The Ultimate Residential Purchase & Mortgage Transaction Checklist

By Darren Richards

Below is a simple outline or checklist of the tasks and events that comprise a typical residential purchase and mortgage transaction. It might serve to give some context to those crazy legal fees that lawyers charge and by crazy I mean crazy small by the way!

YOUR OBJECTIVES:

• Legal Title Purchase the home of your choice and obtain proper ( free and clear ) legal title (ownership).
• Mortgage Financing Obtain mortgage financing to pay for the purchase.

INITIAL STEPS TO ACHIEVE YOUR OBJECTIVES:

(by you, your realtor, and your lender)

• Make your purchase decision and sign an Offer to Purchase (Purchase Contract) stipulating any conditions precedent ( subject to clauses ). These subject-to-clauses render the contract contingent upon certain conditions being fulfilled such as financing, home inspection, etc.
• Within the condition period, confirm the condition of the property is satisfactory to you (for example, as the Home inspectors Fort Worth to conduct an inspection) and confirm your financing arrangements.
• Remove the conditions precedent once you are satisfied with the inspection, your financing arrangements and any other conditions precedents in your offer.
• Advise the realtor and your bank or mortgage lender who your lawyer will be; confirm that the realtor and bank has your lawyer s contact information.
• Arrange for insurance on your home and have your insurance agent fax or email your lawyer a binder letter of insurance showing your mortgage lender as first loss payee.
• Once you’ve done all of this, you’re only a few steps away from owning your dream home! It’s time to think about the more exciting stuff, like whether you’ll use full service movers austin or similar services to get all of your belongings from your old house to your new one.

LEGAL STEPS TO ACHIEVE YOUR OBJECTIVES

(What your lawyer will do)

Your lawyer will usually receive the Purchase Contract sometime after conditions have been removed. The realtor will send both lawyers the Purchase Contract (along with other documents pertaining to the purchase). Your lender will send your lawyer mortgage instructions. Once your lawyer is in receipt of these two items he or she will:

• Conduct several searches and review the results, including title, taxes, and Personal Property Registry searches to ensure title to the property being purchased is, or can be made, free and clear for your to own.
• Find out from you how you want your name (or names) to appear on title. For example, full legal names are typically recommended in order to properly identify and distinguish you from others with similar names. The address that you use is also important. If you are buying investment property and not living there, you would want an address other than the property address so that legal service of documents relating to the property are delivered or served at a location where you are sure to get them. Last, if more than two parties are to be on title, you will want to decide if you are going to hold title jointly or as tenants in common . More on that in a future article.
• Get a conveyancing quote and use them to help prepare documents including conveyance/purchase documents and the mortgage documents for you to sign.
• Receive the transfer of land from the Seller s lawyer on trust conditions these are the rules the other lawyer imposes to protect the Seller and that the Purchaser s lawyer must follow in order to use the Transfer of Land and register the land in your name(s). In B.C. this process is reversed.
• Calculate the cash to close (the amount needed to close the transaction after adjusting for amounts already paid by the seller (such as property taxes) and the money expected from your lender). The legal (legal fees) and closing costs (actual third party costs incurred by your lawyer such as Land Titles registration charges, couriers, searches, etc.), plus potential late interest charges that may be payable to the seller pursuant to the terms of the standard form Purchase Contract, are estimated as well and this amount is added to the cash to close that you need to bring in to your lawyer. You will be requested to bring your lawyer the cash to close, plus the legal and closing costs in the form of a bank draft or bank money order made payable to your lawyer’s firm in trust. If you need help with understanding what closing costs are and how they factor into buying a property, you will want to check out related websites like https://houstonrealestateobserver.com/ to see how they are calculated.
• Meet with you: to discuss the various land conveyancing and mortgage documents; receive from you the closing funds in the form of a bank draft, and guide you in the proper signing of the documents.
• Register the transfer of land and mortgage at the Land Titles Office.
• Obtain mortgage funds from your mortgage lender. Most lenders require your lawyer to provide a Solicitor s Opinion regarding the title and confirming their mortgage is properly registered. Your lawyer may be able to close using either the Western Torrens Protocol closing procedure or title insurance in order to obtain funds and pay the cash to close prior to title registration, depending on the situation, mortgage lender, and Provincial rules.
• Pay the total cash to close to the seller s lawyer; this is usually done on the morning of closing and possession passes at noon on the day of closing; the real estate agents will handle the release of the keys.
• Sometimes delays occur: the mortgage funding is late, transfer documents are late from the seller, you are late in delivering the money needed to close these delays may or may not alter the timing of possession, depending on circumstances. Should any of these arise, your lawyer should explain the options and recommend a course of action.
• Finally, you will receive your lawyer s reporting package within a reasonable period of time after Closing/Possession. Our firm sends out a full Home Purchase Reporting Binder , with all the transaction and mortgage documents carefully tabbed and labeled for your future reference.

This is the most typical and simplistic outline of the inner legal workings of a residential real estate purchase transaction. Many more tasks are completed than are outlined here but hopefully this gives you a helicopter view of the process for a better perspective the next time you venture into your lawyer s office. And maybe, just maybe, a better appreciation for the tasks and complexities of that simple real estate deal your lawyer does for you.

Darren Richards is a partner with Richards Hunter Toogood. He focuses on both residential and commercial Real Estate and Corporate/Commercial Law serving both small and medium sized owner-managed business in the Edmonton and surrounding region. Mr. Richards also acts for major banking institutions and other lenders in relation to their commercial loan facilities. Reach him at: d.richards@rht-law.ca or www.rht-law.ca.