Buying or Selling Real Estate privately?
NOTE: the article below is general information and does not constitute legal advice. Please contact a real estate lawyer to ensure you are receiving advice that covers your particular situation.
From time to time, I will get a call from a potential buyer or a seller asking about the steps to complete their real estate transactions without the use of a real estate agent. My suggestion is to always sit down with a local real estate agent who knows your market and has the requisite skills to assist you with your transaction. One should aim to understand the services realtors provide; the value they add to the transaction and how this can help you in the long run. That being said, if you are absolutely certain that you are prepared to do without the services of a real estate agent, some general steps are outlined herein.
First, the buyer and seller would have to determine who is making the initial offer and thereby having their lawyer draft the agreement of purchase and sale. The lawyer will have a fee for this, usually based on time spent or they may have a set fee. If you work things out in advance, it can help simplify the real estate contract which may save you some money on legal fees. Remember, the lawyer is not and cannot play realtor. The lawyer is generally not going to visit the subject property or have much of an opinion about the true market value – this is the area of expertise of real estate agents. That being said, from a contract perspective, below is a general list of questions that we require from someone looking to have an agreement of purchase and sale drafted. Be advised that these are basic questions and that your transaction may differ and have additional moving pieces that need to be considered. For general information, this is what we would ask of the parties:
Agreement of Purchase and Sale (Private Questionnaire)
• What are the names of the buyer(s)? – Please provide full legal names as they are to go on the title.
• What are the names of the seller(s)? – Please provide full legal names as they are to go on the title.
• What is the address of the property? – Please include any parking/locker details, if any.
• What is the offer/purchase price?
• What is the amount of the deposit?
• Who is the deposit being paid to? – Usually, it is being paid to either the realty company or the seller’s lawyer, in trust. It is advised not to make a cheque directly payable to the seller.
• Who is making the offer (buyer or seller)?
• What is the irrevocability date?
In other words, how long does the other party have to accept your offer?
• What is the closing date?
• Which items are being purchased as a part of this transaction?
When in doubt, list it out. Usual items include a fridge, stove, washer, dryer, electric light fixtures etc.
• Are there any rental items on the property?
The buyer typically assumes these rental contracts.
• Is the property a single-family residential dwelling or is it a duplex/triplex/multi-unit. Please provide details.
• Are there any realtors involved in the transaction at all? If so, please provide their name and contact details.
• What type of conditions are you looking to include in the agreement?
Generally speaking, a buyer may want to make it conditional to financing or home inspection to name a few or possibly subject to the sale of an existing home or confirmation that home/fire insurance can be obtained by the buyer. Further details would be required.
• Are there any Tenants on the property? If so, are the tenancies being assumed? Please provide copies of the leases.
• What is the name and contact information for the lawyer representing the other party?
• Are there any other items you wish to share?
As you can see, there is a lot of information that needs to be gathered. Note that if there are any conditions included in the agreement of purchase and sale, they need to be drafted to meet the intentions of the buyer and seller. Further, the conditions also need to be addressed once they are satisfied by signing further documents/ schedules.
Another note is to make certain of which items are being kept by the buyer and which are going to be removed by the seller. Generally speaking, chattels do not form a part of the agreement unless specifically referenced as included. Chattels are items of personal property that are not ‘attached’ to the real estate such as washers, dryers, stove, tables, chairs and various other items that make up ‘stuff’ inside a house. On the other hand, items that attach to a building/house are generally known as fixtures. These items are known to be sold with the property unless specifically excluded. An example of a fixture may be a built-in workbench or a built-in wall safe. Though there is some grey area, one suggestion is that if it will cause damage to remove it from the property, it may be considered a fixture. This is the reason to work it out in the agreement and as usual, real estate lingo goes, ‘when in doubt, spell it out’. Not only will this avoid unpleasant surprises, but it will also assist with any potential litigation if a dispute arises.
There are a number of other items that need to be considered and clients (buyers or sellers) may require more contact with their real estate lawyer since they do not have the benefit of working with a real estate agent. The main message here is that if you’re going to decide not to proceed with the assistance of a realtor, be aware of your rights and speak to a real estate lawyer before signing anything.
VRS Law is a real estate law firm serving Kitchener, Waterloo, Cambridge, Guelph, and other areas west of the GTA. We offer assistance in buying, selling, refinancing along with other practice areas. If you have any questions about real estate lawyer Kitchener, give us a call!Read More
Disclaimer: Please note that opinions and information herein (and elsewhere on this website) is general information and is not to be considered legal advice. Please contact a Kitchener real estate lawyer for advice in relation to your specific scenario.
WHAT TO LOOK FOR IN A STATUS CERTIFICATE
If you’ve come to this page while searching for information on a status certificate, it is likely that you are involved in purchasing a condominium either as a prospective buyer or a realtor. This package of documents shared by the condominium corporation is often the subject of many questions, deadlines and processes involving a number of parties. As a real estate lawyer in Kitchener, I see status certificates as a critical document that requires a review. It provides very important information on a variety of things some of which are listed below.
What is a status certificate, what does it include?
In exchange for a fee ($ 100 +), a prospective buyer is provided a package of documents referred to as the status certificate. This contains documents including the condominium by-laws, condominium declaration, the budget, and rules of the condominium corporation and a summary document. Real estate agents will often (highly suggested) make their client’s offer conditional on a review of a status certificate by a lawyer. Review of these documents allows the buyer to cross-check the information provided by the seller. For example, if the seller indicates a certain amount for monthly common expenses and the status shows a higher amount (perhaps due to a recent increase in condominium fees), the buyer can be better prepared for the true costs involved.
What are the risks in NOT reviewing a status?
There are many risks. As a starting point, you do not have a financial snapshot of the condominium and its affairs. The status will reveal if the condominium corporation is involved in any lawsuits or other legal proceedings. A lawsuit may very well impact the finances of the corporation so additional details may need to be explored. It will also disclose whether the current owner is up to date in paying the common elements (maintenance fees as it is sometimes referred to as) and whether the condominium corporation has placed any liens on the property due to arrears of such payments or unauthorized changes to the unit. Certainly, one would want to know this information upfront and make an informed decision.
What other documents are included in a status?
The status certificate would also include a reserve fund study. This is a study required to be completed under the governing legislation and is prepared in conjunction by engineers and accountants. Every few years, a certified professional (engineer) is required to attend provide an opinion on the major components to see which items require repair and replacement. As a result of the report, the corporation is not only able to budget but also to project how much money is to be allocated into a reserve fund (sort of like a long term savings account) for the years to come. The general thought is that more is better!
Follow the rules
Although most clients understand the concept that purchase of a condominium would come with certain rules, it is important to review them. Are there restrictions on pets? Short-term rentals (Airbnb) or student rental, parking etc. When it comes to these rules, a prospective buyer should understand them in advance of the purchase.
What else would one find out?
You may get some sense into how many units are rentals rather than being owner-occupied. This could certainly impact a potential purchase decision. You also want to know which utilities, if any, are covered by the monthly common expenses. More and more utilities now, especially in newer condominiums are being separately metered which means you would pay fees for these utilities on top. Understanding this allows will allow one to budget properly. Also, if the condominium is facing issues or in bad financial shape, a special assessment may be imposed on the unit owners. This is where additional fees may be required from unit owners to cover some type of shortfall. Very important to know this upfront.
Remember, there is no magic wand one can wave to know if it’s a ‘good purchase or not’ but reviewing this document can give some insight into what you are getting into. The point is, there’s a lot involved and it is best to have the status certificate reviewed and provide adequate time to conduct the review.
VRS Law is a Kitchener-Waterloo Law firm and assists clients purchasing, selling, refinancing real estate property including condominiums which require the review of status certificates. We also help clients with their estate planning and estate administration needs. In other words, we assist those looking to prepare their wills, power of attorneys and receive assistance with probate or executor related services.