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FAQ: Real Estate
Find out the answers to frequently asked questions ("FAQs") with regard to family law and other legal issues.
Can one lawyer act for the buyer and seller of real property?
According to the Rules of Professional Conduct, one lawyer cannot act on behalf of both the buyer of real property (otherwise known as the transferee) and the seller of real property (also known as the transferor) except under limited circumstances.
In the following series of circumstances, and so long as there is no violation of rule 2.04 of the Rules of Professional Conduct, a lawyer may act for the transferor and the transferee when transferring title with respect to real property:
(a) the Land Registration Reform Act allows the lawyer to sign the transfer on behalf of both parties.
(b) the parties are “related persons” (“Related persons”, according to section 251 of the Income Tax Act (Canada) include but are not limited to the following:
- People connected by blood relationship, connected by marriage, common-law partnership or adoption.
- A corporation and a person who controls the corporation (assuming that the corporation is controlled by one person.
- A corporation and a person who is a member of a related group who controls the corporation.
(c) the lawyer’s practice is in a remote location where there are no other lawyers that either the transferor or the transferee could retain for the transfer, without causing them undue inconvenience.
In any of the above-noted exceptional circumstances, the lawyer must advise the clients that:
(a) the lawyer has been asked to act for both parties;
(b) None of the information that is received relating to the matter from one may be treated as confidential so for as the other is concerned; and,
(c) if a conflicts ensues that cannot be resolved, the lawyer will not be able to continue to act for both parties. In such a situation, the lawyer may have to withdraw completely from the matter.
Should you wish to learn more about transfers of title to real property, contact Marilyn Krol, partner at Krol & Krol, at 905.707.3370 ext. 22.
An explanation of different types mortgages
A mortgage is a loan that is secured against real estate.
If you want to purchase a home, it is always a good idea to get pre-approved on a mortgage. The pre-approval will outline how much, based on your qualifications and personal credit ratings, the bank feels you can afford to borrow. By being pre-approved, you will then know in advance what funds you will have available in order to negotiate your purchase price. Additionally, if the property is very desirable you can put in an offer without it being conditional on financing and then the vendors (or the party selling the property) may be more inclined to negotiate an offer of purchase with you.
There are many different kinds of mortgages a person can obtain.
A conventional mortgage is a mortgage that does not exceed 80% of the purchase price of the property. Accordingly, this type of mortgage does not need to be insured against default.
A high ratio mortgage is a loan that needs to be insured against loss by either Canada Mortgage and Housing Corporation (CMHC), a Federal Government Corporation, or GE Capital, a private insurer. If you don’t have 20% of the lesser of (a) the purchase price, or (b) the appraised value of the property, your mortgage must be insured against default by a Mortgage Insurer. For information about premiums added to the mortgage amount, or the premiums paid at closing, please refer to CMHC Borrowing Costs.
For more information on mortgages and the services provided by Krol & Krol, contact Krol & Krol at 905.707.3370.
Do I need a lawyer when buying or selling property?
Whether you are buying a property, or selling your house, you will need a lawyer to represent you and your interests.
In Ontario, the recording system for land ownership is computerized in such a way that lawyers are allowed to enter this system to change ownership over land as well as to register and delete mortgages relating to the land in question. Lawyers hold this role and are supposed to guard against fraud in order to make the system safer.
The seller of the land also has to assure the purchaser that he or she is in a position whereby “good title” is transfered with respect to the land in question. In order to do so, the seller needs to understand both real estate law and procedure. The lawyer who is representing the purchaser will be aware of the appropriate concerns about the land that is in question.
Lawyers will also ensure that the proper papers are prepared and signed prior to the transfer of the land. Having a lawyer helps guide you through the process of buying or selling a home, ensuring that your legal rights and financial interests are protected.
The Rules of Professional Conduct have certain requirements when dealing with purchase and sale transactions, which usually include the presence of a different lawyer on both sides of the transaction.
What is title insurance and what does it cover?
It is important, when purchasing a property in Ontario, that you obtain one with clear ownership, which is also known as “good title”.
Title insurance is a form of insurance policy to insure the homebuyer and mortgage lender (when involved), against the loss or damage sustained as a result of surveyed title risks and defects. Title insurance helps to ensure that the quality of the legal title that you are purchasing when purchasing the property is unproblematic. In other words, it transfers the risks connected with the property title from the homebuyer and mortgage lender to the title company.
Title insurance is a form of insurance that has recently become more commonly accepted by different mortgage lenders.
Title insurance can provide coverage in the event that the following circumstances arise:
1. Work orders which arise from the failure of previous owners to obtain proper permits;
2. Cover a purchaser for issues that an up to date survey might reveal;
3. Access-related problems;
4. Any mortgage or lien affecting the property;
5. The unmarketability of title to the property;
6. Another entity having ownership over the property or any other interests, whether or not it appears on the registered title;
7. Liens that result from court orders, property tax arrears, or public utility arrears;
8. Any unregistered hydro easement;
9. Any uncompleted, unsigned or unregistered documents;
10. The invalidity of your title due to fraud, forgery, duress, incapacity or impersonation.
It is important to note that title insurance will not necessarily fix any issue that is discovered on title, however it will often times protect the owner from financial loss for issues which may not be discoverable through regular investigations.
For more information on real estate law, contact Marilyn Krol (partner at Krol & Krol) at 905.707.3370.
What is the difference between various types of mortgages?
Mortgages are loans that are secured against homes. There are many different kinds of mortgages a person can obtain.
There are three types of mortgages: a closed mortgage, a convertible mortgage, and an open mortgage.
A closed mortgage cannot be changed. TIn this regard, the buyer is not allowed to prepay or renegotiate the terms of a closed mortgage until the term outlined has been completed. The only way that a borrower may be able to convince the lender to alter the mortgage is by paying an interest penalty.
A convertible closed mortgage is a closed mortgage whereby the borrower is able to change the mortgage from a short-term mortgage, to a long-term mortgage, depending on the financial needs of the borrower.
An open mortgage is one that can be prepaid, paid off, or renegotiated at any time and in every amount without interest or penalty. Usually, even if the term in both the closed and open mortgages are the same, the interest rate on an open mortgage is higher than it is on a closed mortgage.
A pre-approved mortgage is obtained before you go looking for the home you wish to purchase. It outlines how much, based on your qualifications and personal credit ratings, the bank feels you can afford to borrow from the bank. By being pre-approved, you know in advance what funds you will have available in order to negotiate your purchase price. Additionally, if the property is very desirable you can put in an offer without it being conditional on financing and then the sellers may be more inclined to negotiate an offer of purchase with you.
A conventional mortgage is a loan that does not need to be insured against default.
A high-ratio mortgage is a loan that needs to be insured against loss by either Canada Mortgage and Housing Corporation (CMHC), a Federal Government Corporation, or GE Capital, a private insurer. For information about premiums added to the mortgage amount, or the premiums paid at closing, please refer to CMHC Borrowing Costs.
For more information on mortgages and which are best to suit your interests, contact Marilyn Krol, an experienced partner and real estate lawyer at Krol & Krol, at (905) 707-3370.
Why should I hire a real estate lawyer?
Each party (the vendor and the purchaser) to a real estate transaction needs a separate, independent real estate lawyer in order to close a real estate transaction in Ontario.
In addition, you will have questions with regard to what your legal rights are and what the best way is for you to proceed with the buying and/or selling of the property. Not only will hiring a real estate lawyer relieve stress that comes along with the legal transaction, but they will also ensure that you are fully aware of the implications of your actions and aware of what you are entitled to.
A real estate lawyer serves a number of roles in the legal process of obtaining and selling a property:
1. Help you prepare the purchase contact;
2. Ensure that you understand the purchase contact;
3. Prepare and register all other legal documents;
4. Negotiating terms and conditions on your behalf; and,
5. Review contracts prior to the closing.
A real estate lawyer should be involved in the process as soon as possible, so that he or she can begin to start working to protect your interests. It is suggested, however not mandatory, that you obtain a lawyer before you sign any agreements with real estate agents.
It is important that you hire a real estate lawyer that is knowledgeable and experienced in real estate law.
For inquiries about hiring a real estate lawyer throughout Toronto, Richmond Hill, Thornhill, Maple, Concord, Markham, Vaughan and Aurora, contact our experienced real estate lawyers at Krol & Krol at 905.707.3370.
What is mortgage amortization?
When one refers to the mortgage amortization period, they are referring to the amount of time that it will take until the entire mortgage debt will be repaid. The mortgage amortization period is important, as it affects the amount of interest one will be required to pay on their mortgage, as well as the amount that they will have to put down on their home when they sign the mortgage.
If you obtain an amortization period of less than 25 years, then you will be obligated to pay less interest on your mortgage each month, and will be required to make monthly mortgage payments for a shorter period of time.
If you choose to do this, then you will be required to put down more money when it comes to the principal balance, however this means that you will be mortgage free sooner rather than later.
If, however, you choose to have a 25 year long amortization period, you would pay a larger interest rate over a longer period of time. This means that the amount owed monthly would be less, however due to the extension of the pace of the mortgage, you would end up paying a larger amount of interest in total and would be required to pay your mortgage for an extended period of time.
More frequent payment schedules, like bi-weekly payments, can save interest costs by reducing the outstanding principal balance more quickly.
For more information on mortgage amortization contact Marilyn Krol at Krol & Krol at 905.707.3370, extension 22.
What is an offer to purchase or an agreement of purchase and sale?
An offer to purchase is also commonly referred to as an agreement of purchase and sale.
An offer to purchase (or agreement of purchase and sale) outlines the terms upon which the buyer agrees to purchase the property from the seller. It takes the form of a written legal contract between two parties, being the buyer and the seller. Usually, an offer to purchase is a legal document drafted by a lawyer and witnessed by a third party. That means that the contract is legally binding, and that the purchase is subject to the terms outlined in the offer to purchase.
In addition, it often outlines the price upon which the buyer will buy the property from the seller. An offer to purchase can come in one of two forms. It can be firm, or conditional.
A firm offer contains no conditions. The agreement is straightforward and clear cut. It outlines that the sale will take place and the way in which the sale will proceed. This type of offer does not outline specific conditions that need to be met in order to go ahead with the sale.
A conditional offer is another type of offer to purchase. This type of offer to purchase is subject to specific conditions, outlined within the document itself. Usually, there is an indicated time period within which the conditions outlined in the conditional offer must be completed in order for the purchase to go through. With this type of agreement of purchase and sale, if the conditions are not met, then the buyer may back out of the deal.
The conditions outlined in a conditional offer may include, but are not limited to, financing, or the sale of an existing home and so forth.
For more information on offer to purchases, also known as agreements of purchase and sale, contact Krol & Krol at 905.707.3370.