Signing paper in a digital world

You’ve completed your offer and any signbacks over email, by signing it electronically. Then you get to the lawyer’s office and see a stack of paper. What’s up with that?

In Ontario, lawyers must have original documents signed on paper.  While it might be nice to sign everything electronically, we can’t do that unless the laws are changed.

Yes, we use a lot of paper. Unfortunately, we have to.

Review Before You Sign

Most purchasers and sellers send their agreements to their real estate lawyer after the agreement has already been signed. At this point, it is typically too late to amend or get out of the deal. This is why it is important to have your lawyer review the agreement prior to signing.

If your purchase or sale agreement is conditional on lawyer’s review, then your lawyer can go through the entire agreement. Through this review, a lawyer can determine whether any changes should be made. Without a review clause in the agreement, the purchaser and seller are bound by the terms in the agreement. A review of the agreement can address issues at the outset of the real estate transaction, saving you time and money.

This is particularly true with the purchase of a property which has not been built or with the purchase of a condominium. These types of purchase transactions tend have lengthy agreements. Having a lawyer review these documents means that all the details are examined thoroughly.

The purchasing or selling of a house is one of the largest transactions that you will make in your life. Why not have a lawyer with expertise in this area review your agreement?

Severing ties

I had a potential client call me this week about a property he owns with his wife, from whom he had recently separated. They are working through their separation agreement, but in the meantime, he felt uncomfortable leaving their house in joint names, as he wanted his share of it to go to their children if something happened to him, rather than going to his wife.

It’s not commonly known, but it is possible to sever a joint tenancy with no notice to the other owner. You sign a deed from yourself to yourself, and now you are tenants in common; if you die, your share now goes through your estate, rather than to the other owner.

 

It’s usually best to let your co-owners know what’s going on. But if you need to sever ties quickly, you can get it done on your own.

Electronic deals

In Ontario, except for a tiny (less than 1%) fraction of properties across the province that have major title issues, all real estate is done electronically. A lawyer who is licenced to do real estate law in Ontario can close a deal anywhere in the province. So, if you’re moving to or away from a city, and you want to use the same lawyer for both deals, you can.

Are you common law? Then your spouse doesn’t need your consent

In Ontario, the law is very clear: common law and legally married are two separate things. In the context of real estate, that means that, if the house is only in your spouse’s name and you aren’t legally married, your spouse can mortgage or sell the property without you even knowing, let alone consenting. Get married, get on title, or be very aware of the limits of your rights.

Are you a first-time buyer?

It seems like it should be a simple question: if you’ve never personally bought a house, you should qualify, right? Unfortunately, it’s not so simple.

If you live in a home that your legally married spouse owns, you no longer qualify. Same if you are common law (in Ontario, that’s after three years of living together or any time of living together if you have a biological child together). If your spouse owns property, even if you don’t live there and never did, you no longer qualify. Even if you or your spouse got put on title to a property for some other purpose but didn’t truly buy the property, you don’t qualify – this happened once to a client of mine who got put on title to his parents’ Florida condo, and therefore no longer qualified as a first-time buyer.

This can have a significant for a first-time buyer. There’s the land transfer tax rebate – up to $4,000, plus more if you’re buying in Toronto. There’s the RRSP Home Buyers Plan, which allows you to withdraw from your savings, tax-free, as long as you repay yourself within 15 years. And there’s the tax refund available on expenses related to buying your first home that you can claim through CRA when you file your taxes for the following year.

If you’re planning to buy, and you’re counting on using a program available to first-time buyers, be absolutely sure that you qualify before you get started.

Always budget for your property taxes

Final tax bills are starting to come out in Simcoe County. Here’s a little known fact: if you don’t pay your property taxes, your city can sell your house in order to collect them. When I was a law student, I prepared tax deeds for people buying these properties. There were people who lost their properties over a few thousand dollars in back taxes.

In Barrie, as in many municipalities, taxes are due four times a year. You can choose to pay in those quarterly instalments, or you can (usually) set up a payment plan and pay each month as a direct withdrawal. Some banks will also let you pay your taxes alongside your mortgage, and they will take care of sending the money over to the municipality, and some banks require that you pay your taxes through your mortgage.

However you pay your taxes, just be sure that you pay them.

Don’t forget about other costs when shopping for a house

Short and sweet today: When thinking about the cost of a home, remember to be aware of more than just mortgage payments. You will need to pay taxes, house insurance, and utilities, and you should always budget for repairs and emergencies. When calculating whether you can afford to buy, don’t forget all of the little costs that add up.

Co-signed

With the mortgage rules changing almost daily these days, it is becoming increasingly difficult to qualify for financing. As a result, many young and first-time buyers are turning to parents or other relatives to co-sign the mortgage in order to get that approval.

As a co-signer, you do have to be very careful. You are now on the mortgage, so if the true owner stops paying, you’re on the hook – and your credit will take a beating. Also, you are likely going to be on the house too, so that could affect your ability to qualify for additional loans for yourself, whether a new credit card or credit line or refinancing your own mortgage.

Ultimately, you’re the only one who can decide whether it makes sense to co-sign a mortgage, but you should definitely be getting legal advice before you sign everything to be sure that you really want to do it.

Severing ties

What happens when you own a property jointly with someone, and don’t want to share any more?

Your kindergarten teacher probably wouldn’t be happy, but technically, you can sever a joint tenancy without any notice to the other parties. Basically, you do a transfer from yourself to yourself, with a statement that it is being done to sever the joint tenancy. The other person won’t find out unless they decide to look. Possibly not the best surprise to leave someone, but sometimes it is important to make sure that your share goes where you want it to go.