Why you need a lawyer for your property transaction:
By: Moneesha Sinha, L.L.B., M.B.A., B.S.c.
When you are about to embark on purchasing, selling or refinancing your home you will need a lawyer to assist you with the transaction. You want a lawyer who understands that this is one of the most important things you and your family has ever done. You want a lawyer who understands that you need to know what is going on and who is there for you at every step of the transaction. You need a lawyer who can explain what is happening in a way that you will understand.
Purchasing a home:
You are in the process of purchasing your home or about to sign your Agreement of Purchase and Sale. You should either contact your lawyer once your offer has been accepted; however you can also see your lawyer prior to signing the Agreement if there is anything you don’t understand. What does your lawyer do? Well first of all, the primary role of the lawyer is to go over the Agreement of Purchase and Sale with you, to help ensure that you are able to satisfy all conditions; obtaining insurance, getting approved for a mortgage that you can afford and having a home inspection done. Your insurance company should send confirmation that your new property will be insured, there should be written commitment by the lender to ensure that you are able to obtain mortgage financing for the transaction and the inspection can be discussed with your lawyer if there are any major issues with the property. Your lawyer should then obtain all assurances that your new property is free and clear of any liens or encumbrances.
Your lawyer will ask you if you are taking title of your new home with another person. If so, you will be asked about your manner of title. Most often spouses take title as joint tenants which mean that the property will pass to the surviving owner upon the death of one of the owners. The other option is to take title as tenants in common which means that each owner’s share is separate from the others. If one owner dies, their share will be dealt with in accordance with their will. Your lawyer will advise you if you are unsure as to how to take title.
The legislation in Nova Scotia requires that all property being sold for value be migrated; this is something that will be completed by the vendor’s lawyer. The vendor’s lawyer will complete a title search and will review and certify the title to the Government. Migration is a one time process. Migration is something that will be discussed below. Once the property is migrated, your lawyer should review the information for any outstanding interests and ensure that any objections to title are satisfied (for example, to ensure that an outstanding mortgage is paid out).
With respect to taxes, your lawyer will get an update from the Municipality to determine the status of property taxes which will be reflected on the Statement of Adjustments. Your lawyer will also inquire for account updates for services such as water consumption or sewer charges or if there are any leased or rental equipment on the property (such as a leased furnace). Your lawyer will also have to determine if the building on your new property complies with the zoning by-laws as they relate to the use of the property. Your lawyer will also review the location certificate which shows the exact location of the property and structures on the property in relation to the lot boundaries. It will also show if there are any structural encroachments.
The most important question is how much will a purchase cost you? You must consider the fact that you will incur recording costs payable to the Land Registration Office of $79.57 for your deed and $79.57 for your mortgage. You must also consider the cost of a tank of oil if the home is oil heated (most likely what will happen is the seller will top off the tank and bill you for the cost of a full tank of oil). You must pay your share of the year’s property taxes on the home. The greatest closing expense is the fact that you must pay the deed transfer tax which is payable to the Municipality and is 1.5% of your purchase price. Finally if the location certificate is unavailable you should also factor in the fact that you might have to purchase a title insurance policy. Title Insurance is a policy of insurance which will be an assurance of the condition of the title to the home at the time of your purchase. It is an assurance of the ownership of the land and its size. The policy is issued to you by a Title Insurance Company and it is a one time fee and will protect your title for as long as you own your home.
A new home is not exempt from GST. If your home is a new home, you as the Purchaser will have to pay GST on the purchase price of the home but you will normally qualify for a rebate for a percentage of the GST paid.
When it comes time to signing the documents, you will have to meet with your lawyer to sign. Your lawyer should advice you of the amount you will need to bring in to close your purchase. Even if you have 100% financing, you will have to cover the balance for the recording costs, for the lawyer fees, for the deed transfer tax, etc. This amount must be a certified cheque and must be payable to your lawyer’s firm in trust.
On closing day – you really shouldn’t have to worry about a thing. Your lawyer will arrange to have the mortgage funds transferred to their office. Your lawyer will arrange to send everything to the vendor’s lawyer – and the vendor’s lawyer will forward the deed to the property and the keys. Keep in mind that your keys may not be available until the late afternoon (important when there are movers waiting).
After closing your lawyer should send you a reporting letter with copies of your documents.
Selling your home:
Your lawyer will not only deal with the purchaser’s lawyer but also the bank in ensuring that your outstanding mortgage is paid off. Your lawyer will be responsible to migrate the property into Property Online, Nova Scotia’s online Property System. The migration process does take some time, so you should keep that in mind. It is even helpful to migrate your property before the Agreement is signed. Your lawyer will complete a title search, review the title search abstract and prepare the legal description. You will have to sign some documents confirming the size, shape and location of your property.
Your lawyer will first ask you for the location certificate for the property; this will be provided to the purchaser. Your lawyer will request a mortgage payout statement from your mortgage provider for the day of closing.
For the sale, your lawyer will prepare a Deed and a Statement of Adjustments which will outline what is credited to the vendor in the transactions. The lawyer will arrange for the Deed to be sent to the purchaser’s lawyer with keys. Your lawyer will also pay out your mortgage and request a release from your lender and ensure it is recorded at the Land Registration Office when it is received. Expenses to keep in mind with a sale are recording fees payable to the Land Registration Office to record the release of your mortgage, lawyer’s fees and requesting a tax certificate. The lawyer will pay the real estate commission fees, legal fees, property taxes, recording fees for the release and any other expenses you have requested of your lawyer to be paid out. The balance of the funds can either be deposited into your account or will be sent to you in your closing package.
The Migration of your Property:
You are required to have your property converted to Nova Scotia’s Land Registration Act if your property is being sold for value or mortgaged. Your property is converted into the new online system. First of all, your lawyer will have a title search done which will outline the status of the title to the property, will have outstanding mortgages, liens or judgments outlined. Your lawyer will submit the PDCA application first (Property Description Certification Application). This is a property description outlining all applicable easements, restrictive covenants and agreements for review. The description will be compared and either approved or rejected. Once approved, the lawyer will submit an AFR (Application for Registration) which will outline who the property owners are, all outstanding mortgages and all easements. Once the AFR is approved, there is a final step to certify your title done by the lawyer.
The above is meant to provide a straightforward outline of why you need a lawyer for your property transaction. If you have any questions on the above, do not hesitate to contact me. I would be happy to meet with you to discuss your concerns or questions. Good luck with your transaction.
Moneesha Sinha
Blois Nickerson & Bryson
1568 Hollis Street
Halifax, N.S. B3J 3B7
Telephone No. (902) 425-6000
Fax No. (902) 429-7347
Email: msinha@bloisnickerson.com