We’re making an offer on a home, now what?
My wife and I have come to a decision: we’re going to make an offer on a home. What happens between now and the day we move in? What if the home gets damaged before closing?
Congratulations! Buying a home involves many important steps and the process can get complicated, so RECO recommends working with a registered real estate salesperson or broker whenever you do so.
You’ll also need a lawyer who is insured to practise real estate law to handle the closing — and it’s a good idea to hire one early in the process so they can review your agreement with the brokerage and other relevant documents. Before the closing date, you and your lawyer should review the closing costs, sign any necessary documents, and provide the required funds (payable to the lawyer’s firm in trust) to close the transaction. Your lawyer will give you the keys to the property after the transaction closes.
Before you submit an offer on a property, ask to see copies of recent bills for property taxes and utilities so you’re aware of the carrying costs of that property. Also make sure that you are clear about whether items such as hot water tanks, alarm systems and heating/cooling systems are owned or leased; include these details in the offer. Transferring rental agreements to a new owner can sometimes be very expensive.
In most cases, real estate transactions take place without any complications — but it’s important to perform the necessary due diligence. You and your salesperson would be well-advised to schedule a pre-closing visit shortly before the property changes hands to confirm the home is in the same condition as when you made the offer, and that the seller has made any required repairs they had agreed to make under the Agreement of Purchase and Sale.
Should you discover at the pre-closing visit that the home has been damaged, immediately inform your lawyer and your salesperson. The latter can co-ordinate with the seller’s representative and your lawyer to get the matter rectified. You should ask for an estimate of the repair costs and the time it will take to finish the work. If the damage is substantial, you may be able to cancel the transaction, receive compensation to help you initiate repairs, or work out another solution. Your lawyer can explain your options to you.
Remember: in Ontario, the seller is normally responsible for any damage that occurs between the time the Agreement of Purchase and Sale is entered into and closing (the date you take possession of the home). Their home insurance normally terminates when you take possession of the home. If you discover a problem after you move in, you will have to discuss next steps with your lawyer.
If you have a question for Joe about the home buying or selling process, please email firstname.lastname@example.org.
Joseph Richer is Registrar of the Real Estate Council of Ontario (RECO). He is in charge of the administration and enforcement of all rules that govern real estate professionals in Ontario. You can find more tips at reco.on.ca, follow on Twitter @RECOhelps or on YouTube at http://www.youtube.com/RECOhelps.