Real Estate
Closing Costs | Closing Steps (Purchase) | Closing Steps (Sale) | Closing Steps (Mortgage) | First Time Home-Buyers | Non-Residents | Moving Tips
Closing Costs
“What’s it going to cost to complete my transaction?” is the most commonly asked question. And for most people, they are thinking just in terms of legal fees when they really need information on:
- Legal Costs;
- Third Party Closing Costs;
- Property Transfer Tax;
- Goods and Services Tax; and
- Closing Adjustments
“What do I do now?” is usually the second most commonly asked question. They have entered into a binding contract of purchase and sale – what do they need to do now and when do they need to do it? There are a number of questions that arise and we want to help our clients understand the Closing Steps (see links above for your type of transaction).
Buying
Information we will need if you are buying:
- A copy of the Contract of Purchase and Sale (through your realtor if you used one or directly from you if not)
- Full names, occupations and contact information for all of the buyers
- Buyers address if they will not be moving into the new property
- The name of your realtor, lender, mortgage broker, and insurance agent
- Name of your strata management firm or the person who manages the strata corporation
- Your address, e-mail, fax and phone numbers
- Information regarding any existing tenants
- Surveyor’s Certificate, if one is available
- Two pieces of identification, one must be photo ID
- Whether you are to be registered as Joint Tenants or Tenants in Common
- If you are a first time buyer, your birth date, Social Insurance Number and a list of where you have resided for the last two years
Closing Steps (Purchase)
- Step 1 – Contact our office as soon as you have an accepted Contract of Purchase and Sale and have removed all subjects to avoid rush fees. Let your realtor/banker/mortgage broker know that you are using our office for your transaction. If you are not using a realtor, you must provide us with a copy of your Contract.
- Step 2 – We will need to gather information from you including how you wish to hold title to the property if you are buying with your spouse or partner. Don’t hesitate to contact our office if you have not heard from us at least 2 – 3 weeks before the closing.
- Step 3 – We conduct a title search and obtain tax information and any additional information necessary to prepare Statements of Adjustments. If you are getting a mortgage, we will also need to obtain an insurance binder with “loss payable” to your lender.
- Step 4 – We prepare closing documents including title transfer, mortgage, property transfer tax forms and Statements of Adjustments. We will then forward the seller’s closing documents to the seller’s lawyer or notary for execution.
- Step 5 – 1 – 3 days before closing is when we usually meet with you to sign documents and obtain the balance of the down payment or equity. The balance of funds will need to be paid to our office by certified cheque or bank draft payable to Notary,” in trust”. If your funds are invested ensure that they will be available for deposit in advance of closing.
- Step 6 – We will register the transfer and mortgage documents and arrange to payout the seller’s lawyer or notary.
- Step 7 – Your realtor will make arrangements for the house keys for the Possession Date as set out in the Contract of Purchase and Sale.
- Step 8 – Move in and enjoy your new home!
Selling
Information we will need if you are selling:
- A copy of the Contract of Purchase and Sale (through your realtor if you used one or directly from you if not)
- Your forwarding address and phone number
- Your current address, e-mail, fax and phone numbers
- Copy of your most recent mortgage statement
- The name and phone number of your realtor
- Information regarding any existing tenants
- Surveyor’s Certificate, if one is available
- Two pieces of identification, one must be photo ID
Closing Steps (Sale)
- Step 1 – Contact our office as soon as you have an accepted Contract of Purchase and Sale and have removed all subjects to avoid rush fees. Let your realtor know that you are using our office for your transaction. If you are not using a realtor, you must provide us with a copy of your Contract.
- Step 2 – We will need to gather information from you regarding your existing mortgage and any existing tenants in the property. We will also ask you for the Surveyor’s Certificate for the property if you have one.
- Step 3 – We conduct a title search and obtain tax information and order a mortgage payout statement from your lender.
- Step 4 – The buyer’s notary public or lawyer prepares the closing documents, so we must receive those documents before we can prepare our Order to Pay and arrange for your appointment.
- Step 5 – 2 – 5 days before closing is when we usually meet with you to sign the sale documents.
- Step 6 – We will return the signed documents to the buyer’s notary public or lawyer on undertakings for them to register the transfer and mortgage documents and provide us with the sale proceeds on completion. The documents are generally provided to the buyer’s representative on their undertakings to: not register the documents until they are in receipt of the balance of funds required by the buyer to complete and that upon registration and their receipt of mortgage proceeds (if any) they will forward the net sale proceeds to our office.
- Step 7 – Your realtor will make arrangements with you to pass along the house keys on the Possession Date as set out in the Contract of Purchase and Sale.
- Step 8 – We will contact you when we have a cheque for the net sale proceeds ready for you to pick up.
Mortgages
Information we will need if you are refinancing:
- Your address, e-mail, fax and phone numbers
- Copy of your most recent mortgage statement
- Name and phone number of your lender/mortgage broker
- Name and contact information for your insurance agent
- Surveyor’s Certificate, if one is available
- Void cheque
- Two pieces of identification, one must be photo ID
Closing Steps (Mortgage) Refinancing your home is a pretty straightforward process once you have selected from the many mortgage products available on the market. The cost for a refinance can vary, depending on what is being paid out. Please contact our office for a quote. To help alleviate the stress of refinancing it is important to understand the closing process step by step:
- Step 1 – Contact our office as soon as you have a mortgage approval and preferably at least 10 days before funding is to occur, to avoid rush fees. We will need to receive the lender’s instructions before we can start our work on your behalf.
- Step 2 – We will need to gather information from you including the name of your insurance company and if the property is strata title, the name of the management company. We will also gather payout information for any existing mortgages or third party creditors to be paid out with the refinancing.
- Step 3 – We will conduct a title search and obtain tax information and any additional information necessary to prepare the Mortgage and Order to Pay.
- Step 4 – We will prepare closing documents including the Mortgage and Order to Pay.
- Step 5 – We usually meet with you 1 – 3 days before funding to sign documents.
- Step 6 – We will register the Mortgage, obtain funds from your lender, payout any existing lenders or creditors approved in the Order to Pay and arrange for deposit or pick-up of proceeds.
- Step 7 – We will provide you with a final report, including the net mortgage proceeds.
First Time Buyers
First Time Buyers are usually looking for answers to the following questions:
- Do I qualify for an exemption under the provincial Property Transfer Tax?
- Can I take money out of my RRSP under the federal Home Buyers’ Plan?
- What are my Closing Costs and adjustments going to be?
- I have a binding Contract of Purchase and Sale and been approved for a mortgage, what is the process or the Closing Steps?
The Home Buyers’ Plan is available to “first time buyers”. Unlike the Property Transfer Act, a purchaser can qualify as a “first time buyer” more than once if they or their spouse have not owned a principal residence for approximately four years. The Home Buyer’s Program allows a first time buyer to withdraw up to $20,000 without paying tax on the withdrawn amount. The home being purchased must be a principal residence, can be existing or being built and the RRSP must be repaid within 15 years with minimum payments of 1/15th of the withdraw amount (see Home Buyers’ Plan for more information).
Non-Residents
Buyers Non-residents can own property in QC/Canada but there are some important considerations. Mortgage qualifications in Canada are different for non-resident buyers than for Resident Buyers. Non-resident buyers should consult with a lender or mortgage broker to understand the qualifications for a non-resident buyer. Non-resident buyers will need to open a Canadian bank account and will need to do so in person with identification acceptable to the lender. Non-resident buyers do not need to be present in QC. to execute closing documents. We utilize technology to streamline the closing process for non-resident buyers. Documents can be forwarded electronically and executed in front of a lawyer or notary in most foreign jurisdictions. It is important to make arrangements for the transfer of monies well in advance of closing. Non-Resident Buyers should also consult with a Canadian tax professional to discuss tax treatment both during the period of property ownership and on disposition. A non-resident owner of rental property will be subject to a 25% withholding of taxes on the gross rental income. Administrative rules require that the owner or agent remit these amounts to the Canada Revenue Agency. A non-resident owner may file a special form to have the withholding taxes reduced which essentially treats the non-resident as a resident with respect to the rental income. This form needs to be filed before January 1st of each year. For further information, please contact a tax professional. Sellers To avoid liability for non-resident sellers’ unpaid taxes, purchasers must withhold a portion of the sale proceeds until a non-resident seller has provided a Clearance Certificate from Canada Customs and Revenue Agency. The holdback is normally 25% but could be higher depending on the use of the property. A non-resident seller should retain the services of a tax professional to assist in obtaining a Clearance Certificate. This should be done as soon as possible as the process can take six to eight weeks. Under circumstances where the holdback would not leave sufficient funds to payout an existing mortgage at time of closing of the sale, a seller can claim hardship to expedite the issuance of a Clearance Certificate. A Clearance Certificate will only be issued once the tax is paid. Canada Customs and Revenue Agency will review the particular sale transaction to determine whether or not capital gains tax is payable but will also require payment of any other taxes outstanding or payable by the seller. The seller can claim certain expenses in determining the adjusted cost base including Property Transfer Tax, Goods and Services Tax, legal fees on the original purchase, and any capital improvements made, including strata assessments. The commission, tax and legal fees on the sale are not deductible for purposes of calculating tax owing at the time of the sale. The seller can claim these expenses by filing a Canadian tax return subsequent to the sale.
•Title Attorney & Notary -Petro Choma Notary& Law Firm •8780, av Henri-Julien, Montréal, QC •514.560.6983 •Anastasia.Kyva@Gmail.com