Buying a home in Ottawa

“Guide to Buying A Home” has been prepared by Real Estate Professionals to offer you practical information about the buying process. It outlines the steps that you and your Real Estate Professional will follow during your search for the ideal home.

Before you move

Use this helpful checklist as a reminder of the things you need to do before you move.

Book the movers.

You can choose to have the movers pack everything, or just the breakables, or you can pack yourself. It’s a good idea to obtain estimates from several different companies.

If you own your present home:

  • Arrange to have our gas, water, and electric meters read on the day you leave and have the bills forwarded to your new address.
  • Have your oil tank read and filled before your sale closes, and provide a receipt to your legal professional if required.
  • If the water heater or furnace is rented, arrange for a transfer of the rental agreement to the purchaser.
  • Disconnect your telephone, cable TV, and water softener.

If you rent your present home:

  • Give necessary written notice to your landlord and make arrangements for the return of any monies you have on deposit.

At your new home:

  • Make arrangements for the gas and electric utilities, water softener, telephone and cable TV to be connected on the day the sale closes.

General:

  • Get “Change of Address” cards from the post office and send out well before moving day.
  • Have the post office forward your mail to your new address.
  • Cancel any contracted services and pre-authorized cheques.
  • Inform gardening, dry cleaning, garbage pick-up, newspapers, magazines, diaper and other home services. Arrange for service at your new address.
  • Obtain a letter of introduction from your current branch to help establish new accounts. Transfer trust or bank accounts and securities.
  • Cancel or transfer social, athletic, civic, religious or business affiliations and memberships.
  • Arrange for transfer of medical, dental, prescription and optical records.
  • Change the address on your driver’s license(s) effective the day of the move.
  • Collect all items out for cleaning, repair or storage. e.g. fur coats, dry cleaning.
  • Make special arrangements for the moving of perishables, such as plants.
  • Make special arrangements for the moving of your pets.
  • Dispose safely of all flammable liquids as it is illegal for movers to carry them.

 

Choosing a neighbourhood

It is important that the neighbourhood you choose to live in is well suited to you and your family. The following is a list of considerations and possible problem areas:

Environment

The quality of air, water and soil is a top concern as a polluted neighbourhood can be detrimental to both your health and property value. Ask your real estate agent, neighbours and local media about any known environmental issues in the area.

Appearance

The home you are considering may be tidy and attractive inside and out, but how does it compare to the surrounding area? Explore the neighbourhood, keeping an eye open for signs of neglect (overgrown lawns, houses in need of paint, trash and junked appliances littering yards). No matter how diligent you are in the upkeep of your property, a run-down neighbourhood can drive your property value down.

Crime rate

Check with the local police department to find out if the home you are considering is in a safe neighbourhood. Police may be able to provide statistics regarding break-ins and other crimes.

Schools

If you have children, the proximity and quality of schools is an important consideration. Talking to neighbours with school age children can be helpful. In some areas schools will provide data (such as average test scores) that can aid you in determining a school’s quality.

Transportation

Convenient access to public transportation and/or major highways can mean the difference between a pleasurable and not-so-pleasurable commute to work.

Amenities

Amenities like a grocery store, parks, recreational facilities, post office, dry cleaner and a doctor’s office can make life easier if they are located nearby.

Property Values

By researching the selling prices of homes in over the past decade or so, you may be able to predict future trends. Your real estate agent may be able to provide helpful data.

Utilities

Avoid unpleasant surprises by finding out what utility costs are before you decide to purchase. Fees for water, electric, cable tv, phone and gas vary greatly by region.

Noise and Nuisances

It can be hard to get an accurate impression of a neighbourhood in just one visit. Be sure to return to the neighbourhood at different times of the day and night. Listen for traffic noise, barking dogs, low-flying airplanes and any other noises that could bother you as a resident.

 

Closing the deal

Closing day is the day you become the official owner of your home. However, the closing process usually takes a few days.

Typically, you visit your lawyer’s office to review and sign documents relating to the mortgage, the property you are buying, the ownership of the property and the conditions of the purchase. Your lawyer will also ask you to bring a certified cheque to cover the closing costs and any other outstanding costs.

Once your mortgage and the deed for the property are officially recorded, you become the official owner of the property and your lawyer will call you to pick up the keys to your new home. Congratulations! You’ve just bought a home!

 

Deciphering real estate classified ads

air conditioning a/c
apartment apt
appliances appls
bachelor bach
balcony balc
basement bsmt
bathroom ba, bath, bth, bthrm
bedroom br, bed, bdrm
building bldg
bungalow bung
cathedral ceiling cath. ceil
central air conditioning c/a
central vacuum cvac, c/vac, central vac
condominium condo
detached det
double dbl
exposure exp
exterior ext
family room fam. rm
fenced fncd
finished basement fin. bsmt
fireplace fpl
floor fl
garage gar
hardwood floors hrdwd flrs
included incl
kitchen kit, kitch
large lrg, lge
luxury lux
parking prkg
penthouse ph
piece pc
private priv
renovated reno, reno’d
room rm
separate entrance sep entr
solarium sol
spacious spac
storey stry
subdivision subdiv
suite st, ste
townhouse twnhse
wall to wall w/w
washer/dryer w/d
workshop wkshp
yard yd, yrd


 

Determine what you can afford

Purchasing a home involves one-time costs and monthly expenses. The largest one-time cost is the down payment. It usually represents between 5-25% of the total price of the property. In addition to the actual purchase price, there are a number of other expenses that you might be expected to pay for. These are listed below:

Typical One-Time Expenses

EXPENSE PAID
Mortgage Application and Appraisal Fee At time of application
Appraisal Fee At inspection
Property Inspection (optional) Closing
Legal Fees Closing
Legal Disbursements Closing
Deed and/or mortgage registration Closing
Property Survey
(sometimes provided by seller)
Closing
Land Transfer, Deed Tax or Property
Purchase Tax (in Quebec within 3 months following signing)
Closing
Mortgage Interest Adjustment and
Take Over Fee (if applicable)
Closing
Adjustments for Fuel, Taxes, etc. Closing
Mortgage Insurance
(and application fee if applicable)
Closing
Home and Property Insurance Closing and on-going
Connection charges for utilities
such as gas, water and electricity
Date of move
Moving Expenses Date of move


Other costs may include landscaping, redecorating, furnishings, appliances and repairs.

Typical monthly costs incurred with home ownership are mortgage payments, maintenance, insurance, condo fees, property taxes and utilities.

 

Have the Home Inspected

Buying a home is one of the most important investment decisions you will make in your lifetime. As such, it makes sound financial sense to enlist the services of a qualified home inspection company to ensure your home is as solid and secure on the inside as it is on the outside.

A home inspection will determine the structural and mechanical soundness of your home. Your home inspector will identify existing and potential problem areas, suggest practical low-cost solutions, and provide estimates regarding costs for any work required. Shortly after the inspection has taken place, a report summarizing the findings is generally provided to the potential purchaser.

By commissioning a home inspection prior to purchase, you’re protecting both yourself and your investment, as well as buying a little peace-of-mind.

Home inspection costs often range according to size, age, and location of the home. Your Real Estate sales representative can recommend a reputable home inspection service or arrange for a home inspector to visit your property.

 

Hire a Legal Professional

A legal professional is there to represent your interests and to process the legal documentation required. Your Real Estate Professional can provide you with the names of legal professionals who specialize in real estate.

The legal process differs from province to province. Your Real Estate Professional or legal professional will advise you on the steps to be taken before the keys to your new home are presented to you.

 

Real Estate Glossary

AMORTIZATION PERIOD:
The actual number of years it will take to pay back your mortgage loan.

APPRAISED VALUE:
An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

ASSUMABILITY:
Allows the buyer to take over the seller’s mortgage on the property.

CLOSED MORTGAGE:
A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.

CONDOMINIUM FEE:
A common payment among owners which is allocated to pay expenses.

CONVENTIONAL MORTGAGE:
A mortgage loan issued for up to 75% of the property’s appraised value or purchase price, whichever is less.

DOWN PAYMENT:
The buyer’s cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.

EQUITY:
The difference between the home’s selling value and the debts against it.

HIGH-RATIO MORTGAGE:
A mortgage that exceeds 75% of the home’s appraised value. These mortgages must be insured for payment.

INTEREST RATE:
The value charged by the lender for the use of the lender’s money. Expressed as a percentage.

LAND TRANSFER TAX, DEED TAX OR PROPERTY PURCHASE TAX:
A fee paid to the municipal and /or provincial government for the transferring of property from seller to buyer.

MATURITY DATE:
The end of the term, at which time you can pay off the mortgage or renew it.

MORTGAGEE:
The person of the financial institution that lends the money.

MORTGAGE INSURANCE:
Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.

MORTGAGE LIFE INSURANCE:
Pays off the mortgage if the borrower dies.

MORTGAGOR:
The borrower.

OPEN MORTGAGE:
Allows partial or full payment of the principal at any time, without penalty.

PORTABILITY:
A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.

PRE-APPROVED MORTGAGE:
Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a “firm” offer when you find the right home.

PREPAYMENT PRIVILEGES:
Voluntary payments in addition to regular mortgage payments.

PRINCIPAL:
The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.

REFINANCING:
Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage.

RENEWAL:
Re-negotiation of a mortgage loan at the end of a term for a new term.

SECOND MORTGAGE:
Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.

TERM:
The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.

TITLE:
Legal ownership in a property.

VARIABLE-RATE MORTGAGE:
A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.

SELLER TAKE-BACK MORTGAGE:
When the seller provides some or all of the mortgage financing in order to sell their home.

 

Home Owner’s Insurance

When you purchase a home, consider how you will protect your investment.

Most mortgage lenders insist on fire insurance coverage at least equal to the loan amount or the building value, whichever is less. You should also consider a homeowner’s policy that combines fire insurance on the building and its contents with personal liability coverage. Consult your general insurance agent or broker for professional advice on home insurance.

Mortgage Life Insurance

When lenders refer to mortgage insurance, they’re referring to coverage that’s provided by CHMC or MICC for a high ratio mortgage. Mortgage life insurance (MLI) is inexpensive coverage on your life which protects your family or beneficiaries by paying off your outstanding mortgage in the event of your death. For just pennies a day, you will have peace of mind knowing your beneficiaries will be mortgage free. MLI premiums are based on two factors: your age and mortgage amount. Your premium is added to your mortgage payment so there’s no extra paperwork, and it remains the same until your mortgage is paid off. Joint coverage for spouses is also available.

Disability Insurance

Disability Insurance is important if your mortgage payments depend entirely or in part on your income. Disability insurance provides replacement income if an accident or illness prevents you from working.

Job Loss Mortgage Insurance

Recently insurance companies have started to offer Job Loss Mortgage Insurance. This insurance covers the mortgage payments in the event that you involuntarily lose your job.

 

Options For Retirees

The kids have grown. Pension is just around the corner. The home that you’ve lived and loved is just too big for the two of you.

Your friends have downsized to smaller homes and retirement communities. The advantages are obvious they say – smaller homes translate into lower costs and less maintenance. Retirement communities ensure like-minded neighbours. The lifestyle decision is yours.

For empty nesters and retirees, moving can be an overwhelming experience both physically and emotionally. But preparing yourself for your move – before you make your move – can make all the difference in the world. Once you’ve determined that you’re ready to take the plunge, there are an abunSuzannece of options available to you.

Ideally, the perfect “retirement” home is one that provides for the inevitabilities of aging and accommodates changing needs. The closer the home matches your needs; the less chances are of a subsequent move.

Options, options, options

Making the right choices can save you a substantial amount of money. Determine how much you have to spend and what your dollars will buy in areas which you are interested.

When choosing a new home, your first decision is whether you want to remain in the same neighbourhood. You’ve called this neighbourhood home for many years. Can you leave behind the friends and acquaintances you’ve made over a lifetime? Can you say goodbye to your trusted doctors, friendly shopkeepers, and familiar surroundings? Only you can answer these questions.

If the decision is made to move out of your neighbourhood, determine where it is that you would like to go. A better neighbourhood within the city? A community outside a major center? Down South?

What type of property would suit your lifestyle? Is it a condominium promising little or no upkeep or a small bungalow that would still allow you to garden?

Condominium cozy

Short on maintenance and long on amenities, the condominium lifestyle has been a favourite of empty nesters and retires since its inception. Condominium apartments and town homes are available in virtually every price range and neighbourhood. Many offer recreational facilities such as swimming pools, tennis courts and fitness areas. Some include golf courses. Unlike owning your own property, owning a condominium means that you’re governed by the by-laws, rules and regulations established by the condominium board. Generally, these rules are necessary to ensure the enjoyment, safety and cleanliness of the condominium. It may be a wise move to check with the condominium board to determine how these by-laws, rules and regulations will affect you as an owner, especially if you have a pet.

Single, detached and a bungalow

Bungalows provide empty nesters and retirees with the best of both worlds – the opportunity to own a house and a yard with minimal maintenance.

The “bungalow living” concept has surged in popularity in recent years, especially in smaller communities outside major centers. Many empty nesters and retires are considering the sale of their larger, more expensive homes in the city to purchase less expensive bungalows in more rural areas.

Retirement villages

Retirement communities offer retires the amenities often associated with condominium living, smaller homes and the opportunity to live with like-minded individuals.

Adult lifestyle communities came into existence in the 1970s in Canada. Today’s complexes generally house approximately 500 – 1000 families in dwellings ranging from apartment units to single detached homes. The focal point of these communities is the clubhouse, where a variety of amenities including fitness facilities, tennis courts, games rooms, swimming pools, and in some areas, golf courses are available.

Current day retirement communities are resort-like in nature. For the most part, they’re built in rural areas that are close to large urban centers, but far enough away from the hustle and bustle of city living.

If you’re uncertain about the alternatives available to you, you may want to speak to your Real Estate sales representative. He/she can provide you with a free estimate of the value of your home and help you to determine what type of property will best suit your lifestyle.

 

How to make and offer

When it comes time to make an offer, your Real Estate Professional can provide current market information and will assist you in drafting your offer.

Your Real Estate Professional will communicate the offer, sometimes known as an Offer to Purchase* to the seller, or the seller’s representative, on your behalf. Sometimes there may be more than one offer on a property coming in at the same time. Your Real Estate Professional can guide you through this process.

Offer to Purchase:
a legal document which specifies the terms and conditions of your offer to purchase the home.

The offer can be firm or conditional

Firm Offer to Purchase:
usually preferable to the seller, because it means that you are prepared to purchase the home without any conditions. If the offer is accepted, the home is yours.

Conditional Offer to Purchase:
means that you have placed one or more conditions on the purchase, such as “subject to home inspection”, “subject to financing” or “subject to sale of buyer’s existing home”. The home is not sold until all the conditions have been met.

*In the province of Quebec, this is referred to as a “Promise to Purchase”.

Acceptance of the Offer

Your Offer to Purchase will be presented as soon as possible. The seller may accept the offer, reject it, or submit a counter-offer. The counter-offer may be in reference to the price, the closing date, or any number of variables. The offers can go back and forth until both parties have agreed or one of you ends the negotiations.

 

Land Transfer Taxes

Purchasers in most large Canadian centres can add Land Transfer Taxes to their list of closing costs.

Unless you live in Alberta, Saskatchewan, or rural Nova Scotia, land transfer taxes (or property purchase tax) are a basic fact of life. These taxes, levied on properties that are changing hands, are the responsibility of the purchaser. Depending on where you live, taxes can range from a half a per cent to two per cent of the total value of the property.

Many provinces have multi-tiered taxation systems that can prove complicated. If you purchase a property for $260,000 in Ontario, for example, .5 per cent is charged on the first $55,000, 1 per cent is charged on $55,000 – $250,000, while the $250,000 – $400,000 range is taxed at 1.5 per cent. Your total tax bill? $2,375.00. The following chart illustrates Land Transfer Taxes by province.

BRITISH COLUMBIA
Property Purchase Tax
Up to $200,000 X 1 % of total property value
From $200,000 up X 2 % of total property value

MANITOBA
Land Transfer Tax
Up to $30,000 N/A
From $30,000 to $90,000 X .5 % of total property value
From $90,000 to $150,000 X 1 % of total property value
From $150,000 up X 1.5 % of total property value

ONTARIO
Land Transfer Tax
Up to $55,000 X .5 % of total property value
From $55,000 to $250,000 X 1 % of total property value
From $250,000 to $400,000 X 1.5 % of total property value
From $400,000 up X 2 % of total property value

QUEBEC
Transfer Tax
Up to $50,000 X .5 % of total property value
From $50,000 to $250,000 X 1 % of total property value
From $250,000 up X 1.5 % of total property value

NOVA SCOTIA
Land Transfer Tax
Halifax Metro
1.5 per cent on total property value
Outside Halifax County
Check with local municipality.

 

Obtain a pre-approved mortgage

Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home.

Your Mortgage Specialist will answer your questions and help you determine which financing terms and options are right for you. Your Mortgage Specialist and Real Estate Professional work as a team to help you find the right home and select the best financing.

Finalizing Your Mortgage

Once you’ve found the home you want to purchase, there are some documents you’ll probably be asked for in order to finalize your financing. They will include:

  • A copy of the real estate listing of the property. If the home is still to be built, the mortgage lender will need to see the architect’s or builder’s plans and details on lot size and location.
  • A copy of the offer to purchase or the building contract, if this document has been prepared.
  • Documents to confirm employment, income and source of pre-approval.

If you have a pre-approved mortgage, it’s a simple matter of finalizing a few details which your Mortgage Specialist will explain to you.

 

Rental units may ease financial burden for purchasers

The old adage ‘house rich and cash poor’ is an economic reality for many buyers in large Canadian cities.

Many purchasers are looking for creative ways of making ends meet. One such option available to purchasers is to create a ‘secondary suite’ or ‘basement apartment’ in their home. For most buyers, the advantages clearly outweigh the disadvantages. The inconvenience of becoming a landlord is offset by the substantial dent the incoming rent will make on the monthly mortgage payment.

But before you start dry walling the basement, you may want to check with your municipal government to determine if there are any zoning by-laws and planning standards that will impact your decision.

By-laws pertaining to ‘secondary-suites’ generally vary from municipality to municipality. In Ontario, for example, the Land Use Planning and Protection Act – Bill 20 allows municipalities to use their zoning by-laws to decide if and where new second units in houses are to be allowed. Existing apartments in houses that have been registered with the municipality continue to be permitted as long as they meet fire code requirements and planning standards.

Similar laws governing rental units are in place in other provinces.

Contact your local municipal offices to determine how by-laws and planning standards will affect your decision to create a secondary suite.

 

Residential Moving Guide

Now that you’ve found your new home or apartment, let us help you plan your move.

Whether you are moving across town or across the world; moving your grandmother’s antique dresser or your child’s favourite toy, Allied will meet — and exceed — your service requirements.

To help you get organized and plan a successful move, Allied has put together two valuable guides, geared toward either a residential or a corporate move.

  • How long distance moving operates
  • Your move
  • How moving charges are determined
  • Determining the right coverage for you
  • Filing a claim
  • Garage sale guidelines
  • Packing tips
  • Preparing children for the move
  • Special moving needs
  • Counting down
  • Glossary of terms

 

The Importance of Good Credit

There are a number of steps to getting mortgage financing. A particularly important step and one many people don’t give much though to – is the credit check. As a routine part of the application process the lender will order a copy of your credit history.

Your personal credit history is compiled by credit bureaus, which collect information from various sources, including banks, retailers and other public records, creating a credit report. Information such as: what credit and debit cards you have, the types of accounts you have at various financial institutions, information about personal loans, mortgages, student loans, etc., is all part of the report. The report shows the creditors’ names, account numbers, the date accounts were started, the current balance, as well as a detailed payment history, for example, how many times you were over 30, 60, or 90 days late in paying bills. Generally, credit reports show information going back six to seven years. The report will also show public information, for example, marriages, divorces, liens, judgments that have been entered against you, bankruptcies, etc.

The credit bureau does not rate you – it merely provides information on your credit history. The lender will examine the credit report to aid in determining whether to lend you money. If the lender has any concerns about something on the report the lender may ask you for an explanation. Though lenders usually work as quickly as possible in processing mortgage applications – the process can be slowed down if the lender needs to go back to the applicant for an explanation concerning items on a credit history. So, don’t worry, but be prepared to answer questions the lender may have – often a simple explanation will do.

The lender will also use the report to verify other information on your mortgage application, for example, information about your employment status, your address (including the name of your landlord and perhaps rental payment history), etc. The credit report will also indicate inquiries made by other creditors over the period of the report. This information might be useful to a lender to show what other avenues of financing you might have tried and it may raise questions about why another potential creditor declined to lend it to you.

Honesty is the best policy – and that certainly holds true when applying for a mortgage. If you think there might be any credit problems – tell the lender up front and ask about the lender’s policy prior to applying for the mortgage. There is no point in trying to hide something that will show up in your credit history. Of course, even if you think your credit record is fine, there may be detrimental comments on the report about which the lender may ask you.

Just like the old saying – a stitch in time saves nine – by getting a copy of your credit report before you apply for a mortgage, you may be able to avoid surprises and possible delays that may occur in having to answer questions about your credit report. Because the report contains information about you, you have a right to inspect a copy of it. Equifax, one of Canada’s largest credit bureaus, will mail consumers a free copy of their personal credit file upon request. (The request must be by mail or via fax, and certain information must be supplied with the request. For more information, call Equifax at 1-800-465-7166.)

If you disagree with something in your credit history, you have the right to challenge it and ask that the information be corrected. For example, perhaps the report shows that you were over 90 days late paying a bill but the report does not indicate that you withheld payment pending a settlement of a dispute with the creditor. OR perhaps you were late with a particular payment because you were away. Whatever the explanation, contact the credit bureau to attempt to clarify the matter and have the file corrected. Equifax, for example, ensures that file correction procedures to personal credit files are made within seven days, and they send amended copies of your history to any company that has received your credit report in recent months.

 

The Major Elements of an Offer

1. Price

Depending on the local market conditions, your opinion of value and market information provided by your Real Estate Professional, the price you offer may be different from the seller’s asking price.

2. Deposit

The deposit shows your good faith and will be applied against the purchase of the home when the sale closes. Your Real Estate Professional can advise you on an appropriate amount.

3. Terms

Includes the total price offered and the financing details. You may arrange your own financing or ask to assume the seller’s mortgage, especially if it has an attractive interest rate.

4. Conditions

These might include “subject to home inspection”, “subject to you obtaining financing”, or “subject to you selling your property”.

5. Inclusions and Exclusions

These might include appliances and certain fixtures or decorative items, such as window coverings or mirrors.

6. Closing or Possession Date

Generally, the day the title of the property is legally transferred and the transaction of funds finalized unless otherwise specified (except in Manitoba and Quebec). Note: In British Columbia the Possession Date is legally 1 to 3 days after closing.

 

Title insurance explained

Title insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? Whether title insurance is right for you is something you should discuss with your lawyer, as it depends on the circumstances of your transaction. This article will provide you with some background information about title insurance to help you make an informed decision.

Title to property

Title is the legal term for ownership of property. Buyers want “good and marketable” title to a property – good title means title appropriate for the buyer’s purposes; marketable title means title the buyer can convey to someone else. Prior to closing, public records are “searched” to determine the previous ownership of the property, as well as prior dealings related to it. The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects property that is free of such claims, so normally they must be cleared up before closing. For example, the seller’s mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.

Sometimes problems (or defects) regarding title are not discovered before closing, or are not remedied before closing. Such defects can make the property less marketable when the buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without permission. The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.

Who is protected with title insurance?

Title insurance policies can be issued in favour of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance protects purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.

Types of risks that are usually covered under a title insurance policy include: survey irregularities; forced removal of existing structures; claims due to fraud, forgery or duress; unregistered easements and rights of-way; lack of pedestrian or vehicular access to the property; work orders; zoning and set back non-compliance or deficiencies; etc. For a risk to be covered, generally it has to have existed as of the date of the policy. As with any type of insurance policy, certain types of risks might not be covered, for example, native land claims and environmental hazards are normally excluded. Be sure to discuss with your lawyer what risks are covered and what are excluded.

The insured purchaser is indemnified for actual loss of damage sustained up to the amount of the policy, which is based on the purchase price. As well, some policies have inflation coverage, which means that if the fair market value of the property increases, the policy amount will also increase (up to a set maximum).

How long is the insurance coverage?

In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser’s death, or certain family members (e.g., a spouse or children) to whom the property may have been transferred for a nominal consideration.

In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured in the event the lender realizes on its security and suffers actual loss or damage with respect to a risk covered under the policy. Lenders are usually covered up to the principal amount of the mortgage.

The premium for title insurance is paid once (at the time of purchase). Generally speaking, in Canada the purchaser of the property pays for the title insurance, though there can be situations where the seller pays for it. Some policies automatically cover both the purchaser and lender; others will cover both for a small additional fee.

Protection and peace of mind

Title insurance can help ensure that a closing is not delayed due to defects in title. And, if an issue relating to title arises with respect to a risk covered under the policy, the title insurance covers the legal fees and expenses associated with defending the insured’s title and pays in the event of loss.

 

Understanding Market Conditions

The real estate market is always changing. It helps to understand how market conditions can effect your position as a seller.

Suzanne Desrochers can provide you with current real estate market conditions and explain their impact.

Market Conditions Characteristics Implications
Buyer’s Market:
The supply of homes on the market exceeds demand.
High inventory of homes: Few buyers compared to availability. Homes on the market longer. Prices tend to drop in this type of market Your home may take longer to sell. Less negotiating leverage in terms of selling price.
Seller’s Market:
The number of buyers wanting homes exceeds the supply or number of homes on the market.
Smaller inventory of homes. Many buyers. Homes sell quickly. Prices usually increase. May have more negotiating leverage and obtain a higher selling price for your property.
Balanced Market:
The number of homes on the market is equal to the demand or number of buyers.
Demand equals supply. Homes sell within an acceptable time period. Prices generally stable. More relaxed atmosphere. Buyers have a reasonable number of homes to choose from.

 

Viewing an open house with open eyes

Remaining objective can be a difficult task when viewing an open house. It is easy to fall in love with a home’s appearance, blind to problems that may make it unsuitable.

While aesthetics can be an important consideration, it is necessary to look beyond window-dressing. A qualified home inspector should be hired before purchasing a home, but there are areas that consumers can examine on their own. This will shorten your list of potential homes and reduce the likelihood that a home inspector will reject it as unsafe or unsuitable.

Here are some considerations and common problem areas to look for when touring an open house:

General upkeep:

Much can be surmised from the general state of the home. Is the home clean? Are lawns left uncut? Are the walls chipped and in need of paint? If smaller chores have been ignored it may be an indication of a broader disregard for home maintenance.

Water leaks:

Check ceilings and drywall for stains, bulges and other signs of water damage. Water that works its way inside via a leaky roof or a cracked foundation can rot wood, create mildew and mould, destroy possessions and can be expensive to repair.

Does it work?:

Test lights, faucets, the heater, air conditioning, major appliances (that are to be included with the home) – even flush the toilets to ensure everything is working as it should.

Floors:

As you walk across the floors be aware of ‘spongy’ (soft or springy) sections. Excessive squeaking and uneven, bumpy floors may also be indicative of expensive forthcoming repairs.

Doors and windows:

Check that doors and windows fit snugly in their jambs and operate smoothly. Look for flaked paint and loose caulking. If the wood around windows and doors is not protected from moisture, it can rot away. Feel for drafts in these areas too.

Poor drainage:

On a wet day walk around the yard and look for areas where water collects. This can be an especially bad sign if there are soggy areas near the home’s foundation.

Grout and caulking:

If the grout and caulking around bathroom and kitchen tiles is loose and crumbly, there is a good chance that water is finding its way into the wall or under the floor.

Structural:

Although this is definitely an area where you want the services of a qualified home inspector, you can get an idea about possible structural problems if you see deep cracks in the foundations or loose mortar and bricks.

Miscellaneous concerns:

Naturally, one the most important factors will be determining if the house suits your family’s needs. If you do not want to replace all of your furniture, make sure it will fit into the rooms of the new house. This is difficult to do by eye, so be sure to bring a measuring tape.

Also, take note of storage space. If you are moving from a home with large closets and a shed, make sure your new house is able to store an equivalent amount of belongings.

 

Types of Home Ownership

There are three broad categories of home ownership: freehold, condominium and cooperative.

Freehold Home:

Freehold homes offer the most privacy and freedom of choice of any other type of home. As owner of the entire structure and grounds, homeowners are free to decorate and renovate as they please. But with that freedom comes a lot of responsibility. All of the maintenance (indoors and out) is the sole responsibility of the owner, which can be costly in terms of both money and time. Freehold ownership is the most common type of home ownership.

Condominiums:

Condominiums are typically a less costly alternative to owning a detached house. With a condominium, you own, and are responsible for, the interior area of your unit (everything from the plaster in). Upkeep of the building and grounds is handled by the condominium association, which is funded by monthly fees collected from tenants. Condominiums often have strict rules regarding noise, use of common areas, renovations etc. Condo residents often enjoy less privacy than residents of detached homes.

Cooperatives:

Cooperatives (or co-ops) are comparable to condominiums, except instead of owning your unit, you own a percentage of shares in the entire building (or complex). As with condominium ownership, maintenance and repairs are paid for through the collection of monthly fees and you are subject to the rules and regulations of the co-op board. One drawback to living in a cooperative is that if you decide to sell your shares and move out, the co-op board has the right to reject your prospective buyer.