MONDAY MOMENTS WITH MICHELLE – The Buying Process: Fulfilling Subjects

Welcome to Episode 14!

 

Congratulations! Your offer was accepted!! What next?

 

As explained in my previous Blog, there are Conditions Precedent (Subjects) that must be fulfilled in good faith by you, the Buyer, in a specific time frame (usually 7-10 days). It is important for a Buyer to actively and intentionally work in good faith toward fulfilling these. I always tell my Buyers that Subjects are not a "Get Out of Jail Free" card if they experience cold feet. It is important to note however, that sometimes after doing all of the due diligence, a Buyer may not be able to remove Subjects because of financing not being approved, prohibitive insurance costs, costly repairs for red flag items that come up in the home inspection or other roadblocks.

 

Although there are many different subjects depending on the property, I have listed below the most commonly included subjects in a CPS (Contract of Purchase and Sale) and your fulfillment obligations:

 

TITLE – your agent will provide you with a current copy of the TITLE for the property you are purchasing. Together, or with legal counsel, you will go through it to see if there are any charges or features on it that may adversely affect the property’s use or value. Easements, Rights of Way, Covenants, Building Schemes, Water Rights and Mineral Rights are some charges and terms that may need further investigation to find out how it affects the land and your use of the land.

 

PROPERTY DISCLOSURE STATEMENT – a Seller is required to fill out a Property Disclosure Statement (PDS) when they list the home. This is information based on the Seller’s best knowledge and ability. You and your realtor will go through it to see if there are any red flags with regard to the condition of the land, the services, the building and other general items. You, the buyer, must make your own inquiries as well, rather than rely solely on the PDS for information.

 

PROPERTY INSPECTION – if you choose, you are required to employ the services of a qualified home inspector at your cost. The home inspection will cover most of the aspects of a home and will note all of the potential red flags.

 

FINANCING – if you require a mortgage or other funding to purchase the home you must take your accepted offer and other required documents to a lender to see if you AND the home qualify. You have probably already been pre-qualified to purchase a home within a certain price point. This does not guarantee that the home you chose will qualify for a mortgage. Lenders look at the condition of the home, the PDS, the TITLE, the neighborhood, the comparable properties in the neighborhood and other factors to determine whether the home is worth the mortgage that they will be granting you.

 

GST – GST applies to all homes. Generally, a used home price includes GST as stated in the CPS. I say “generally” because there are ALWAYS exceptions. It is important to investigate with a qualified tax accountant what tax implications there are with respect to the property you are purchasing (GST liability, GST exemptions, GST rebates). Your real estate agent is not a tax expert and cannot offer GST advice.

 

LEGAL ADVICE – I always suggest seeking legal advice with regard to your accepted offer because it is easier to deal with complications BEFORE a contract becomes firm and binding. If you have questions that your agent cannot answer, it is best to speak to a lawyer. Your real estate agent is not a lawyer and cannot offer legal advice.

 

INSURANCE – even though the home is not yours yet, it is important to contact your home insurance agent to find out whether the home you are purchasing is insurable. If it is, you want to find out how much your yearly insurance will cost, what are the restrictions, etc. Your insurance agent can generally hold your rate (BIND) for at least 2 months before you take possession. Most homes are insurable, but the cost could prove to be prohibitive.

 

For simplicity sake, let’s say that you have done your due diligence with your subjects and are satisfied with the Title, PDS, Home Inspection, Financing, GST and Insurance and are ready to move forward with the purchase. Your agent will have you sign a REMOVAL OF SUBJECTS form. You will also initial the pages in the Title and the PDS and these documents will form part of the CPS. The contract is now firm and binding and the home is SOLD. Depending on the CPS requirements, you will most likely have to get a bank draft for the deposit within the next 24-48 hours. This deposit will be held in Trust by your agent's brokerage and form part of the proceeds of the sale.

 

But wait! There's more! Now that you know where and when you will be moving, there are a few more steps to take: Call your lawyer/notary to let them know that you have a firm deal. Do a change of address with the Post Office. Let your utility companies know about disconnection and reconnection of your services (Phone, Hydro, Gas, Internet). Let your insurance agent know that the deal is firm. Reserve a truck and round up friends to help you move or reserve a moving company. Most important of all: START PACKING!

 

When your completion and possession dates draw near, your lawyer/notary will contact you to come into their office to sign the sale documents and other purchase details. They will instruct you as to what to bring with you before you meet. Once this step is done, you just have to finish up the packing details to get ready for possession! On possession day, after your new property has registered in the Land Title Office, your agent will then present you with the keys. Welcome to your new Home!!

 

Buying a home is always very stressful whether it is your 1st home or your 5th home. Your real estate agent is always there to answer questions, walk you through the steps and “peel you off the ceiling”. A real estate transaction is never a “one and done” relationship. We’re always here to help!

 

Next week, I will talk about the best time to list. Stay tuned!!

 

Feel free to reach out to me regarding this content or to suggest subjects you would like to learn about.

 

Oh, by the way! I am NEVER too busy for your Referrals, either! Share my Blog! Tell your friends!

 

Have a great week! Definitely call me if you want exceptional real estate service!