Anecdotes and Advice from a First Time Home Buyer Part 8 – Success!

My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 7 – A close call.

Having inured ourselves to the speed-of-light pace of home buying in downtown Toronto, we had expected to be looking for a long period of time. To our surprise, just a few months into the search, we chanced upon an updated house with original architectural details just outside the Annex. The house was a bit more expensive than we had originally budgeted for, but it was affordable for us and most importantly in our target neighbourhood.

Despite the higher price, we still had to compromise on space. Many of the less expensive options that required additional work went through bidding wars which substantially increased their prices; thus the difference between a slightly cheaper property which needed more work and one in better condition was in some cases very small. For being able to avoid the potential renovation headaches, the higher purchase price simply made sense.

We were fortunate to avoid a bidding war which we ascribe to competition from other larger houses for sale nearby. Unlike what we’ve seen on television, we did not have to wait on tenter hooks at a coffee shop for our agent to present our offer. It was the lack of competition that worked in our favour.

We feel fortunate that we could afford a slightly higher selling price. We were careful to make sure that our budget could accommodate unexpected emergencies. We also wanted to ensure that we would not have to resort to a Kraft Dinner diet and that we would still be able to enjoy the downtown amenities that we love. Only time will tell if we have been foolhardy. Because we intend to live there for the long haul, even if values fall, our location will help cushion any losses.

We wanted to bask in the euphoric haze of having finally found a home; however, we had to get the various “close” elements into motion. The main areas that had to be set up included the lawyer, the mortgage and insurance.

The Real Estate Lawyer

The role of a real estate lawyer is quite straight-forward and is mostly administrative. As we had confidence in our real estate agent’s recommendations, we chose to use a lawyer that she suggested. Our agent also helpfully provided the lawyer with copies of the MLS Listing and Purchase Agreement.

It was the lawyer’s responsibility to coordinate the transfer of money from our bank to the seller’s bank, to draw up the paperwork for ownership, advise the local tax and water departments of the change in ownership, and make adjustments on any property taxes or utility payments prepaid by the seller. It was also the lawyer with whom we signed the mortgage paperwork and through whom we received the keys.

Below are the detailed responsibilities of a real estate lawyer:

– reviews the agreement of purchase and sale

– searches for arrears with utilities or property taxes

– advises the municipal tax and water departments of the change in ownership

– arranges the transfer of the Deed

– prepares the Ontario Land Transfer Tax Affadavit and collects the fees

– calculates and collects the Municipal Land Transfer Tax (as of February 1, 2008)

– ensures that fire insurance has been arranged on the property

– calculates the amount owing to the seller on pre-paid property taxes or utilities using a Statement of Adjustments

– coordinates with the mortgage lender and the lawyer for the seller/buyer (whatever the case may be)

– hands over the keys

What does the lawyer not do? Because of time constraints, there are areas that some real estate lawyers do not examine as part of the close process including property surveys, liens, open building permits and work orders against the property. If this is important to you, you should check with any lawyer you retain about his/her practice around these areas.

To protect against any potential property encroachments or other obstructions to your having clear title to the property, title insurance is extremely important, particularly if your lawyer will not being conducting a full title search. Title insurance protects a homeowner against any future problems with title and is a small price to pay (around $200) in case of anything the lawyer may have missed out on.