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STRINGAM DENECKY LAW OFFICES
WHAT YOU NEED TO KNOW ABOUT BUYING A HOME
Why should I consult a lawyer when I buy my home?
Buying your home is probably one of the largest investments in your life, both from the standpoint of the substantial investment involved and the satisfaction which comes from home ownership. Therefore it makes sense to have a real estate lawyer assist you in obtaining ownership of this investment.
What is the importance of an Offer to Purchase in
the purchase of a home?
The Offer to Purchase is generally the total of your rights as a purchaser; it is the written contract that sets in motion the procedures which will allow you to take possession of your home. As a purchaser you must be aware that "caveat emptor" (let the buyer beware) is the general rule and that if something is not in writing in the Offer to Purchase, then you will not likely have any recourse against the owner of the home. In short, before you sign an Offer to Purchase you must do your homework, because once the Offer to Purchase is signed and the owner accepts your offer, you are legally bound to purchase the property at the price and on the terms agreed to.
What should I consider before signing an
Offer to Purchase?
- 1. Save any advertisements and include any representations made in the advertisements in the Offer to Purchase. As a purchaser, insist that 'any promise good enough to make is good enough to write".
- 2. Inspect the home thoroughly. Alberta Consumer and Corporate Affairs publishes an excellent pamphlet which will assist you in completing the inspection. We recommend that you obtain this pamphlet before embarking on any inspection of a home.
- 3. Can we afford it? You should prepare a monthly budget and consult with a bank official who can advise you on whether you are qualified for a mortgage and how much of a mortgage you qualify for. Consider how much of a financial commitment you wish to make.
- 4. Consider all the extra costs which are included. Extra costs include lawyer's fees, registration of title fees, a survey of the property, insurance, and property taxes. You can usually bank on an extra $1,000.00 for this.
- 5. What other items, such as the fridge, stove, washer and dryer, and drapes do I want to buy with the property?
- 6. When do I want to move in and how may this relate to any home which I now own or rent and does this date give everybody concerned enough time to complete the transaction?
What are the extra costs involved in purchasing a home?
Beyond the downpayment you are going to have to have available approximately $1,000.00 to conclude the purchase. This $1,000.00 will be used for the following items:
- 1 . Land Titles Office charges $35.00 plus $1.00 for every $1,000.00 the property is worth to register title, plus they also charge $15.00 plus $1.00 for every $1,000.00 a mortgage is worth to register a mortgage.
- 2. A survey certificate costs $350.00, if one is not available.
- 3. Fire Insurance is at least $175.00 for a year.
- 4. Mortgage application fees at a financial institution. Also mortgage insurance fees if you are taking out a Canada Mortgage and Housing Corporation mortgage.
- 5. Legal fees vary with the complexity of the transaction, usually we will give you an estimate before the transaction is commenced.
- 6. A tax certificate from City Hall will cost approximately $5.00.
- 7. Opening of utilities accounts.
As soon as possible you should determine whether you have the money available to conclude the purchase. One of our lawyers would be happy to assist you is working out all the extra costs involved.
What is the
Land Titles office?
The Land Titles Office is run by the Province ol Alberta government and is a land registry which has title to practically every piece of property in the Province. It is through this office that every real estate transaction is processed and where you receive title to your property. Your lawyer will prepare the documents necessary to process your home purchase through the Land Titles Office.
What should I consider when trying to finance my home purchase?
There are various means of financing a home purchase including a standard mortgage from a bank or other financial institution. You may wish to see if someone else is willing to loan you the money at a cheaper interest rate, a rich aunt perhaps. You should check and see if the property has an assumable mortgage and whether this mortgage meets your financial guidelines. Sometimes the owner of the home is willing to grant you a loan as well. The terms on which this financing is done is very important and it pays to shop around for the best interest rates and terms. Our lawyers would once again be happy to discuss with you these various options.
What is a mortgage?
In exchange for someone, usually a bank, giving you money to buy a home, you agree to give that person a mortgage which is registered against your title. You also agree to pay back to that person the money that has been borrowed on a set payment schedule. If you miss your payments that person reserves the right to take back your property. Under the mortgage you must also maintain insurance on your home and keep your home in a reasonable state of repair.
What significance do the "subject to" clauses have
in an Offer to Purchase?
Sometimes when you sign an Offer to Purchase you do not have the bank's approval for the granting of the mortgage on the property. You therefore have to make the offer subject to the bank's approval. The Offer to Purchase usually provides that you must use your best efforts to obtain financing; you can not just sit back and use the subject to clause as a means of backing out of a deal. The subject to clause can deal with other matters besides mortgage financing. You could for example, have a subject to clause dealing with obtaining the approval of your lawyer.
How does G.S.T. affect the purchase of my home?
The Goods and Service Tax is only applicable to the purchase of a new home. The G.S.T. chargeable on a new home is 7%, but there is a 2.5% rebate on the G.S.T. thus making the G.S.T. on a new home 4.5%. This applies on homes up to $350,000.00 in value. There is no G.S.T. payable on the purchase of a used home. G.S.T. will apply to all new homes purchased after January 1, 1991, however there are important transitional rules with respect to G.S.T. and we recommend that you contact one of our lawyers to discuss these rules prior to making a purchase.
At what time should you contact your lawyer when
purchasing a home?
It may be useful to phone us even before the Offer to Purchase is signed. Usually though, the first contact you will have with us is after the offer is accepted and all subject to clauses have been complied with. We at Stringam Denecky encourage our clients to contact us as soon as they can so that the transaction can proceed smoothly and there are no surprises.
What are
Stringam Denecky's
office hours?
Our main office in Lethbridge is open Monday through Friday from 8:30 a.m. until 5:00 p.m., but if you have trouble getting in to see us during this time, we would be happy to set up an alternate appointment. We also have offices in Taber, Cardston and Raymond.
For further information please E-mail lethlaw@agt.net
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