Edmonton Real Estate Lawyer

What is a Transfer of Land (Back) and Covenant to Restore Title?

Posted on 28. Aug, 2009 by admin in Real Estate

or  (Why do I have to sign a Transfer of Land transferring the property back to the Seller when I purchase a property?)

Before answering this question, I need to give you a very simple and brief explanation of how regular real estate transactions work in Edmonton.

The Seller’s lawyer prepares a Transfer of Land which is signed by the Seller.  The Transfer of Land is the document that will transfer the property from the Seller to the Buyer.

The Seller’s lawyer sends the Transfer of Land along with some other documents to the Buyer’s lawyer.

Now, think about this:  The Seller’s lawyer is sending the Transfer of Land to the Buyer’s lawyer before the Seller is paid for the purchase price.  This means that the Buyer’s lawyer can register the Transfer of Land (transferring the property to the Buyer) without paying the Seller.  So how does the Seller’s lawyer make sure the Seller gets paid?

The documents are sent to the Buyer’s lawyer on explicit conditions called Trust Conditions.  The Buyer’s lawyer must follow those conditions (if they don’t they are in big trouble!).  I like to explain Trust Conditions as promises made between lawyers and that we trust each other to keep them.

[Here's a quick plug about the legal profession - lawyers get a bad rap for being dishonest but really our profession and the rules that we are governed by are based on honesty and Trust between each other and with our clients]

Some of the conditions that the documents get sent to the Buyer’s lawyer on are:

1. The Buyer’s lawyer must have the down payment from the Buyer and must make sure that the Buyer’s mortgage is ready to be advanced before the Transfer of Land is sent for registration;
2. Once the Transfer of Land and Mortgage are registered (usually on or before the Possession Date), the Buyer’s lawyer must pay to the Seller’s lawyer the Purchase Price.

It takes a few days for a Transfer of Land to get registered and it must be registered on or before the Possession Date. So, the Buyer’s lawyer sends the Transfer of Land to get registered a few days before the Possession Date (the day on which the Seller gets paid and the Buyer gets the property).

During those few days that the Transfer of Land has been sent in to be registered something could happen with the Buyer’s money.  For example, the mortgage lender might decide not to advance the mortgage money because they have discovered that the Buyer was dishonest on their mortgage application.

Once the Buyer’s lawyer sends the Transfer of Land to get registered, it usually can’t be stopped.  This means that the title will transfer to the Buyer no matter what once the Transfer of Land has been sent in.

What happens if the Buyer becomes the owner and they suddenly don’t have the money to pay the Seller?    How is the Seller protected?

and here finally is the answer to your question …

Before sending the Transfer of Land to get registered, the Buyer’s lawyer must get the Buyer to sign what I call Just In Case Documents.

The first is an agreement that if the Buyer becomes the Owner of the property and does not pay the Seller within a certain number of days after becoming the Owner, the Buyer will transfer the property back to the Seller.  This agreement is called a Covenant to Restore Title.

The second is the Transfer of Land (Back) which is the document that will actually transfer the property back from the Buyer to the Seller.  The Buyer’s lawyer will hold this document on their file and it will only be used in the event that the Covenant to Restore Title agreement applies.  The Buyer must sign the document in advance because the Buyer’s lawyer might never see the Buyer again after the Bank does not advance the funds.

These are signed Just In Case the Buyer becomes the Owner and does not pay the Seller.

© Giardino Law. All rights reserved. The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues. Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

Why do you need a lawyer to handle your house purchase or sale?

Posted on 13. Aug, 2009 by Rosellina Giardino in Real Estate

Why do you need a lawyer to handle your house sale or purchase?

There are so many reasons you need a lawyer to handle your house sale or purchase.  Here are a few:

1. Lawyers make sure the Seller gets paid the purchase price.
2. Lawyers make sure the Buyer gets what they paid for.  For example, lawyers make sure:
   1. That the property is transferred to the Buyer;
   2. There is nothing on the title that isn’t supposed to be there. For example, mortgages, liens, caveats; and
   3. The house, garage, fence, etc. is where it is supposed to be on the lot.
3. Lawyers make sure that (if applicable) property taxes, utilities, and condo fees are paid.
4. Lawyers make sure that you are provided with the information that you need.
5. Lawyer can make binding promises to each other to make sure things are completed.  For example, it may be a condition of your purchase that the seller will clean out the garage.  The seller’s lawyer can promise to hold back money from the sale proceeds until such time as the garage is cleaned.

© Giardino Law. All rights reserved. The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues. Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

Frequently Asked Real Estate Questions

Posted on 09. Jul, 2009 by Rosellina Giardino in Real Estate

September 21, 2009

My wife and I own a townhouse in Edmonton, AB and the title for the property is in both our names (both of us are registered as owners of the property). We would like to change the title of our townhouse to my wife’s name only, so I will not be the owner of the house anymore.

I would also like to know upon completing the task above, will there be any problem changing the name on the mortgage which is also in both our names.

There is a clause in almost all mortgages that is called a “due on sale” clause. This means that if you transfer the property (even if you remove one person from the title) your mortgage becomes immediately due and payable. Your bank can decide to demand payment of the entire amount owing on your mortgage.

The bank registers a mortgage on your property as security for the loan they gave you. The loan they gave you was based on the credit of both you and your spouse. If you want to be removed from the mortgage, you need to contact your bank and get their consent. Once you have that then you can also transfer the title to your spouse’s name alone.

Hope this helps.

Rosellina

August 3, 2009

Hi Rosellina  – I am hoping to purchase a condo in the near future, and am looking for a lawyer to assist me in the process – I’m a first time home buyer and really have no clue

Most first time buyers expect that there is lots for them to do but your realtor, bank and lawyer do most of the work.

What is a Tenancy – At – Will?

Posted on 02. Jul, 2009 by Rosellina Giardino in Real Estate

What is “Tenancy – At – Will”? The situation where a buyer receives possession of the property prior to payment of the full purchase price to the seller.

Sometimes, for a number of different reasons, the buyer may not be able to pay the purchase price to the seller on the possession date. One example is where the buyer’s mortgage lender is late sending the mortgage funds to the buyer’s lawyer which results in the buyer’s lawyer not having the money to pay the seller the purchase price. Another example, is where the seller has not provided the buyer with a document required to close and therefore the buyer’s lawyer wants to delay the payment of the purchase price so as to protect the buyer.

The seller may still allow the buyer to move into the property on the possession date if (there may be other requirements):

1. the buyer’s lawyer has the downpayment in trust;
2. the buyer’s lawyer has submitted the transfer of land to the buyer for registration;
3. the buyer has signed all their mortgage and purchase documents;
4. the buyer has property insurance in place; and
5. the buyer has signed a tenancy at will agreement which generally says that the buyer is a tenant only, must vacate the property on very short notice, the buyer can’t make any changes to the property; and the buyer must pay interest to the seller up until they pay the purchase price.

The seller is under no obligation to allow the buyer to move in prior to the buyer paying the full purchase price and the buyer completing all it’s obligations under the purchase agreement (unless the purchase agreement says otherwise).

If you have any questions about Tenancies at Will,  I would be happy to answer them.
Rosellina

© Giardino Law. All rights reserved. The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues. Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site. The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

Should a Buyer accept Title Insurance instead of a Real Property Report?

Posted on 25. Apr, 2009 by Rosellina Giardino in Real Estate

Read my article “What is Title Insurance?” before you read this article.

Most Real Estate Purchase and Sale Agreements contain a clause requiring the Seller to provide the Buyer with a Real Property Report with compliance.

Only a Real Property Reports that reflect the current state of the Property and that is marked with compliance by the municipality will satisfy the requirement of the Purchase and Sale Agreement.

Sometimes, the Seller does not have a current Real Property Report with compliance.  In that case, the Seller may offer to purchase a Title Insurance Policy for the Buyer in lieu of providing the Buyer with a Real Property Report with compliance.  The Seller may do this because it is cheaper to pay for the title insurance,  they are aware of a problem with the property (this may prevent title insurance coverage), or there is not enough time to have a Real Property Report prepared.

Should a Buyer accept Title Insurance instead of a Real Property Report with Compliance?

Of course, this depends on each transaction.  In most situations, I recommend the Buyer insist that the Seller provide them with a Real Property Report with compliance for these reasons:

1.       If you receive a Real Property Report with compliance at the time of purchase you will know what you are getting.  You will know if your fence encroaches on your new neighbour’s property, you will know if your garage is too close to the property line, you will know if a permit has been issued for your deck.

2.       If problems are revealed by the Real Property Report during the transaction, it will be the Seller’s responsibility to fix them.  For example, the Seller will get a permit for their deck, or enter into an encroachment agreement with the municipality or the neighbour.

3.       If you get title insurance instead and problems with the property are revealed at a later date they are now the buyer’s responsibility.  The Buyer may find out that there is an issue with their property and it is now their responsibility to fix. The Buyer can go to their title insurer but the title insurance policy may not cover the Buyer’s loss.

4.       It is very important to read the contents of your title insurance policy and be aware that you are making a claim on an insurance policy and your insurer may decide not to cover your loss.

5.       If the Seller or the Buyer is aware of a deficiency and decided to get title insurance instead of a real property report with compliance, the Buyer may not receive coverage under the title insurance policy.  The title insurer and the Buyer can take legal action against the Seller if there evidence that the Seller was aware of problems with the property.

6.       When it is time to sell the property, the new seller will have to provide the new buyer with a real property report with compliance or pay for the new buyer’s title insurance.

You may also want to read the following articles:

“What is Title Insurance?”

“What is a Real Property Report?”

© Giardino Law. All rights reserved.  The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues.  Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site.  The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

What is a Real Property Report (RPR)?

Posted on 17. Apr, 2009 by Rosellina Giardino in Real Estate

What you need to know about Real Property Reports (RPR)

What is a Real Property Report?

A Real Property Report (RPR) is a document that illustrates the location of visible improvements (for example, a house, garage, shed, deck, or fence) located on a property relative to the property boundaries. RPRs are not prepared for condominium units.

An RPR includes the following:

1.       The legal description of the property;

2.       Dimensions and directions of all property boundaries;

3.       Designation of adjacent properties, roads, lanes;

4.       Location and description of all relevant improvements situated on the property including dimensions and distances from the property boundaries;

5.       Right-of-way or easements as noted on the title to the property at the date of the survey;

6.       Location and dimension of any visible encroachments onto, or off of the property; and

7.       A certificate and opinion by an Alberta Land Surveyor.

Because an RPR includes a statement detailing the surveyor’s opinions or concerns, the RPR is often relied on by the buyer, seller, lender, and the municipality as an accurate representation of the improvements located on the property.

If you are a Seller, you need an RPR because:

1.       It may protect you from potential future legal liabilities resulting from problems related to property boundaries and improvements.

If you are a Buyer or Owner of Property, you need an RPR because:

1.       You will know the accurate locations and dimensions of buildings, improvements, rights-of-way, and encroachments relative to boundaries of your property.

2.       You will know the physical dimensions of the property.

3.       It shows the location of improvements within the property boundaries (example – Is your home too close to the property line?).

4.       It shows any encroachments from adjacent properties (example – is part of your garage on your neighbour’s property?).

5.       It shows whether the property complies with municipal bylaws and fire codes.

6.       It shows if there are any problems relating to property boundaries.

7.       Your Mortgage Lender will need to ensure the property complies with municipal bylaws.

Alberta Law Society Recommended Rules regarding Real Property Reports

The Alberta Law Society hasRecommended Rules for real estate lawyers regarding Real Property Reports, including the following:

1.        The Buyer’s Real Estate Lawyer should not have to proceed to registration until they have the opportunity to review an RPR.  Interest should only be paid at the mortgage rate mortgage amount if the buyer wants to take possession or  Possession shall be postponed until one is provided and no interest shall be payable.

2.       Original RPR’s are not required.

3.       Age of the RPR is not relevant so long as it reflects the current state of the property (exception: purchaser’s lender may have certain requirements)

4.       If an RPR is prepared before the date of final acceptance of the Purchase Contract, the Seller should sign a statutory declaration that there have been no changes

5.       RPRs do not need to include sidewalks, driveways, landings, or small sheds;

6.       A removal of an improvement does not require a new RPR; and

7.       All fences must be shown on the RPR.

© Giardino Law. All rights reserved.  The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues.  Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site.  The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

What is Title Insurance?

Posted on 17. Apr, 2009 by Rosellina Giardino in Real Estate

What is Title Insurance?

Title Insurance is an insurance policy that protects a residential or commercial property owner and their lenders against losses related to the property’s title.

For a one time fee, title insurance may provide protection from such losses as:

1.       Unknown title defects (title issues that prevent you from having clear ownership of the property);

2.       Existing liens against the property’s title (e.g. the previous owner has unpaid debts from utilities, mortgages, property taxes, or condominium charges against the property);

3.       Encroachment issues (e.g. a structure on your property  needs to be removed because it is on your neighbour’s property);

4.       Title fraud;

5.       Errors in surveys and public records;

6.       Other title-related issues that can affect your ability to sell, mortgage, or lease your property in the future.

Your title insurance policy may protect you as long as you own your property, and may cover losses up to the maximum coverage set out in the policy.  It may also cover some legal expenses related to restoring your property’s title.

It is important to read the policy and ask questions to be aware of the coverage that is provided. You also need to be aware of possible exclusions, which may include:

1.       Known title defects (that were revealed to you before you purchased the property);

2.       Environments hazards (e.g. soil contamination);

3.       Native land claims;

4.       Problems that would be only be  discovered by a new survey or inspection of your property (e.g. property is smaller than originally thought);

5.       Matters that are not listed in public records;

6.       Zoning bylaw violations from changes, renovations or additions to your property or land that you are responsible for creating.

Title insurance does not provide compensation for non-title related issues.  It is not a home warranty or home insurance policy, and will not provide compensation for:

1.       Damages  due to flooding, fire, or sewer backup;

2.       General wear and tear of your home (e.g. replacing old windows, a leaky rof, or an old furnace);

3.       Theft (e.g. a burglar breaks into your home and steals your television); and

4.       Other losses or damages due to non-title related issues.

You must carefully review your title insurance policy, as it may include additional exclusions and exceptions that are specific to your property.

There are two types of title insurance policies:

Owner’s policy – protects the property owner from various title-related losses that are listed in the insurance policy, for as long as the property is owned.  On owner’s policy sets a maximum amount of coverage.

Lender’s policy – Protects the lender from losses in the event that the property’s mortgage is invalid or enforceable.  A lender’s policy usually provides coverage for the amount of the property’s mortgage.

You can purchase title insurance for both residential and commercial properties.  Types of residential title insurance include:

1.       Types of residential title insurance include:

a.       Policies for new homeowners;

b.      Policies for existing homeowners;

c.       Policies for lenders in a residential mortgage.

2.       Types of commercial title insurance include:

a.       Policies for individual purchasing commercial properties

b.      Policies for lenders in a commercial mortgage

Please contact a title insurance provider for further information regarding Title Insurance.

© Giardino Law. All rights reserved.  The content on this web site is provided for general information purposes only and does not constitute legal or other professional advice or an opinion of any kind. Users of this web site are advised to seek specific legal advice by contacting Giardino Law (or their own legal counsel) regarding any specific legal issues.  Giardino Law does not warrant or guarantee the quality, accuracy or completeness of any information on this web site.  The articles and posts published on this web site are current as of their original date of publication, but should not be relied upon as accurate, timely or fit for any particular purpose.

Do I need a Bridge Loan/Interim Financing?

Posted on 17. Apr, 2009 by Rosellina Giardino in Real Estate

What is a Bridge Loan or Interim Financing?

Bridge /Interim Financing is a loan made to facilitate the purchase of your home prior to the sale of your existing home where you plan on using the sale proceeds from your existing home to complete the purchase of your new home.

For example, the possession date for your new home is July 10 and the sale of your existing home does not close until July 15.  Your new home needs to be paid for on July 10 but the funds from the sale of your existing home won’t be available until July 15.  So, your lender may give you a 5 day loan so that you can pay for your new house on July 10.  The loan will be paid out on July 15 when you receive the sale proceeds from the sale of your existing home.

If you are selling and buying a property and your purchase transaction closes before your sale you will need a Bridge Loan or Interim Financing.

If Possession Date is the same date for both transactions, I would also recommend a Bridge Loan or Interim Financing. It is possible your sale may be delayed and you won’t be able to close your purchase.

Discuss your Bridge Loan or Interim Financing options with your mortgage lender.