|
For most people, buying
a home is the most expensive purchase they will ever make. With the
average resale home or condominium in the Toronto area selling for more
than $300,000, it’s a purchase that requires careful planning and
assembling a group of qualified experts to assist in the process. By
the time the purchase is closed and the lawyer is ready to hand over the
keys, the new owner will have dealt with a handful of people, each of
whom has an important role to play in the transaction.
Toronto real estate lawyer Shawn Zuckerman is also a licensed real
estate agent with Bosley Real Estate on Merton St. He is one of a very
small group of professionals who have a foot in both the legal world of
real estate, and the practical world of buying and selling.
"Assemble your ‘dream team’ of experts at the start of any search for
a resale home," says Zuckerman. "It’s impossible to be too well prepared
for a house purchase which now averages more than $300,000."
Whether the market is frenzied or stable, Zuckerman recommends
assembling a dream team at the start of any search for a resale home. If
the experts are not gathered up front, valuable advice may not be
available in time, and a mad scramble could take place at the last
minute.
As a minimum for any house purchase, Zuckerman suggests creating a
team which includes
a knowledgeable real estate agent
a competent real estate lawyer
a mortgage broker or banker
a qualified home inspector
an insurance agent, and
a land surveyor.
The real estate lawyer. The quarterback of the dream team is a
qualified real estate lawyer. When looking for a lawyer - or any other
member of the purchaser’s team - ask family, friends or colleagues for a
recommendation, or search on the Internet or in places like the Yellow
Pages.
Make sure the lawyer chosen is one who devotes a significant
percentage of his or her legal practice to real estate law.
The lawyer reviews the agreement of purchase and sale, hopefully
before it is signed and not after. As well, he or she will search the
title, arrange title insurance, prepare all the purchase and mortgage
documentation, check for tax and other arrears, and arrange for the
signing of document authorizations to enable electronic closing and
registration by computer.
Each document will be carefully explained to the purchaser at the
time of signing, and the flow of money from the mortgagee and the
purchaser to the vendor will be reviewed in detail.
Of equal importance, the lawyer will co-ordinate all the other
players on the purchaser’s team, and make sure that they are in game
position on the playing field at the time and place they are needed for
closing the transaction smoothly.
The mortgage broker or banker. In order to clarify the amount of
mortgage a purchaser can carry, a banker or mortgage broker should be
consulted very early in the process.
A pre-approved mortgage will let the buyer know exactly home much
house and how big a mortgage he or she qualifies for, but it’s not
necessarily a guarantee that financing will be provided. If the
purchaser’s financial circumstances change before closing, or if the
house is appraised for less than actual the purchase price, the mortgage
financing can easily disappear or be reduced to an amount lower than the
original approval.
The real estate agent. There is no shortage of information
available to the public on resale houses being offered for sale, but in
most cases a real estate agent will be involved in the sale and purchase
of a property. A well-prepared agent will have colour brochures
describing the house available to prospective buyers, and will help
stage the house so it shows its best side to the buying public.
A buyer’s agent will assist the client in narrowing down the choices
and negotiating the final price and contract terms.
When the same person is a dual agent and represents both buyer and
seller, he or she will explain to the clients where the dual role begins
and ends, and how conflicts of interest are avoided.
The home inspector. Typically an offer to purchase contains
several conditions, including one allowing a home inspection. After the
offer is accepted, a home inspector will conduct a detailed home
inspection in the presence of the purchaser, explaining the significance
of any discovered defects, and often - since no house is perfect -
giving ballpark figures on repair costs.
Purchasers should be aware, however, that home inspectors do not
inspect sealed or inaccessible areas, and do not comment on any
environmental issues, like urea formaldehyde foam insulation, asbestos,
vermiculite insulation, radon gas or soil contamination.
Home inspections take two or more hours, and represent a few hundred
dollars well invested.
The insurance agent. An insurance agent is an important part of
the team, and purchasing fire and liability insurance should not be left
until the day of closing.
In recent years it has become increasingly difficult to arrange home
insurance, and some insurers are not interested in new customers with no
insurance record. In many cases it is difficult to obtain insurance for
homes with old fuel oil tanks, or knob and tube wiring. Sometimes a
mortgage lender will want higher coverage than an insurer is willing to
provide.
In all these cases, early contact with the insurance agent can avoid
last minute problems.
The agent will also explain the various levels of coverage available,
and assess the purchaser’s comfort level with the recommended policy.
The surveyor. If the house has no existing survey, or an old or
illegible land survey, the savvy purchaser will retain an Ontario land
surveyor to prepare a new one.
A survey shows the full extent and dimensions of the property being
purchased, and the location of all buildings and improvements on the
land. It can reveal whether there are any encroachments of neighbouring
buildings or fences on the land, and whether the house, garage or fences
being purchased stray beyond the limits of the property boundaries.
Despite the fact that title insurance may protect a purchaser from
some of the losses resulting from the lack of a current survey, it will
not compensate for the grief involved in correcting the problem. Many
lawyers suggest using a land surveyor when appropriate.
***
By the time the lawyer hands the keys to the purchaser, every member
of the team will have played a critical role in getting the deal closed.
--------------------------------------------------------------------------------
Bob Aaron is a Toronto real estate lawyer. He can be reached by email
at bob@aaron.ca, phone 416-364-9366 or
fax 416-364-3818. Visit the column archives at
http://www.aaron.ca. | 
