyle choices which are typically not legal issues reviewed by a lawyer. If you think a specific rule may apply to you, please let your lawyer know as soon as possible so they can determine if/how it applies to you.

Owned vs. Exclusive Use Spaces

Oftentimes, individuals purchase a parking and/or locker unit with their dwelling unit. There are two types of ownership when it comes to these units: owned and exclusive use.

If the unit is owned, it is a separate piece of land/property from the dwelling unit. The parking/locker unit will be registered in your name on closing, on a separate deed, so it can be sold or leased separately (subject to any Condominium Rules).

If the unit is an exclusive use space, it is not a separate piece of land and will not be registered on a deed in your name on closing. Rather, as the owner of the dwelling unit, you will have an exclusive license/right to use the parking/locker unit. Exclusive use spaces run together with the dwelling unit and cannot be sold or leased separately.

By reviewing the Status Certificate, your lawyer can confirm whether your parking and/or locker unit is owned or exclusive use.

What Red Flags could you find?

Below is a non-exhaustive list of common red flags that may be discovered during our review of a Status Certificate.

Litigation
- Is the Condominium Corporation suing or being sued?
- How can this affect you as the owner?
Arrears in common expenses
- If the unit’s common expenses are not paid up-to-date, the Condominium Corporation can register a lien over the property.
- If a lien is registered on title, it can be enforced and may affect your financing, your right to vote at meetings, etc.
Financial Statements
- Does the Condominium Corporation have an adequate reserve fund?
- Are there greater liabilities than assets?
Special assessments
- Will you be required to pay an amount above and beyond that of the common expenses?
- Has the current owner paid their share of the special assessment in full?
Outdated status certificate
- Should be as close to the current date as possible.
- If dated more than 90 days before your closing date, you will need to obtain a new one.

We would be happy to review the Status Certificate for your next purchase or refinance transaction. Following our review, we will provide you with a comprehensive written report of our findings. Please do not hesitate to contact us at (416) 203-6347 or info@wearelaw.ca if you have any questions. We invite you to try our easy-to-use Closing Cost Calculator. We look forward to working with you!

Written by Ariana Serapiglia, an Articling Student at We Are Law.

The Closing Costs Most Overlooked by Home Buyers

By Zoocasa

When it comes to material possessions, nothing will be more important than your very own home. The price tag on the house you can afford, however, is only the start of costs you’ll be expected to roll out.

To start with the bottom line first, most financial institutions recommend setting aside roughly 1.5 to 2.5 per cent of your purchase price to cover closing costs, such as $6,000 on a $400,000 purchase. While that percentage might give home-seekers momentary pause to which they’ll likely find a solution, the double-digit accrual on a house priced over a million dollars could potentially throw one’s purchasing power out the window. Total closing costs will depend on where you live (in the burbs or rural setting as opposed to the City of Toronto, for example), the type of home you’re buying, and whether the home is a resale or a new construction.

Be prepared:

Closing costs, to be clear, are not ‘hidden’ costs; instead, they are costs for which home-seekers need to prepare. To avoid unpleasant surprises, therefore, put all charges, especially those that are wince-worthy, into a spreadsheet, and either budget accordingly for them or set your sights on a home you can truly afford. This will help you prepare to meet all expenditures means home-ownership success.

Closing costs:

So what are the closing costs? Basically, they include legal and administration fees, home inspection costs, land transfer and property taxes, property/title insurance, moving costs and utility hookups.

Prospective home buyers should also expect to add maintenance and utilities, as well as one-time fees associated with buying a home, such as inspection fees and land transfer costs, to their savings plans. According to a recent TD homeowners’ survey, many former first-time buyers admitted that they hadn’t budgeted beyond the down payment and monthly mortgage payment; if they had, they would have avoided much needless stress and disappointment.

Major closing costs overlooked:

Many sources, including the TD survey, agreed that the most overlooked costs for first-time buyers are:

land transfer taxes
general closing expenses
legal fees

After the mortgage, this taunting trio of expenses is the costliest, and, because it’s often not factored into the budget, causes buyers to scramble for extra cash to close the deal.

Take note that if you’re buying into a new construction, GST/HST/QST applies. A GST rebate might be available, however, for first-time buyers. Ask your lending institution or real estate lawyer for details.

Land transfer taxes will no doubt be the largest upfront expense for homebuyers, which are charged in most jurisdictions across Canada whenever a property is transferred to another owner. In most cases the tax is tiered. One source notes that in Manitoba, for example, you pay zero per cent on the first $30,000; 0.5 per cent on the next $60,000; 1.0 per cent on the next $60,000; 1.5 per cent on the subsequent $50,000; and 2.0 per cent on the remaining value in excess of $200,000. To take the guesswork out of how big a hit you can expect from taxes, depend on handy online calculators to tally your total, depending on your province.

First-time buyers should know that provinces and some municipalities offer rebates that can greatly reduce the amount of land transfer tax you owe. Additionally, an income tax credit is available for qualifying first-time homebuyers in Canada, which can be worth up to $750 in tax relief.

If homeownership is within your grasp, ensure your research is thorough and make sure you know as much as you can about the process and ongoing commitment by adhering to these top three recommendations to aid you in your house-hunting:

Be more thorough when budgeting and accounting for all of costs of home ownership
Make a bigger down payment than 20 per cent if you can
Buy a home sooner, rather than later

Zoocasa.com is a leading real estate resource that combines online search tools and a full-service brokerage to empower Canadians to buy or sell their homes faster, easier and more successfully. Home buyers can browse Toronto real estate listings, to find the perfect Toronto townhouse, condo, or detached home.

How Condo Fees Affect a Condo Purchase

Deciding to buy your own home is an exciting milestone for many, and choosing a condo over a detached home definitely has its perks. The indoor amenities and services, not to mention the outdoor maintenance tasks you’ll never have to do are all wonderful features, perfect for busy singles, couples and seniors.

Although you’re spared a constant outlay of cash towards the upkeep and repair of a detached dwelling, first-time condo buyers sometimes overlook occupancy fees, development charges and closing costs. Without foresight of these expenses, the unwary purchaser could find themselves in a sinking financial boat.
So, besides your hard-earned down payment on the condo of your dreams, ensure you have knowledge of all the costs a condo will entail before deciding you’re ready to sign on the dotted line. Then, go back to the drawing board and ask yourself if you’re truly prepared for the financial impact of all condo fees on your budget.

What are occupancy fees?

They include three fees, identified as:

maintenance fees
property taxes
interest on balance owed (typically 80 per cent, but can vary depending on your deposit structure)

The amount of occupancy fees is roughly equal to the interest on the amount outstanding on the purchase price. For example, a $500,000 condo with 25 per cent down means you must pay monthly occupancy fees roughly equal to interest payments on $375,000.

Put another way, typical condo fees can range anywhere from 60 to 70 cents per square foot, or $485 to $566 per month. The charge goes towards cost of repairs and upkeep of common spaces, amenities and hydro. As the building ages and repairs are required, expect fees to rise.

Condos under construction = development charges

Are you investing in a condo not yet built? Prepare yourself not only for a substantial outlay of closing costs (estimate an additional two to seven per cent of the condo’s purchase price), but also hefty development charges that include:

general levies
education levies,
Section 37 levies
Green Standard levies

Each City issues development charges to a builder when the developer receives their building permit. The developer pays these charges that fund infrastructure, such as roads, libraries, schools, hospitals, parks, transportation amenities, and more. These amenities aren’t free, any more than the pool, fitness room or services that go into establishing your occupancy fee. The difference, however, is that the development charge is a one-time deal.

The problem with development charges is that they are invoiced by the city upon closing, and if you’re in the situation where you’ve signed your contract on a pre-construction condo that won’t be built for two or more years down the road, who can say what those development charges will be?

Fortunately, one money-saving strategy is open to you: Negotiate for capped fees before you sign a purchase of sale agreement. This action will save you tens of thousands of dollars. If a developer is not willing to negotiate, you are advised not to buy.

Additionally, purchasers of units in larger projects might find themselves in an interim occupancy situation (aka phantom rent) for a full year or two—which means paying rent to stay in your unit until developers are ready to register the build. This occupancy fee is estimated between $10,000 and $12,000 before ownership title is obtained and mortgage payments can begin.

While projects are being constructed to minimize capital costs to stay competitive on selling prices, the projected outlook is that building systems will likely require maintenance, repair and replacement earlier than in the past. The heads-up is that condo fees, AFTER the first year of operation, are likely to escalate quickly.

Older condos = higher maintenance fees

You might be dodging the one-time development charge by opting to buy an older condo, but they often have higher fees. The building’s age plays a major financial role in determining the fees residents will pay.

The general rule is this: The older the building, the higher the maintenance fee. One reason is that utilities are normally included in older builds, as opposed to newer condos, in which you’ll pay utilities over and above your occupancy fees. New structures will have 20 to 25 years before an underground parking garage, for instance, needs to be replaced, compared to older buildings in which replacements or repairs may need to be done now, thus raising your fee.

Calculating property tax

One expert notes that calculating the correct amount owing for property tax can be problematical, leading to errors of over-payment or under-payment. This margin of error in calculating the property tax portion of the occupancy fee could cost unsuspecting condo purchasers thousands of extra dollars. Developers are urged, therefore, to calculate the tax in the same way their particular City does, and purchasers are advised to ensure their lawyers are alerted to this problem, when they scrutinize tax calculations used by developers for occupancy fees.

Should buyers be discouraged from buying into the condo market? The consensus is no. Historically, occupancy fees are “normal” and unavoidable. With foresight, however, potential buyers are wise to take the opportunity to learn how deeply they might have to reach into their financial pockets, so they can make informed decisions about whether to buy into the condo market now, or wait until they’re better prepared.

Bio: Zoocasa is a real estate website with Toronto townhouse, Toronto condoand Toronto house listings and provides advanced search features such as property types and school boundaries.

New Build Condominium – Do You Get Interest On Your Deposits?

The short answer is ‘Yes … but’. Section 82 of the Condominium Act (“Act”) legislates that the builder (also called the declarant) must pay you interest on any funds you have paid as a deposit towards your purchase. This is great news for purchasers as we see more and more delays in the completion of new Toronto condominium projects and, as a result, builders holding purchaser deposits in trust for 3, 4, or 5 years and sometimes longer.

Sections 82(1) and (3) of the Act state the following:

    Interest

        82. (1) The declarant shall pay interest at the prescribed rate to the purchaser on all money that a person pays on account of the purchase price of a proposed unit or that the declarant credits to the purchase price of a proposed unit.

    Calculation

       (3) The interest shall be calculated from the day the person pays the money received until the day the proposed unit is available for possession or occupancy in accordance with the purchaser’s agreement of purchase and sale with the declarant.

However, the great news stops there. The ‘prescribed rate’ referred to in section 82(1) is defined in section 19(3) of Ontario Regulation 48/01 as “2% per annum below the bank rate”. Unfortunately, the current Bank of Canada overnight bank rate is 1%. Thus, if you currently have money on deposit with a builder, then it is not earning any interest. In fact, if you have had money on deposit with a builder going back as far as December 9, 2008, you have earned ZERO interest. That is the date that the bank rate dropped from 2.25% to 1.50%.

Think about the lost opportunities. If you had invested the same money in Apple stock on December 9, 2008, when the price was $100.06, your return to November 1, 2012 was 487%. Even in a conservative investment such asTD Bank stock, your return to November 1, 2012 was 97.6%.

When we meet to sign the closing paperwork and review the Statement of Adjustments, real estate purchasers buying new build condos are always shocked to find out their deposit money earned little to no interest.

Of course, this should not stop you from buying if you have found that perfect condo. However, you should be aware of what your money is doing for you while you wait for your condo to be completed.

What is a First Time Home Buyer?

If you’ve got a ton of questions about buying your first home, you’re not alone. Join @RBC_Canada and a panel of 5 experts (including myself, @DavidLFeld!) for the #FirstHome Twitter chat, on June 26 from 9-10 pm. Get answers to your most complicated questions and a chance to win RBC Visa Gift Cards!

One would think the term “First Time Home Buyer” (FTHB) can be simply defined. Unfortunately, it is not. The FTHB definition differs according to the program, CCRA HBP or Toronto Land Transfer Tax (LTT).

When discussing financing options with their mortgage specialist, buyers may consider withdrawing funds from their RRSP to put toward their down payment. This can be done tax free under the Canada Revenue Agency Home Buyers’ Plan (HBP) so long as certain conditions are met, including the requirement for the buyer to be a FTHB. For the purposes of the HBP, a FTHB is a person who has NOT:

At any time during the period beginning January 1 of the fourth year before the year of the withdrawal and ending 31 days before the date of withdrawal, you or your spouse or common-law partner owned a home that you occupied as your principal place of residence.”

This means for the HBP, one can potentially be considered to be a FTHB every five years. FTHBs under the HBP often take this to mean they are also eligible for the FTHB land transfer tax (LTT) rebates, which gives Toronto FTHBs an instant rebate of up to $5,725 off the LTT(MLTT + Provincial Land Transfer Tax PLTT combined). That is not so. In order to qualify for the LTT rebates, a FTHB is a person:

who has never owned a home ANYWHERE IN THE WORLD; and
whose spouse has not owned a home anywhere in the world while being the spouse of the FTHB

The term “spouse” means married or in a common law relationship (continuously lived together for at least 3 years – or shorter if parents of a child).

See the difference? For LTT rebate purposes, your FTHB status will never reset. Also, for LTT rebate purposes, you will not be considered to be a FTHB if your spouse (married or common law) owned a home while being your spouse.

It is entirely possible for one to be considered a FTHB for the purposes of the HBP, but not a FTHB for the purposes of LTT rebates. Buyers are urged to consult an experienced mortgage specialist and real estate lawyer, lest they be shocked by having to pay more than anticipated.

For more information on the Home Buyers’ Plan, including spousal eligibility, you can visit theCRA website. For more information on LTT, please visit the City of Toronto City of Toronto.

This post content is sponsored by Royal Bank of Canada, however the views and opinions expressed herein represent my own and not those of Royal Bank of Canada or any other party and do not constitute financial, legal or other advice.