What legal issues should I keep in mind when buying or selling a home?
It’s summer and the real estate market seems to be busily humming along. This time of year, we see a variety of buyers and sellers, each using one of the many options on the market. However, whether it is the full service option of a licensed realtor, one of the various scaled back services, or a do-it-yourself option we see many of the same issues arise. The two most common difficulties we see at our firm are:
- The Offer to Purchase / Sale Contract
Surprisingly few buyers and sellers give due consideration to the contract itself. This document sets out the terms of the transaction and once entered into (and all conditions removed) it cannot be easily changed or added to without all parties’ consent. This can lead to difficulty when the contractual “ship has sailed” and one of the parties realizes something was missed, or perhaps not clearly included. Consider carefully what exactly you intend to include or exclude from the sale (e.g. central vac or central vac and attachments), what your precise conditions are (e.g. subject to financing vs. subject to financing satisfactory to the purchaser) and what you intend to provide/require from the other party (e.g. real property report, which condominium documents etc.). When in doubt, consult a lawyer before signing (or at least before removing conditions) as even the best lawyer cannot undo a poorly drafted contract.
- The Real Property Report
Many sellers do not realize that most form residential real estate sale contracts, including those used by many real estate agents, include an obligation to provide a Real Property Report (or “RPR”) with evidence of municipal compliance or non-conformance. In other words, the seller is obligated to provide a survey, showing all improvements on the property in relation to the property boundaries, and proof that the municipality (e.g. The City of Edmonton) has approved of the placement of those improvements. The municipality will provide that confirmation by way of a compliance stamp (giving approval) or a letter of non-conformance. Non- conformance, put simply, means that something on the property is not compliant with the current bylaws, but that the placement is permitted as-is, so long as no changes are made beyond basic maintenance.
If you are a seller and don’t have a current RPR you can expect fees in the area $700 + GST to obtain a new survey. The new RPR will then have to be submitted to the municipality for review. This process is not only is a cost consideration, but also takes time. To avoid being hit with rush fees, or having a partial holdback of your sale proceeds, you should obtain an RPR in advance and be conscious of the costs involved when budgeting around the sale of your home. Also, obtaining the survey in advance allows you to respond to any unexpected issues before the run up to closing on a sale.
Buying or selling a home is one of the biggest financial decisions most people will make in their lives. As such, it pays to attend to the details in advance, carefully consider the contract before signing and ensure those assisting you are fully informed and acting in your best interests.
If you are looking for a real estate agent who will not only assist in locating your next property or a buyer for your current home, but also help in avoiding the many pitfalls that may arise I recommend Jason Paul (www.jasonpaul.ca) of RE/MAX Excellence. Jason has assisted many of my past clients who consistently provide positive reviews and have personally observed him remain engaged even after the contract is signed. In addition, ensure you retain the services of a lawyer who is willing to assist at each stage of the process from entering into the contract to signing the final closing documents, and will respond to unexpected issues when they arise. Not all transactions are created equal, in fact few are, so a solid team of professionals will help to avoid many of the most common issues.
