Introduction to Red Flags in Real Estate Transactions: This is part of a series of blog posts where we share red flags that lawyers watch out for during real estate transactions as part of the conveyancing process. Sharing these insights can empower home buyers, sellers, and real estate professionals to better serve their clients, ensuring smooth and secure property transactions.
One fundamental aspect that cannot be overlooked is the accuracy of the contract. Failure to review the contract thoroughly can lead to unnecessary challenges on Completion Day. To avoid such complications, it’s imperative to conduct a meticulous review as soon as you receive the contract. Here are a few basic questions to guide your review:
Seller Names and Title: Verify whether the seller names on the contract match the registered owners on the title. It is common for these two documents to not align, which can lead to confusion and complications during the transaction. While some discrepancies may have valid explanations, such as Land Titles Office delays, often, the mismatch results from inattentiveness or a misunderstanding of the necessary names on the contract and their importance.
Legal Description Verification: Verify whether the legal description on the contract is accurate. The legal description should match the property’s municipal address, not just for the sake of the contract but also for tax and title purposes.
It’s wise to cross-check the contract information with the title information once you have access to the title documents.
Multiple Titles in Condo Sales: In condo sales, there may be multiple titles associated with the property, such as titled parking stalls or storage units. It’s crucial to inquire with your seller clients about these additional titles.
If sellers are unsure about the existence of additional titles, you can ask if they receive multiple tax notices annually, which might indicate the presence of separate titles.
For confirmation, consider pulling title documents with variations like +1 or +2 at the end, as these may indicate additional titles.
Review Special Terms of Contract: Ensure you are familiar with any additional terms added to the purchase contract. Also don’t forget to include any additional terms when drafting the contract. Often in the excitement of making or accepting an offer, the party may forget to include an important term that was previously discussed in negotiations.
Ensuring that the contract accurately reflects the parties involved is a foundational step in the conveyancing process. Attention to these details not only prevents unnecessary hurdles but also reinforces the integrity and transparency of the transaction. Reviewing the contract thoroughly from the outset sets the stage for a smooth and successful real estate transaction.
