These tips will help ensure your home purchase goes smoothly
By Mark Weisleder, Toronto Star
Between signing a real estate deal and closing, there are plenty of things that can go wrong. By being prepared you can make sure that your deal is kept on the straight and narrow.
Here are some recurring themes:
1. Appliance disappointments:
Sellers will only guarantee that the appliances and home systems they leave behind will be working on closing. If something breaks down shortly thereafter, it is not the seller’s responsibility. Buyers should consider insurance against these types of breakdowns. Some companies that provide these policies are Canadian Home Shield, Resrx and Direct Energy. As with any insurance policy, check the deductibles and what is and what is not covered.
2. Closing day disappointments:
Sellers have to move out as soon as title changes hands. This can be as early as 9 a.m., although most deals close between 1 p.m. and 4 p.m. If the seller is still there after the title changes, they can be liable for any extra moving costs the buyer incurs.
Sellers must also be sure they give their lawyer the right keys so the buyer can get in.
On more than one occasion in my experience, the seller left one key but there were two locks on the front door. The buyer had to pay a locksmith and sent the bill to the seller.
The same goes for junk left behind. If you leave it, you may have to pay the costs to remove it.
3. Arrange bridge financing:
Most buyers want to close their sale and purchase on the same day. Sometimes it doesn’t go smoothly. For example, if the person buying your home is late closing, your lawyer may not be able to get the money to the lawyer who is acting for the person selling their home to you in time. This can result in the seller cancelling the deal if you are late, or charging a penalty to extend it for another day.
In addition, you will likely pay additional moving costs as your seller may not have left the home by the time your movers arrive.
Bridge financing gives you the ability to have the funds on hand if needed and merely pay interest on the money for one or two days.
4. Appraisal policy requirements:
More and more lenders are requesting that an appraisal be done a few days prior to closing, after the buyer has waived their financing condition.
If the appraisal says your home is not worth what you paid for it, they will not lend you what you expected, and you will have to come up with this additional down payment yourself. This can be disastrous at the last minute.
Ask about your lender’s policy regarding appraisals before you apply for any mortgage loan. Make sure they will provide all approvals before you have to waive any finance condition.
5. The new home HST rebate:
People who buy a new house or condominium from a builder must understand that the HST rebate is built into the sale price. The builder will get this money, after closing, from the Canada Revenue Agency (CRA), so long as you move into the home.
If you are not moving in, but intend to rent it out or resell it immediately, you will have to pay this HST, typically between $20,000 and $30,000, to the builder on closing. Otherwise CRA may chase you for the money later.
Mark Weisleder is a Toronto real estate lawyer.
First published in the Toronto Star on December 31, 2012.