The purchase of real estate is one of the biggest financial decisions in one’s life. Therefore, it is wise to be aware of some of the procedures involved in a real estate purchase transaction.
You will negotiate and sign an Agreement of Purchase and Sale
The agreement of purchase and sale is an important contract signed between the buyer and seller. It is a legal contact outlining the terms of the agreement between the parties and brings with it all the responsibilities and obligations of contract law. All agreements for purchase and sale of real estate have to be in writing and Every real estate board in the province of Ontario have adopted the Ontario Real Estate Association’s (OREA) form of agreement for real estate transactions. Real estate agents for both parties are often involved in this stage in negotiating the terms of the agreement.
Obtaining a Lawyer’s Opinion
It is highly advised for buyers and sellers to have their agreements reviewed by a lawyer before it is signed. A lawyer can ensure that the client is informed of important issues and does not undertake something that they cannot fulfill. In addition, a lawyer can provide important guidance to a first-time homebuyer, for whom the process can be unnerving, and inform them of the important conditions in the agreement of purchase and sale. One of those conditions is financing, the agreement provides that the buyer has 10 days from signing the agreement of purchase and sale to advise the seller that it has secured a mortgage. Under the terms of the condition, if the buyer is not able to secure financing and advises the seller within 10 days, the agreement is at an end.
Do your due diligence prior to putting in an offer to purchase, this often involves the following:
- Getting a Mortgage: Although many people sign off on the agreement of purchase and sale prior to obtaining a mortgage approval from their bank, it is recommended that you consult your bank in order to get an idea of mortgage amount you can qualify for.
- Insurance: Consult an insurance broker to ensure you can secure home insurance on the property (fire/content).
- Home Inspection: It is wise to conduct a home inspection on the property as it is one of your biggest investments. Often the agreement of purchase and sale provides the condition that the buyer obtain a satisfactory home inspection report.
- Register for Utilities: Buyers should contact utilities companies to set up their accounts
- Title and off-title searches: Your lawyer will often conduct the title and off-tittle searches, you should consult you lawyer about the searches they will conduct and about title insurance.
On the day of closing the seller is to provide vacant possession to the property to the buyer. This occurs once the lawyers for the respective parties have transferred the money, keys, documentations and have registered the deed.
Time is of the essence in all real estate transaction, therefore, it is crucial to get all parties involved in a real estate transaction (lawyers, real estate agents, service companies) as soon as possible.