Category: Buying a house

Latent Defects

Posted on by Tania Ellerbeck

(Please note that the following is based on my informed opinion as a real estate broker and should not be taken as legal advice.)

 

You bought your dream home but now that you’ve moved in, you think it may have a defect. What do you do??

The first thing to do is determine whether you bought the property WITH a legal warranty or WITHOUT a legal warranty. For the purpose of this article, we’ll be looking at properties WITH a legal warranty. For information about properties sold WITHOUT a legal warranty, please check out our March 2023 article: Legal Warranties in Quebec.

Unless otherwise agreed to in your contract of sale, a property sold in Quebec is presumed to have been sold with a Legal Warranty of Quality. According to Article 1726 of the Code Civil du Quebec, “The seller is bound to warrant the buyer that the property and its accessories are, at the time of the sale, free of latent defects.”

What is a latent defect?

According to the Code Civil du Quebec, a latent defect is an issue with a property (the immovable) that is

  1. Present at the time of purchase but is unknown to the buyer, seller or building inspector;
  2. Not apparent at the time of the purchase;
  3. Is serious enough that, had they known about it, the buyer would not have purchased the property OR would not have paid such a high price for it.

As a homebuyer who has discovered what could be a latent defect, you will have to prove that the problem existed at the time of purchase, which isn’t always easy. You’ll most likely have to rely on an expert to provide an analysis of the problem – including how serious it is and how long it may have been going on (for example, a small leak in a bathroom pipe that has caused the floor joists to rot over several years, affecting the structure and safety).

In addition, a latent defect is one that wouldn’t have been apparent at the time of purchase. However, the law does require buyers to take precautions when buying a home – a vendor can’t be liable if the issue could have been found by a prudent buyer carrying out an inspection of the property.

Finally, a latent defect has to be serious enough that it reduces the value of the immovable, that it renders it unfit for the use it was bought for, or that the buyer wouldn’t have bought it or paid the price they did for it.

At the time of sale, the listing broker will have the home seller complete a Seller’s Declaration, which is a required form used to disclose information about the home, such as the year it was built, what renovations have been done, and if there have been any problems with it. It’s important for the seller to fill out the Seller’s Declaration in as much detail as possible, without leaving anything out. Omitting information can have serious repercussions later on.

For a buyer, the process of discovering a hidden defect, having it fixed and getting compensation for it can be long and expensive, especially if you have to go to court. So it’s no surprise that it’s one of the most common concerns home buyers express to me, their real estate broker.

You can’t guarantee that you’ll never run into a problem, but there are steps you can take to help avoid one:

  • Read the Seller’s Declaration carefully and ask questions if you aren’t sure about something.
  • Have an inspection carried out by a reputable Home Inspector. While they can’t open up walls or pull up flooring to look for defects, they are trained to look for signs that could indicate that there’s an underlying problem. If they see anything concerning, they’ll recommend you hire an expert to come and take a closer look before you buy the property.

 

What do you do when you discover a latent defect?

First, document everything. Take photos and/or video of the defect and the related damage. If you have to go to court, this will help the judge to make their decision.

Next, hire an expert to do a thorough analysis and to give you an estimate of the cost to repair the defect.

Send the previous owner a registered letter advising them of the defect within a reasonable amount of time after finding the defect (Article 1739 of the Code Civil du Québec) and giving them an opportunity to have the defect inspected. I always recommend consulting with a lawyer for help drafting the letter.

It’s also a good idea to check with your real estate broker to see if they have an insurance program that might be able to help you. I offer qualifying clients Royal LePage’s Protection Royale, which provides insurance and legal advice relating to latent defects for a year after purchase.

Ideally, you’ll be able to come to an agreement with the seller to have the defect fixed. Failing that, you would have to take legal action and present your case before a judge. Be aware, however, that pursuing legal action can be time consuming and expensive, so make sure you have a strong case.

It’s worth noting that, should you win your case against the previous owner of your home, if they can prove that the defect existed when they purchased it, they can pursue the previous seller for damages. And there’s no limit to how far back previous owners can go, provided there’s evidence of the defect existing.

Your real estate broker is there to guide you through the home-buying process, so don’t hesitate to ask them about latent defects and how to mitigate the risks.

 

Sources:

OACIQ

Legallogik

Code Civil du Quebec

 

NB The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

Legal Warranties in Quebec – A Buyer’s Guide

Posted on by Tania Ellerbeck

NOTE: I am not a lawyer. This blog post contains my informed opinion as a professional real estate broker. It is not intended to be legal advice.

 

If you’ve been house hunting recently, you will have no doubt noticed that many listings include the clause “sold without legal warranty”. What is a legal warranty and what does it mean for you, the buyer?

In Quebec, there are two types of legal warranties applicable to the sale of a house:

1.Legal warranty of title/ownership.

The property is free of all rights except those declared by the seller;

The seller has discharged the property of all hypothecs, except for those assumed by the buyer;

The property is not subject to any encroachment on the part of the seller or a third person; and

The property does not violate any restrictions of public law, except those declared by the seller or those that the buyer should have discovered.*

2.Legal warranty of quality, meaning good working order.

Seller warrants the buyer that the property is free from defects, existing at the time of the sale, that would render it unfit for the use for which it is intended or which would so diminish its usefulness that the buyer would not have bought it or paid so high a price if he had been aware of them.*

You cannot sell a home without a legal warranty of title – you have to own the title in order to sell the house.

However, it is possible to remove the legal warranty of quality and sell the home “as is”. The relevant clause on the Seller’s Declaration will read as follows: “This sale is made without legal warranty of quality, at the buyer’s risk and peril.” Essentially, what this means is that the vendor will not guarantee the condition of the property.

There are many reasons a vendor might sell a property without a legal warranty of quality. Companies, landlords, estates and banks typically sell their properties without legal warranty of quality because they have never lived in the property and cannot guarantee it’s condition. Owners of older homes may choose to sell them without warranty because an old house can have surprises hidden behind the walls. A house with recurring issues will also be sold without warranty. For example, if the basement floods once a year, no vendor will offer a warranty. Finally, the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ) recommends older homeowners sell without warranty in case of future memory loss.

So what does this mean for the buyer?

The legal warranty protects the buyer from what is unknown at the time of the sale – a latent defect that may become apparent only after the buyer moves into the home.

When a property is sold WITH a warranty, the buyer can legally pursue the seller for money to repair the problem that existed when they purchased the property, even though no one was aware of it at the time of the sale. The burden of proof lies with the buyer, or now new owner, to prove the problem existed when they bought the property, no matter how long ago. Claimants can go back to past owners as well, until it can no longer be proven that the problem existed when the past owner purchased the house.

In an effort to curb endless legal pursuits that can potentially cost the parties involved thousands of dollars in legal fees with no satisfactory resolution, homes are being listed without legal warranty more often. When they agree to this condition in the purchase contract, buyers are acknowledging that they’re foregoing the ability to pursue the seller for hidden defects in the home.

However, there’s a big difference between a home sold in good faith that has some unexpected issues and a home whose issues have been intentionally hidden in order to sell or to obtain a higher sales price. Sellers can’t hide behind the veil of no warranty in that situation. The buyer/new owner still has recourse against the previous owner if they don’t declare an issue they know about, even if they sell without legal warranty.

As a buyer considering making an offer on a home without a legal warranty of quality, it’s important to have a thorough inspection done. In addition, check with the town for any potential zoning or boundary issues. The more information you have about the current condition of the home and the potential problems it might have, the better protected you’ll be.

Working with an experienced real estate broker who knows the area and is familiar with some of the more common potential problems you might encounter, such as iron ochre or seasonal flooding, can also be extremely helpful.

Once you have done all that and are happy with the results, you can negotiate the price to compensate for the added risk of buying a home with no warranty. No home will be perfect, but doing your due diligence can help you avoid big problems.

*Source: OACIQ

 

NB The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

 

Don’t Forget the Welcome Tax!

Posted on by Tania Ellerbeck

When you buy a home in Quebec, you are required to pay a Land Transfer Tax, also referred to as the “Welcome Tax” thanks to the former Quebec Minister of Municipal Affairs, Jean Bienvenue (which means welcome in French), who was responsible for instituting it. The municipality will send you an invoice in the weeks following the signing of the Deed of Sale.

The Welcome Tax is based on:

the sale price OR

the evaluation price of a property OR

the amount of the consideration stipulated in the Act of Sale, if different from the price paid (for example if given as a gift).

The Municipality will take the highest of the three as the basis for their calculations. In addition, many Municipalities are also now multiplying the base number by an extra amount, a Comparative Factor, that changes yearly. In 2023, the Comparative Factor in Vaudreuil and Hudson is 1.28%, so the Welcome Tax on a $500,000 home, for example, would be calculated on a base of $506,400 ($500,000 x 1.28% = $506,400). In Saint-Lazare, the Comparative Factor is 1.33%, so a $500,000 home would have a base value of $506,650 ($500,000 x 1.33% = $506,650).

Once the base is determined, it is broken down into increments which can vary by municipality.

The breakdown for Vaudreuil, St Lazare and Hudson is:

The first $55,200 is multiplied by 0.5%

$55,200 to $276,200 is multiplied by 1%

$276,200 to $500,000 is multiplied by 1.5%

Anything above $500,000  is multiplied by 3%

 

If you were to purchase a $750,000 home in Vaudreuil or Hudson, your Welcome Tax would be calculated as follows: $750,000 x 1.28% = $759,600

The first $55,200  $55,200 x 0.5% = $276

$55,200 to $276,200   ($221,000 x 1%)   $2,210

$276,200 to $500,000 ($223,800 x 1.5%)  $3,357

$500,000 to $759,600 ($259,600 x 3%) $7,788

and your total Welcome Tax payable would be $13,631

 

In comparison, the City of Montreal has extra increments with slightly different values and in 2023 the Comparative Factor is 1%.

Up to $53,200               0.5%

$53,200 to $266,200     1%

$266,200 to $532,300   1.5%

532,300 to 1,164,600        2%

1,164,600 to 2,059,000    2.5%

2,059,000 to 3,000,000    3.5%

Over $3,000,000               4%

 

As you can see, the total amount of the Welcome Tax can be quite high. It absolutely should be one of the costs that figure into your offer price and your moving budget along with moving costs, utility installation costs, insurance, etc. Buying a home is an exciting and happy occasion – don’t let it be ruined by an unexpected cost!

 

*Please note that these numbers are subject to change and can be different from one municipality to the next. Always check on the town’s website for the latest numbers. Your notary will give you the final value. The above numbers are not guaranteed by us, they are only intended as a guideline.

**The numbers above were taken from the website of each Municipality mentioned.

Town of Hudson

Town of Saint-Lazare

City of Vaudreuil-Dorion

 

Do I Have to Sell My House?

Posted on by Tania Ellerbeck

Once rare in our area, multiple offers, often above asking price, are becoming more common, leading clients to ask: “If I receive a full price offer, do I have to accept it?”

In short, the answer is no. The fine print on the listing sheet states that “This is not an offer or promise to sell that could bind the seller to the buyer, but an invitation to submit such offers or promises.” The seller can even counter a full price offer and ask for more money. In seller’s market, the seller has the advantage and can ask for whatever price they want.

Recently, we’ve been seeing some brokers and sellers listing properties below market value to encourage multiple offer situations and prompt bidding wars. This practice is unethical and discouraged by the real estate board.

I advise my clients to price their home at their bottom line sale price. I conduct a thorough competitive market analysis and suggest a listing price that will generate strong interest and attract financially qualified buyers. The risk with setting the listing price below market value is that buyers who are qualified at a low price range will visit and present offers when the owner knows they aren’t going to sell at that price, wasting the buyer’s time, the seller’s time and the broker’s time.

Pricing is a balancing act and the real estate landscape has changed significantly in our area over the last year and a half. Previously, brokers would list properties slightly above the market value, expecting prospective buyers to present opening offers slightly below market value. Negotiations would then take place through counter offers until a mutually agreeable price was reached. It wasn’t unusually to see as many as 7 counter offers. These days, counter offers are rare. Multiple offer situations are now the norm, with prospective buyers offering their best offer on the first offer. If the seller were to counter at a higher price, the buyers would likely walk away.

Overbidding

Another trend we’re seeing is overbidding on an offer to purchase. Buyers are anxious to do whatever they can to have their offer accepted amidst all the competition. The downside to overbidding that buyer and their brokers need to be aware of is that they may not get financing. Banks require a property evaluation before they agree to financing. If the bank evaluator appraises the property below the selling price, they can ask for a larger down payment from the buyer or only provide a mortgage for their evaluated price, which can be a problem for prospective buyers who are already pushing the limits of their budgets with their offers.

High ratio mortgages, between 5% and 19% down, can appear less desirable on an offer but are worth considering if the selling price is well above market value. The CMHC, which guarantees these mortgages, is less likely to send an evaluator to appraise the property’s value, so an offer above market value is less problematic in terms of financing.

Should you take the highest offer?

In my opinion, conditions can be more important than price in an offer. We’re increasingly seeing buyers making huge offers, only to ask for significant price reductions after the building inspection. I encourage my clients to carry out pre-listing building inspections which they can show to buyers before they make an offer, so that there are no surprises and no inflated price reduction requests.

So back to the original question, “do I have to sell to the highest bidder?” You are absolutely not bound to accept the highest offer. You can look at other conditions in the offer, like source of funds and building inspections, when making your decision. Note, however, that you’ve signed a contract with your real estate broker. Clause 7.1 (2) in the brokerage contract states that, if your broker brings you an offer that meets all the criteria you set out (price, dates, inclusions, exclusions) and you refuse that offer, they can demand to be compensated. I have yet to see a broker exercise this clause, but as the seller, you do need to keep in mind that it is a possibility.

If you have questions about pricing your home for sale, please feel free to contact us. We’d be happy to discuss the best strategy for you.

Protective Flood Zones

Posted on by Tania Ellerbeck

We’ve just experienced a winter with very little snow followed by a very dry spring. We’re dealing with low water levels throughout the region and facing the prospect of a drier than normal summer. For many homeowners and prospective buyers, however, the threat of seasonal flooding is an ongoing concern.

Gone are the days when a homeowner could build a house anywhere on their property. As development has increased, municipal and provincial governments have passed laws intended to protect homeowners, their neighbours and the environment. These include rules regulating construction in flood zones.

Flood zones have received a lot of media attention in the past few years but our area has always experienced floods – it’s part of living by the lake. Major flooding usually only occurs every 20 years or so, but those of us living in Hudson, Rigaud and Vaudreuil in 2017 and 2019 know firsthand they can happen more often. I can remember Main Road by the ferry being flooded a few times during my childhood. My dad even had to rescue our neighbours by canoe in the 90s when water surrounded their home. Coming together through floods has become part of our community identity.

New flood zone laws

Most municipalities have mapped their waterfronts and produced flood line maps showing the 20-year and 100-year flood lines. By law, homeowners can’t alter the shoreline, remove trees or add structural elements such as sand/soil or retaining walls below the 20-year flood line.

Prior to the 2019 flooding, it was possible to build between the 20-year and 100-year flood lines provided certain conditions were respected. Since 2019, however, most municipalities have created new bylaws to prevent construction below the 100-year line. In 2019 the Québec government produced a Special Planning (ZIS) flood map imposing strict regulations and a moratorium on construction below the flood lines.

You can’t build a new house in a flood zone, but what about houses that are already in the flood zones? These houses have acquired rights to be there but are subject to restrictions when it comes to renovating or rebuilding. For example, you can’t add an extension to an existing house and you can’t demolish a house with the intention of rebuilding in the same spot.

There are certainly risks associated with owning a home in the flood zone. If the home is damaged during flooding and the cost to repair it is more than 50% of the home’s value, the government will force the owner to demolish it and reconstruction will not be allowed.

Following a flood, home owners must have their homes evaluated to determine the degree of damage. The town will provide the owners with the names of three local evaluators to choose from. If the evaluator determines that the level of damage is less than 50% of the value of the building, the town can grant the owner a major renovation permit to repair the house. Otherwise, the house will have to be demolished.

In Hudson, you can get a major renovations permit to renovate up to 49% of a home, which can include implementing preventive measures like lifting the house, raising the foundation above the high water level or reinforcing the foundation to withstand flooding. Depending on the size of the house, these measures can cost $50,000 and up, but they can help ensure the living space stays dry. If you want to renovate more than the 49% of the house you may have to do it in stages, applying for a second renovation permit once you have finished the first phase of renovation.

In addition to the potential cost of preventing or repairing flood damage, it’s important to look into the availability of mortgages and insurance when considering buying a home in a flood zone. Some banks will not issue a mortgage for a house in a flood zone while others will require a risk evaluation. Insurance companies will charge higher premiums for flood protection or, increasingly, refuse flood coverage altogether.

Why buy in a flood zone?

A well-built older home that has been through previous floods with minimal damage may be an acceptable risk for some buyers. If the foundation is solid and the living area high above the water line, flooding can be an occasional inconvenience instead of a catastrophe. New products designed to protect homes from flood waters can also help minimize damage and subsequent repair costs.

So build it high, keep it dry and enjoy the view!

*The information contained in this article is for information purposes only. It is not, and should not be taken as, legal advice. It is not a substitute for the advice or services of a notary or lawyer.

Cause and Effect in Real Estate

Posted on by Tania Ellerbeck

The local real estate market is brisk and buyers are feeling the pressure to move quickly when a new listing becomes available. As a result, some buyers are calling the listing broker to book an appointment instead of waiting for their broker – who has been diligently searching for a home for them – to make the call. After they have visited the house with the listing broker, the buyers then call their broker to write their offer, thinking they’ve saved some time. What they don’t realize is that, per Quebec real estate law, they’ve just ensured that their broker is no longer entitled to their commission, even if they do all the work of crafting the offer and getting the best possible deal.

In real estate law, Cause and Effect says that the broker who is the cause and effect of you buying the house is the one who gets paid the commission, not the broker who did the paperwork. The listing broker you visit the house with will be considered the ‘cause’ of your purchase. Your broker, who will spend days writing the offer, overseeing the building inspection and doing the research to ensure you are protected, won’t get paid for their efforts.

Open houses

What about open houses? By law, it’s considered the same as visiting with the listing broker. However, if you tell the broker at an open house that you are working with another realtor, most brokers will respect that relationship.

Just a quick question…

“I will just call the listing broker to answer a quick question, then I will call my broker if I want to see the house.” Again, this can cause issues for your broker. Always tell the listing broker you are already working with someone if you call them with questions. Better yet, ask your broker to do it for you. They may even know the answers already!

Many buyers assume that if they visit with the listing broker they are unrepresented. In reality, according to real estate law, the listing broker automatically becomes their broker of record for that particular house.

If you like your broker and have a good working relationship with them, you should let them work on your behalf. After all, they’re in the best position to know your needs and wants and are more likely to represent you well in the negotiation process.

French Drains and Sump Pumps

Posted on by Tania Ellerbeck

Growing up around horses, I often heard the expression “no hoof, no horse”. Essentially, it means that you have to take good care of your horse’s hooves or it will become lame and you’ll have no horse to ride. The same goes for houses: the foundation of a home must be solid and protected. If you don’t look after it properly, you may be putting your house at risk.

Water is one of a house foundation’s biggest enemies. Ground water and rain water will look for the lowest point and that would be the big hole in the ground where your basement is. Water pressing up against the foundation will eventually find a way in and the concrete will crack under pressure. As much as possible, homebuilders take steps to prevent water from damaging foundations. The most common way is by installing French drains.

French drains are wide drain pipes that surround the exterior foundation of the house. They are perforated to let water seep in and they rely on gravity to draw the accumulated water into the sump pump pit in your basement. Once the water in the pit reaches a certain level, the pump activates and flushes the water back out of the house and into the ditch.

So, in reality, we’re bringing the outside water in and the pumping it back out again. I know what you’re thinking: why bring it in the house? Why not have an outdoor pit? I wondered the same thing. There are outdoor pits, but they’re usually secondary pits for homes that have ongoing water issues. An outdoor pit is much more expensive to install and much harder to access for regular maintenance than a basement pit is. They need to be quite deep and so they’re usually only used in areas with very high water tables.

As a homeowner, you’ll hear your sump pump go off from time to time, especially during the spring or after heavy rains. The frequency will depend on your home. Some homeowners have sump pumps that run every day, others only once in a while. The important thing is that your pump is doing what it was meant to do – getting the water out of your house!

What if my sump pump pit is dry?

Occasionally homes will have dry sump pump pits, even in the spring thaw. This could mean that the house was built on sand or on a hill, where water is less of an issue. Newer homes often have French drains that are gravity drained directly into the ditch. If this is the case for your house, make sure to check the exit pipe from time to time to make sure the water is flowing well. Older homes may have been built before French drains were standard, or may have drains that have become blocked or crushed over time.

It’s in your best interest to make sure that your French drains and your sump pump are in good working order. Because we live in an area with a high water table, many insurance companies no longer cover damage caused by water infiltration, which can mean high repair costs for homeowners who have water issues.

Protecting yourself when buying a home with a sump pump

On the Vendor’s Declaration form, one of the questions the seller must answer is how often does the sump pump go off? If the answer is mainly during spring thaws and heavy rains, you can be reasonably certain that the drain system is working properly. However, if the answer is daily, then you know the house is in an area with a high ground water table. Is this something that would stop me buying the house? No. If there were no signs of a damaged foundation from water pressure and the humidity level was low, it wouldn’t stop me from buying. In fact, I bought my own house knowing the sump pump operates daily. I made sure there was a backup battery sump pump in case the main one stopped working or the power was out. I also have a generator in case we lose power for long periods of time. My basement is finished and dry. I do check every time there is a power outage that my backups are working properly!

However, if the water in the sump pump pit is a reddish colour, I would put on the breaks and do further investigations. Red water or a reddish jelly-like sludge in sump pump pits and street ditches indicates the presence of ferrous ochre, which is a mineral that hardens when it dries and that can block French drains. I will write a separate post on this as it can be a serious issue if the homeowner doesn’t do maintenance cleaning of the French drains. Just know that, handled properly, it can be controlled.

According to the building code of Quebec, every home should have a sump pump pit 0.25 m2 wide and 750m m deep. In addition, the pit should have an airtight, childproof cover. Most pits I see don’t have air tight covers. It’s a fairly new regulation, so we are only seeing them in newer construction. It makes sense to keep the humidity out of the basement, it’s just harder to check the pump is functioning properly.

So when visiting homes, check the Vendor’s Declaration for the frequency of the pumping and if there is evidence of ferrous ochre. Then have a look into the pit, if you can, to verify the colour of the water and size of the pit.

Make sure the hoof of the horse is sound!

For more information;

https://www.rbq.gouv.qc.ca/fileadmin/medias/pdf/Publications/francais/fiche-bonnes-pratiques-puisards-fosses-retenue.pdf

Information made available in this guide in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Sellers Declaration

Posted on by Tania Ellerbeck

The Sellers declaration is what I like to call a CYA form (cover your a..) It is a form for the seller to declare to best of his knowledge, everything he knows of importance about his home to a buyer. It is to protect the seller, buyer and real estate broker so everything is transparent.

Examples of questions are; How old the furnace is, does the property conform to local by-laws, does the property have a septic tank and so on.

It is also for the seller to declare everything that is wrong with the house, is there or has there ever been, carpenter ants, a flood, foundation repairs, problems with equipment (furnace…), has it been a Grow house (drugs grown in the house), has there been a suicide or violent death in the house…

It is a 7-page questionnaire that became a mandatory form in July 2012 of chiefly residential homes with 5 dwellings or less, including immovables held in divided or undivided co-ownership(condos). It must be completed and signed at the same time as the brokerage contract.

The answers must be in good faith and to the best of the sellers’ knowledge, if the seller doesn’t know he leaves the question blank or ticks don’t know if there is that as an option.

The seller must clarify his answers and provide supporting documents if he has them. If the window leaked, what was done to fix it? If changed provide receipt if available.

One question in particular seems silly but has good reason to be on the questionnaire is,

D7.3 To your knowledge have the ever been ice accumulation or icicles hanging from the roof in winter?

The question is to see if the roof has a ventilation problem, has it ever had big icicles, ice damning… The seller in this example answered no, I personally don’t think anyone can answer no, every home has had icicles at one point. I always tell my seller to add – only small icicles, if that’s the case. Or answer no and add no large icicles on the side of the document. As the seller is signing this document and it becomes a legally binding document integrated within the Promise to Purchase, answer it carefully!

Buyers that are interested in the property will be given a copy of the declaration, so they have all the information regarding the house and can better decide if they wish to present a Promise to Purchase. Should they write an offer they must sign a copy of the declaration acknowledging receipt of it and its contents. Building Inspectors and Banks also receive a copy of the declaration.

The Declaration is to reduce the risk of legal action for the sellers by making sure buyers are well informed and have better knowledge of the condition of the property.

I advise my sellers to fill the form out in detail, don’t leave anything out. If there was a silly dishwasher leak 5 years ago, put it in! If the leak caused more damage than you believed the buyers and their inspector will have been informed and they will have had the chance to look out for signs of an issue during the inspection. Better to deal with an issue before the sale than in court after! CYA!

Information made available in this guide in any form is for information purposes only. It is not, and should not be taken as, legal advice. It is not in any circumstances a substitute for the advice or services of a notary or lawyer. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website.

Certificate of Location; What is it Really?

Posted on by Tania Ellerbeck

A Certificate of Location is a document, prepared by a land surveyor(arpenteur), consisting of a plan(map) and report on the current situation and state of immovable (the piece of land and all things attached to it, house, shed, servitudes) with respect to titles, lot regulations, zoning regulations and municipal bylaws.
In the standard Quebec Brokerage contracts and Promise to Purchase forms (offer) the seller undertakes to provide the broker/buyer with a certificate of location describing the property in its current state. This means that since the certificate was made, no physical change, no zoning change, no cadastral change (Quebec’s cadastral reform started in 1994) were made. No fences/pools/windows have been added or removed, no extensions to the buildings, no buildings removed or made smaller and no landslide bylaws and no flood area changed.
The Certificate is required by the notary and the bank during the sale of the property. The notary needs it to preform a title search. It will show the notary if there are any discrepancies between the measurements, encroachments or illegal views on a neighboring property. The Board of Notaries and the OACIQ (Real Estate Association) requires that the certificate must be made within the last 10 years. Due to the frequently changing municipal by-laws and the law in the Civil Code referring to ten-year prescription that allows acquiring a right of ownership.
A listing real estate broker has a duty to check the certificate of location and tell the seller to order a new one if necessary. Using a local broker to your area is important as they will be aware of bylaw changes in your neighborhood that you may not be. An arpenteur/surveyor can take from 3-6 weeks to deliver a new certificate, depending on the time of year! There is a law that I have only seen enforce once recently, that says a notary should receive the certificate of location at least 20 days prior to the signing of the dead of sale. So again, I cannot stress this enough, as a seller you should order you new certificate before you list your home!
If a new certificate is required, it will be at the seller’s expense. Locally it cost between $750 to $1200 plus tax for a new certificate on a single-family non-waterfront home. Waterfront homes are more expensive due to the mapping of the 20 year and 100-year flood lines (the highest water level in the last 20-100 years). Houses close to ridges, ravines and wetlands can also be more expensive as the arpenteur needs to map the height of the slope, map the landslide risk zones or the proximity of the wet area.
In the past when selling an empty lot, a surveyor would do a plot survey (with or without installing markers) instead of a certificate of location, as there are no buildings to locate on the land. A survey on large plots of land can be expensive, I recently had a quote of $5000 for 100 arpents. Luckily for sellers, empty lots are not required to have a survey to be sold unless mutually agreed upon in the offer. However, surveyors are now offering to do certificates of locations on the first part of the lot closest to the road. They will ‘locate’ any servitudes, neighbor encroachments and if there is a stream on the property the surveyor will locate the protect zone around the stream (see example of stream protected zone in diagram above). As the surveyor is only surveying a small portion of the lot, the cost of the certificate is approximately the same as a single-family home.
As a seller it is imperative you understand the importance of having your up to date certificate of location ready before you get an accepted offer on your property. If you receive an offer with a 30 day closing at the notary signing and your certificate is not valid, you may have to delay the signing or you could incur extra costs to put a rush on the certificate or pay title insurance to protect yourself and the buyer. If the certificate unveils a surprise of an encroachment, the signing may have to be delayed in order to clear the title. Your buyers may not want to or cannot wait for you and render the offer null and void or charge you for cost incurred for the delay in the signing.
Don’t let a out of date certificate make a smooth transaction turn into a nightmare!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

Multiple Offers

Posted on by Tania Ellerbeck

Dealing with a multiple-offer situation as a Quebec buyer

Entering a bidding war with another buyer isn’t ideal, but when the market is hot and the property well-priced, it’s bound to happen. Knowing the ins and outs of a multiple offer situation will help you come out the winner.

First come, first served?

The first thing to know is that it doesn’t matter who wrote their offer first – the seller is in the drivers’ seat. If a seller is confident, he’ll be getting a second offer, he may choose to wait to respond to you until he has received it and then review both offers at the same time. In this situation, the timing of your offer matters less than its terms.

Deadlines come into play here. A buyer who is interested in a hot property can put a short deadline on his offer. This offer is only binding on himself, committing him to buying the property at the given price and conditions until the specified deadline. If the seller does not accept before the deadline, the buyer can walk away. Sometimes, sellers won’t want to take the risk if the offer is good and will accept the first offer within the deadline. However, if the first offer is low or not what the sellers want, they don’t have to respond by the deadline, as the deadline is only binding for the buyer. Once the sellers counter a buyer’s offer, they are bound by the terms of the counter and its deadline and they cannot accept any other offer unconditionally until the deadline has passed. Unless your offer is amazing, the sellers will most likely wait to see what the second one has to offer. Remember: deadlines bind the person who wrote them, not the party receiving the offer or counter!

Once you’ve submitted your offer, be available to your broker! If a decision has to be made quickly, you should be available to decide and sign at a moment’s notice.

Your best possible offer

Should a second offer be presented to the seller, the seller’s broker must, by law, disclose this information to the first offer buyers. If the seller has not countered the first offer yet, they then have a chance to amend their offer. The second buyers knew there was an offer on the table when they wrote their offer, so they most likely came in with their best offer – not a preliminary offer (or a fishing expedition!). In Quebec, it is illegal for a real estate broker to divulge the amount and conditions of the other offer(s) to a buyer, as that would be favouring one buyer over the other. Offers must remain private between the parties.

If the sellers have already countered the first offer when the second offer is presented, the first buyers hold the power; if they accept the terms of the counter-offer, the deal is binding. If they, in turn, counter, they are opening the door for the seller to be free to accept the second offer.

If the seller hasn’t answered any offer yet and you are given the option to alter your offer – do it! In most cases the seller will just accept one offer without countering anyone. You may only get this one chance, so make it the best you can.  It is not always the highest priced offer that is the best; it is the offer with the best conditions and a good price that usually wins the day. Remove any unnecessary conditions and make it a ‘clean’ offer. Then come in at your top price, and by this I mean the absolute highest amount you’re willing to pay before walking away.

Go over list if you love it, or offer a weird number, like $1,850 higher. People tend to offer full price or they offer 1, 2, 5, or 10 thousand dollars over -round numbers – so be different and offer $5001.00! It just might make the difference in being the better offer.

In a multiple offer situation, you only get one chance, so make sure you give it your best shot. Even after giving buyers this advice, I have still heard some walk away saying they would have paid what the second buyer paid. Put your best offer forward so that, in the event you don’t get the house, you won’t have any regrets about the one that got away.

Can a seller hold a mini auction? Yes!

The seller is holding the cards. If there are two or more offers in front of him but none of them are what wants or if he thinks he can push for more money, he can tell everyone to come back with their best price. He will ask everyone to amend their offers by a specific deadline (usually before the shortest deadline of all the offers, that way he is reducing the likelihood of someone walking away, which they might if he countered everyone). Once every buyer who wishes to change their offer has submitted their amendments, the seller will pick whichever offer he thinks is the best.

Can a seller accept two offers? Yes!

Few people realize that a seller can accept more than one offer at a time. Here’s how and why:  if a seller accepts an offer from Buyer 1, he can accept an offer from Buyer 2 conditional on the first offer not fulfilling its conditions within the offer time frame. Sellers will do this to protect themselves. If all the offers they received have some conditions to them, then the house is not sold until the conditions are removed. So why not hold on to a second buyer just in case? It can also happen that the seller accepts an offer and then the next day a better one comes along, so he accepts that too on the condition that the first one can’t fulfill his financing or some other part of his offer. Buyer 2 will be given a deadline shorter than the first on all conditions so that it will be a firm offer before the first offer. That way if the first buyer even asks for an extension to fulfill his conditions the seller can refuse and Buyer 2 gets the house.

Remember, a sale is not firm until all conditions are removed. The seller can and should continue to market his home until he has a ‘firm’ offer.

So go in with your best offer, with the least amount of conditions possible. Do your building inspection before you write your offer, if you have the time. Or, if the vendors have said they will reply after the weekend, try and get all your conditions removed before Sunday night and send a revised offer Monday morning! Remember you only get one chance in a multiple offer situation, make sure your offer is the best it can be.

Multiple offers definitely favor the sellers but as a buyer, just understanding the process will help you come out on top with the keys to your dream home!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

 

Conditions of Acceptance – The Promise to Purchase Deadline

Posted on by Tania Ellerbeck

When you’re ready to make an offer on a property, your real estate broker will help you fill in a Promise to Purchase to present to the seller. In this document, you specify the price you want to pay, any applicable conditions and the deadline for responding.

Until this deadline passes, you are legally bound to the price and conditions you presented. If the seller finds your price and conditions satisfactory and signs the Promise to Purchase, then both parties are legally bound to its terms.

Should the seller decide to write you a counter offer, they can do so at any time. They aren’t bound to the deadline indicated in your Promise to Purchase (Clause 14.1). They can, in fact, write a counter offer hours or even days after your deadline if they choose to. However, in their Counter Proposal to your Promise to Purchase, they must indicate their own deadline, during which time they are legally bound to the conditions they have presented. They cannot sell the house to someone else in that time frame. You now have the decision to accept within their deadline, walk away, or write a counter offer and set a new deadline for yourself.

A counter proposal is the equivalent to a new offer: the seller submits the counter stating he agrees with everything in the Promise to Purchase except what he puts in the counter. If you reply with a counter offer, the sellers are no longer bound to their counter and can sell the house to another person if they receive a better offer than your counter offer.

In the spirit of fair negotiation, brokers encourage sellers to counter within a respectful time limit of the buyers’ deadline, so no one is left wondering.

In the case of a Promise to Purchase where the deadline has passed and the seller decides that they want to accept it as is, even though it is technically no longer binding to the buyer, they can do so. However, the buyer then gets to choose whether they still want to respect their original offer or walk away. If they want to accept it, they will sign the acknowledgment of receipt. Otherwise they can refuse to sign, thereby rendering the offer null and void.

This same principal works in a counter offer as well, for the Counter-Proposer and the Respondent, seller or buyer, depending on who wrote the counter offer.

The deadline binds the party writing the offer or counter, not the person receiving it. This is very important to remember if you are in a multiple offer situation where deadlines can mean the difference between being sold or not.

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

7 Things to do before you buy a home

Posted on by Tania Ellerbeck

Buying a home is a big investment, so make sure you do it right! Here are 7 things you should do before writing an offer on your dream home:

  1. Find out what your budget is!

Get pre-approved by a mortgage lender. This is a great exercise as it gives you an idea of just how much home you can afford and it forces you to find all the documents you’ll need for the mortgage approval process. If you wait until offer time to get your financials in order, you’ll have the added stress of a deadline to contend with. Plus, you may be wasting your time – and that of everyone involved – on a home you won’t get financing for.

Getting pre-approved doesn’t mean that you are bound to a particular mortgage lender. When the time comes to apply for your mortgage, you can work with another bank or even with a mortgage broker to get the best rates. Ask your real estate broker for a contact. Even if you work with a specific bank, real estate brokers can often get you a better rate through their personal contacts.

Getting pre-approved not only helps speed up the final mortgage approval process during the promise to purchase, but often, in a multiple offer situation, if two offers are close in price and conditions, vendors will pick the buyer offer with a pre-approved mortgage over one without.

  1. Wish List!

Make a wish list of important features you want in your new home. How many bedrooms? How many bathrooms? Do you have to have a finished basement? Do you want a house that’s move-in ready or are you willing to do some work? Some items are must-haves and some are would-likes, but write them all down. Just be realistic; if this is your first home you may not be in a position to have that indoor pool and sauna!

  1. Work with a real estate broker!

A real estate broker is a trained professional who spends his or her days selling homes. An experienced broker will have seen almost every situation that can arise during the buying process and can help you avoid potential problems. Brokers are also bound by a code of ethics and overseen by a government board, the Organisme d’autoréglementation du courtage immobilier du Québec (OACIQ)1.  

Another important point is that brokers have access not only to all of the MLS listed homes, but also the ‘pocket listings’ that are held in their office and/or network. A top local agent will often know what homes are coming on the market before they are listed, giving you an advantage.

  1. One Broker, not 10!

Once you’ve decided on a real estate broker, it’s in your best interest to stick with them. Your broker will get to know your tastes and what is important to you, and you’ll get to know and trust their opinion. A good broker can save you hours of home visits by narrowing down the field for you.

  1. Location, location, location!

The saying really is true. Houses can be renovated and changed, but a location cannot! Remember, you are not buying the seller’s décor, so look past dated wallpaper and ugly furniture to the structure and the setting of the house. If you like a house, take a drive to familiarize yourself with the area. Is it a quiet street? Does the area offer added value? Homes in less desirable locations will be less expensive than similar homes in a better location. If you don’t mind the train tracks and want the bigger house, then buy it, but understand that the tracks will be there when you go to sell, and be prepared to sell for less than comparable homes further away.

  1. Look at homes priced below what you think you can afford!

Don’t tie up all your money in a house! Being house poor is not the way to go through life. Do you want to be able to travel or buy a car or go out to dinner? If the answer is “yes”, you’re better off buying a home that’s a little less expensive so that you have a cushion for all the extra costs and the inevitable curveballs life will throw at you. Interest rates are low presently but if, in 5 years when your term is due, they have jumped by 2% or even 4%, your monthly mortgage payment could increase substantially. Will you be able to afford your payments then?

  1. Don’t make emotional offers!

Be informed. Even if you fall in love with the first house you see, visit a few more to compare prices. With your broker’s input, compare homes that sold recently in the area to the home that interests you, to see if it is priced right for the present market. Your broker will have all that information. Make sure the house is priced within range of the comparable sales. But if it’s your dream home and you plan to live there for 10-20 years, don’t walk away from it because it is priced slightly higher than it should be based on comparable homes. You will most likely recoup your money in the long run. However, if you are planning to live there 3-5 years, you might want to think twice about the price. Here in Quebec prices take time to climb, unlike our neighbours in Toronto and Vancouver.

Shopping for a home is an exciting – and stressful – experience. Armed with the right information and expectations, and with the right professionals by your side, the process can go smoothly.

Happy Shopping!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

1 The OACIQ “ensures the protection of members of the public who enlist the services of real estate and mortgage brokerage professionals governed by the Real Estate Brokerage Act.”

Source: https://www.oaciq.com/en/pages/about-oaciq

Why it’s Important to Hire a Professional Building Inspector

Posted on by Tania Ellerbeck

Building inspections

Since the dawn of Holmes on Homes and every other real estate related TV show, buyers have started to feel that they are building inspectors. Uncle Joe may have renovated 5 homes in the last 10 years but he is not up to date on codes and local issues. Professional building inspectors inspect 5 to 10 houses a week! I have attended too many inspections to count but I still rely on professional inspectors to advise me.

I want to make myself super clear here…

Hire a Real Estate Board approved inspector who has professional liability insurance covering fault, error and omission. Quebec doesn’t have laws to who can or can’t be a building inspector, all they have to do is get a business licence. However, the real estate board OACIQ, has 5 organizations of inspectors that they have approved. The 5 approved associations are;

The Quebec Association of building Inspectors (QABI)

The National Building Inspectors and experts Association (NBIEA)

Les inspecteurs thermographes de l’ATIB

The Quebec Order of Architects

InterNACHI Québec

These inspector’s must;

  1. Have Liability insurance
  2. Have a recognized inspection service agreement
  3. Practice standards recognized by the OACIQ
  4. Provide a written report

So step one; ask your real estate broker for a list of reputable and insured building inspectors from the area. If they are a member of an approved OACIQ association even better! Use a local inspector! They will know the issues relate to the neighborhood you are buying in, like Pyrite and iron ochre.

Step two; realize that an building inspector is like a GP doctor, they have a great base knowledge, can diagnose common issues but they refer to a specialist when for the bigger issues. An inspector is there to flag issues; he will let you know his opinion but if it is a bigger issue he should suggest to bring in a specialist.

I have had a building inspector tell a buyer that the house needed a new central support beam only to be told by the specialist that it just needed one support post. Big difference in price between the two! So make sure you ask a specialist before you run for the hills.

Have the chimneys inspected by a chimney inspector, a building inspector will just do a visual where a chimney inspector will go deeper.

If there is a septic system have the owner clean and ensure it is in good working order it prior to closing. Older Heating systems should be inspected as well if they are not regularly service.

Understand that inspections are for you to find out about the house and to verify there is not a major structural defect(s). A building inspection is not done so you can re-negotiate with the owner to fix small issues. The buyer must act in good faith under all circumstances. In most cases you are not buying a brand new home, maintenance and small issues are to be expected. I don’t think I have ever been to an inspection where the inspector didn’t say that the soil around the outside of the house needed to be re-graded slanting away from the house or that the insulation in the attic needed to be pulled away from the soffits.

What you are on the look out for is major issues that could significantly reduce the value of the property, approximately 2-3% of the value of the property. If something large is found at that point you have a few choices.  You can walk away from the sale by providing the sellers a copy of the building inspection report and a written notice stating you are rendering the Promise to Purchase null and void.  Or either you can get professional estimates for the work required and have your broker try to work out a fair price deduction for the work required or have the owner repair the issue. Here again you would provide the written report along with an explanation of the problems. Once an agreement is made an Amendment form will be written up with the changes to the Promise to Purchase.

What you need to understand is all of this must take place within the deadline set out in the Promise to Purchase, usually 11-14 days.  Generally building inspection conditions are 7 to 10 days, that means the building inspection(s) must be completed within that time frame. However, there is a second deadline of 4 fixed days for reviewing the reports. So the original 7 days to 10 days plus the 4, equals 11 to 14 days to remove the building inspection clause. If at the end of the deadline the buyer doesn’t render the offer null and void or waive the condition, the condition waives itself and the buyer has deemed to waive it! So watch those deadlines!

Before closing I just want to touch lightly on Hidden Defects, it is a subject of another blog on its own.

A Hidden Defect is – hidden- no one, not the seller, not the brokers, not the inspector nor you the buyer are aware of the defect. It maybe behind a wall or in the floor but whatever it is no one knew about it when you bought the property. In Quebec unless removed in an offer, every home is sold with a legal warranty of quality protecting the buyer against hidden defects.

If there is a hidden defect after the sale and you take the vendors to court, the first question the judge asks is….”Did you hire a professional building inspector to inspect the property”. If you answer no, I wish you the best of luck in your court case because you are going to need it! How can you prove the defect was hidden from a professional if you didn’t use one?

Moral of the story, hire a local professional building inspector!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

Accepted offer, Now What Happens?

Posted on by Tania Ellerbeck

You just got the call, they accepted your offer! Woohoo! You jump around for a few minutes but when you calm down you need to realise you are on the clock – you have deadlines to meet or you could lose the house to someone else!

  1. Inspection

Have your home inspected by a professional, not uncle Bob who once renovated a home! Hire an inspector that is approved by the Real Estate Board (OACIQ Organisme d’autoréglementation du courtage immobilier du Québec). Make sure he is insured. Best way is to ask your Real Estate Broker for a list of inspectors from the area you are purchasing in. These inspectors will know the issues relate to the neighborhood you are buying in, like iron ochre or pyrite.

Have the chimneys inspected, if there is a septic system ensure it is in good working order and have the owner clean it prior to closing. Heating systems should be inspected as well.

Understand that inspections are for you to find out about the house and to verify there is not a major structural defect(s).  A building inspection is not done so you can re-negotiate with the owner to fix small issues. In most cases you are not buying a brand-new home, maintenance and small issues are to be expected. What you are on the look out for is major issues that could significantly reduce the value of the property, approximately 2-3% of the value of the property. If something large is found, you have a few choices.  You can walk away from the sale, have your broker try to work out a fair price deduction for the work required or have the owner repair the issue.

Make sure you understand the deadlines in the offer. If in your Promise to Purchase you have a delay of 7 days for your inspection, it is 7 days not 7 business days. In Quebec there is no such thing as business days in real estate contracts. On standard OACIQ Promise to Purchase forms there is a second deadline to know about. First, you have the delay to actually do the inspection ie 7 days (whatever time frame you put in the offer), second you have another 4 days fixed to review the report and waive the inspection or render the offer null and void. So, in reality the condition is 11 days total. You must do the inspection within the first deadline (ie 7 days) not the second (4 days).

Should you require more time to bring in other inspectors, the original 7 days can be extended if both parties agree. Do not wait until day 7 ask for an extension because if another offer comes in on the property the owner could just say no to an extension and you are left making a hard decision whether or not to accept a home that might have issues or not.

The deadline will expire itself, meaning if you do not notify the sellers within the allotted time, it is deemed that you have accepted the building inspection and waived the condition.

  1. Finance Letter

The next phone call you will make is to your mortgage lender, of course you were pre-approved, so this step is easy! Send the mortgage lender the information on the house, as they will now want to approve that the house is worth what you are paying for it. They will require the detailed real estate listing, certificate of location and the full offer with seller’s declaration. The lender will also finalize your personal documents and verify proof of down payment again. Often the lender will spend an appraiser to evaluate the home. This alone is a 2-3-day process and is only done once the lender is satisfied with all other documents. You do not need to be present for the appraisal visit the evaluator will contact the real estate broker directly to arrange a visit.  With a deadline of 10-12 days there is no time to dilly doddle!

If you didn’t get pre-approved, get ready to run to find all your paperwork and get it to the mortgage lender. Ask your real estate broker for a referral, even within your own bank as the back-door rates with your brokers contacts are usually better then what you can get through the front door.  Time is of the essence so don’t delay. Using your brokers contact, also insures that the broker will be kept informed of any delays or hiccups along the way and can react faster.

The finance condition deadline is set out in the negotiations, if the condition is 7 days for example; the condition starts the day after the offer was accepted as day 1 and ends at midnight on the 7th day. With this condition if buyer has not given proof of financing by the deadline the seller has the choice within in 5 days to make the buyer file for a loan at the seller’s bank or render the offer null and void by written notification.

  1. Sellers Conditions

The main condition for the seller is providing an up to date Certificate of Location. The Certificate is a map of property with all the buildings on the lot, it states any servitudes or encroachments. A surveyor will take about 3 weeks to make a new certificate so hopefully if the seller requires a new certificate he ordered it when he listed the property. If not, as long as it is ready prior to signing and there have been no changes that effect the titles (ie. Encroachments on a neighbour’s property) the sale can proceed as normal.

If you are buying in the country area there are other conditions in your Promise to Purchase that the Seller is responsible for. Namely having the and septic tank cleaned, and the system verified in good working order. If the property is service from a well the seller will also be responsible to provide proof of potable water. As you have hired an experience real estate broker he/she will be aware of these situations and advice you accordingly.

  1. Firm Offer!

You made it, you met all your deadlines! Now on to the less stressful steps.

  1. Hiring a Notary

Again, speak to your Real Estate Broker and get a list of the local notaries. They know the area and can advise you accordingly. The notary will contact your bank and handle the transfer of funds, he will do a title search on the property and work with your real estate broker regarding the documents. Remember in Quebec the notary must have the funds free and clear in their trust account 48 hours prior to the sale. For your down payment, wire transfers are the safest way, as a certified cheque can be held by banks for days.

On your Promise to Purchase you have agreed on a Closing date, the fine print says, ‘on or before’ this means you can sign on the day or a few days earlier. Occupancy remains the fixed date in the offer but signing can be moved forward to comply with everyone’s schedules.

The notary will have you come to his/her office a few days before the transaction to sign your mortgage papers and to go over the sale and adjustments. The adjustments are the balancing act of the municipal and school taxes, propane and/or oil tank, condo fee, basically the fixed costs that are attached to the property. The Seller will have to be up to date on all of his bills and then the notary will charge you the balancing days of the paid bill. For example, if you buy on December 1st you will have to pay the seller the taxes for the month of December as he has already paid the municipality for the month.

  1. Home Insurance

The mortgage lender will demand that you have property insurance on the home as of the closing at the notary’s. The notary will request a letter from your insurance company before the Title Deeds are signed. Ask the seller who they use for insurance, it might be easier to stay with the same company.

  1. Little Things

Hydro, make sure you call Hydro and let them know you are moving. There is also the cable company, internet etc… A good thing to do is take a reading of the hydro meter when you first arrive at your new home and give the number to Quebec Hydro to ensure there are no extra charges.

Now you just have to pack everything you own, stick it a truck and meet it at the new house!

**The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

 

 

Conditional offer How does it Work?

Posted on by Tania Ellerbeck

Shopping for a new home before you have sold your first house can be frustrating. You see a house that would be perfect, but you can’t buy before you sell yours. A conditional 72-hour clause in your offer is a solution.

Clause R2.1 of a Promise to Purchase states that the Promise to Purchase is conditional to the buyers selling their present home within a time period (30,60 or 90 days usually). They must fulfill all other conditions of the offer, do their building inspection and get a bank approval letter for their mortgage (conditional to selling their present home) so the only conditions remaining on their offer are selling their home, presenting an unconditional bank letter and of course the signing of the deed of sale.

While the buyers work at selling their home, the seller holding the ‘conditional offer’ doesn’t want to put all his eggs in one basket, he wants to try and sell his house to someone else that doesn’t have to sell their house to buy his house. To be able to do this the Clause R2.2 must be ticked in the offer. This clause allows the seller to continue to actively market his home and look for another buyer.

Should the seller receive another offer he deems acceptable, whether it Is a higher or lower price than the first offer, he can accept it conditional to the first offer falling through.  The second buyers would then have to fulfill all their conditions, building inspection, finance etc.. Once all the second offers conditions have been waived, other than the notary signing, the sellers must turn to the first offer and give them 72 hours to remove the condition of selling their house and present a non-conditional finance letter OR render their offer null and void. The 72 hour time frame commences as soon as the first buyer receives a time stamped telegram or a time stamped hand delivered amendment. It doesn’t matter if it is a Friday night or on the weekend, the 72 hours starts as soon as notice has been received.

If you are the first buyer with a conditional offer on a home, the first thing I suggest you do when your offer is initially accepted is to speak to your bank to see if you could buy without selling your home if you received a 72 hour notice. Could you afford a bridge loan? Two mortgages? It’s better to know ahead of time to avoid panic and scrabbling when you receive the 72 hour notice. Especially as the notice time could be when the banks are closed over the weekend.

For the second buyer, he must take a risk when there is a conditional offer already on a house. He has to invest money in a building inspection, get his mortgage approved and then sit and wait to see if the first buyer can get financing without selling their house or sell their house by the end of the 72 hours. Many buyers don’t want to go through the trouble unless it is their dream house, or they believe the first buyers can not fulfill financing without selling.

As a seller whose house is just new to the market or the market is hot, conditional offers are not ideal. A home that has been on the market for awhile it is a good option though. Sellers usual are not as negotiable when dealing with conditional offers, as they feel it is more like a first option to buy than a firm offer. So, when a second offer comes along that has normal, finance and building inspection conditions they often accept less money as they feel it is a real offer.

Be that as it may, you still have first dibs at the house and if the bank is willing you can get the key to your dream home! In the time from acceptance to the signing at the notary you may have the time to sell your present home, if the price is right!

Conditional offers are very common in a buyers market and could be the right option for you to get your dream home if handled properly!

**The foregoing provides only an and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.**

 

Get In Touch

Tania Ellerbeck
Tania Ellerbeck
Chartered Real Estate Broker
514-791- 5367

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