The process of title transfer known as the real estate closing process is the last step, which is involved in any property exchange. It is a vital process which has several critical stages that facilitate valid change of ownership from the seller to the buyer. For instance, in Canada, the process may involve many people such as the real estate lawyers, agents, mortgage companies, and insurers. It is crucial that you familiarize yourself with the procedural framework that regulates the closing process. And the tasks that must be accomplished to avoid such complications, leading to costly oversights.
Step-by-Step Guide to the Real Estate Closing Process in Canada
Real estate closing in Canada is a series of well-defined actions or operations that result in the passing of title or ownership of a property from the vendor to the purchaser. In each of them there are crucial issues which decision can substantially influence the overall result of the transaction. Below is a detailed explanation of each step involved in the closing process:
Signing the Agreement of Purchase and Sale (APS)
The process starts from offer and acceptance which are evidenced by the signing of the APS: Agreement of Purchase and Sale. This document includes all the stipulations of the transaction such as price, down payment, closing date, and any contingent provisions as may be required (e. g., obtaining a loan, inspection report). The APS forms the basis for the entire closing process.
- Legal Review: Before signing, it’s advisable for both parties to have the APS reviewed by their respective real estate lawyers. This ensures that all clauses are fair and protect the interests of both buyer and seller.
- Condition Period: Many APS contracts include a conditional period where certain requirements, like obtaining a mortgage or a satisfactory inspection, must be fulfilled. If these conditions are not met, the contract may be voided without penalties.
Conducting a Title Search and Property Survey
Once the APS is signed, the buyer’s real estate lawyer will carry out a title search to ascertain that the title deeds to the property are free of any form of encumbrances like liens, easement or any other pending legal issues. This step it necessary to ensure that the seller has the capacity to convey the said property to buyer and that the latter is going to get a clear title once the purchase is complete.
- Title Insurance: In addition to the title search, buyers often purchase title insurance to protect against any potential title-related issues that may arise after closing.
- Property Survey: Depending on the property and local requirements, a new property survey may be required to confirm the property’s boundaries and ensure that all structures comply with local zoning laws.
Arranging Financing and Insurance
Another important aspect that is usually risky in the closing process is the issue of funds. Normally, buyers consult their lenders to discuss the mortgage loan agreements and conditions such as the interest rate, the amount of the loan, and other formality of the loan application.
- Mortgage Approval: Once the mortgage is approved, the lender will provide a commitment letter outlining the terms of the loan. This document is necessary to move forward with the closing.
- Homeowners Insurance: Before closing, the buyer must also arrange for homeowners’ insurance, as it is often a requirement for obtaining a mortgage. This insurance protects the buyer’s investment in the property.
Completing a Final Walkthrough
Before the closing date, the buyer typically conducts a final walkthrough of the property if stipulated in the agreement of sale. This is the final check to confirm that the property retunes to its original state and where necessary all post-inspection damage has been fixed. While doing the walkthrough, the buyer must verify that all the fixtures and appliances are functional and see that no other problem has emerged after the home inspection.
- Addressing Issues: If any problems are discovered during the walkthrough, they should be immediately brought to the attention of the seller and the lawyers involved. Any unresolved issues could delay the closing.
Preparing Closing Documents and Calculating Adjustments
The buyer’s real estate lawyer will draft the closing documents required in the final days before closing. Such documents include transfer of deed, mortgage agreement, and any others that are necessary for the completion of the transaction.
- Statement of Adjustments: The seller’s lawyer will also prepare a statement of adjustments, which details the final amount of money that needs to be paid by the buyer. This includes the purchase price, less the deposit already paid, plus any prorated costs such as property taxes, utility bills, and other expenses that the seller has prepaid.
- Reviewing Documents: Both parties should carefully review all closing documents before the day of closing to ensure accuracy and understanding.
Closing Day: Finalizing the Transaction
Closing day is the final meeting between the buyer and the seller generally represented by their real estate lawyers. The buyer will be advised by his attorney as to when the balance of the purchase price, legal fees and closing costs should be paid to the seller.
- Transfer of Ownership: Once the funds are transferred, the seller’s lawyer will hand over the keys to the property and buyers’ lawyer will register the transfer of title with the local land registry office. This registration officially completes the transfer of ownership, making the buyer the new legal owner of the property.
- Closing Costs: The buyer should be prepared to cover various closing costs, including land transfer taxes, legal fees, title insurance, and any other miscellaneous fees. These costs are typically paid on closing day.
Post-Closing Tasks
After the transaction is complete, there are still a few important tasks to be done. For example, one is advised to keep all the Closing Documents save and secure this is because it can be useful in the later future, especially when preparing the tax returns.
- Final Statement of Accounts: The buyer will receive the final statement of accounts in the weeks following closing with reporting letter, which outlines the exact costs and fees paid during the transaction.
- Property Registration: The transfer of title will be officially registered with the local land registry office, ensuring that the new owner’s legal rights to the property are recognized and protected under the law.
How long does closing on a house take?
Generally, it takes from 20 to 60 days to close, and it starts when the APS has been signed. All the documentation work is done, and last confirmation is made to make sure that the orderly operational of the transaction will take place. Many might find this process to be quite challenging, particularly if they have little understanding of the legal and financial conditions that go with it. Is that what you are going through also? Our Real Estate Lawyers are ready to help, connect with us today. Are you also going through the same thing? Connect with our Real Estate Lawyers!
What Can ‘We’ Do for You?
Our professional real estate lawyers are ready to help you have as hassle-free a closing as possible. There is no aspect of a sale from the review of contracts to sealing the transfer of ownership that we do not cover to ensure your interests are well guarded. Ready to close with confidence? Contact us today! Call 905-405-0199
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