Frequently Asked Real Estate Questions
Here are many of the frequently asked questions by my clients.
If there is a question that you have that is not answered here please contact me and I will get back to you and post the question and answer here as well.
What is the difference between Freehold Strata, Leasehold Strata and Co-ops?
- Freehold Strata is the normal type of ownership for apartments/town homes and sometimes homes. Here you acquire fee simple title to your strata lot.
- Leasehold Strata is typically in the Falce Creak or University Land area. When purchasing a leasehold Strata unit you are actually purchasing an interest as a "Leasehold Tenant". Leaseholds are either a Prepaid or Non-prepaid Lease for the length of the term (99 years is the typical lease length from when the original lease was signed). At the end of the term the Leasehold Landlord may purchase the land back from the owners or re-lease it for another term but typically at a higher rate than the original lease.
- Co-ops (Cooperative Corporations) is the one of the oldest forms of land ownership in Canada. Here you don't own a Fee simple title to the unit, instead you own "shares" in the complex and the shares are allocated to your specific unit. When buying in a Co-op building you need a minimum of 35% of the purchase price for down payment as banks require this and you also need to go through a screening process with the council of the Co-op where they need to approve you for ownership of the complex. Typically Co-ops do not allow Rentals in the building or Pets.
What is the difference between working with a mortgage broker and a Bank?
- Mortgage Brokers shop for the best rate for their clients through all the Banks and lenders. They also are free to use as the Banks will pay their fees.
- going through a bank though you will only get whatever rate they have and it might not be the best rate that you can get if you were to use a Mortgage broker
When do I have to pay GST?
- You pay GST on a new home. If the home is not new, then there is no GST applicable; in addition, GST is payable on the commission when you sell your home
What is the disclosure of Remuneration?
- This tells the buyer what percentage of commission his/her realtor will be receiving from the listing broker.
When should I call a mortgage broker?
- As soon as you decide to buy a home
What are the advantages of being pre-approved by a Mortgage Broker?
- By being pre-approved, you know what your price limit is; you are protected from an interim rise in interest rates; and sellers will take your offers more seriously
When do I have to provide my deposit?
- Depending on the wording of the Contract of Purchase & Sale, it could be, on acceptance of the offer, after subject removals are signed or there could be a clause stating it has to be received within a certain time frame (i.e.: 24, 48, 72 hours from acceptance or from subject removal).
How long is a typical subject period?
- Usually 7 days for standard subject clauses
What is a Working with a Realtor document?
- A form that is used to provide an explanation of the relationship between you and a realtor and of the collection, use and disclosure of personal information
What is a Dual Agency Agreement?
- Licensee and/or brokerage that has entered into an agency relationship with both the buyer and seller in the same transaction. For example if Josh Rosenberg (Realtor) represents both the Buyer and Seller then this would be a Dual Agency, But Similarly if Josh Rosenberg (Realtor) represents the Buyers in a transaction and Kevin Hardy (Realtor) represents the Sellers and Both Realtors work for Macdonald Realty then this would also form a Dual Agency because Both Kevin and Josh work for Macdonald Realty and their Brokerage is actually who both the Buyer and Seller are represented by.
What is a Subject to Sale offer?
- An offer with a clause that states the Buyer will complete the purchase agreement of the subject property once their house has sold. This Clause in normally followed by a 24, 48 or 72hour clause that states if another party gets an accepted backup offer from the Seller, then the original Buyer has 24, 48 or 72 hours (depending on what is stated in the contract) to remove all their Subject or their Contract will collapse.
What information should I have when I buy a NEW house?
- New Home Warranty Information or Owner/Builder declaration, an Occupancy Permit certificate satisfaction regarding deficiency and lien holdback and an understanding of who pays the GST if applicable
When can I occupy a tenanted home?
- 2 full months after notice; after the tenant has received written legal notice. For example if a tenant is given notice Feb. 3rd, the tenant does not have to vacate until the end of April (or the 1st of May at noon depending on the terms of their agreement)
What are the most important points to be aware of in a multiple offer situation for a Seller?
- Each Buyer or Buyer's agent presents their offer to the Seller's Agent. After hearing from each Buyer or Buyer's agent the Seller discusses each of the offers with the listing realtor; typically the sellers have 1-2 hours to decide of the offers they will accept or counter (you can only counter 1 offer at a time) typically the offers from the Buyers are their "best shot" in some instances the Seller will ask the best of the offers to submit their best and final offer in a second round of offers if they are close in price and conditions.
What are the most important points to be aware of in a multiple offer situation for a Buyer?
- The Buyer should put forward their "best shot" offer; put in another way, the offer they would make if they did not expect any negotiating or back & forth; the buyer typically makes their best offer because in a multiple offer situation they may not get a second chance to go before the seller; the best option for the Buyer is to have the prospective home inspected and appraised prior to making their offer
What is PTT?
- Property transfer tax; a Provincial Government Tax which applies on all transfers of Real Estate and is payable on the completion date; the rate of tax is 1% on the first $200,000 of the purchase price and 2% on the balance of the purchase price over $200,000; payable at completion at the lawyer's office and payable with a separate cheque from your down payment cheque to the Minister of Finance
What is the PDS?
- Property disclosure statement; a form that the Sellers completes disclosing general and structural details; the Seller is responsible for the accuracy of the answers on the form as it constitutes a representation under any contract of purchase and sale if so agreed, in writing, by the seller and the buyer
How much does a home inspection cost?
- Usually $200-$500
How long does it take to get financing?
- Typically 2-5 business days if pre-qualified
What happens if the Seller of the house is a non-resident?
- Non-residents must notify the Canadian government within 10 days of the completion of the transaction to obtain a certificate of compliance; this will only be issued if the CCRA has received either a prepayment on account of the taxes owing or appropriate security for the prepayment. The buyer must notify their lawyer that they are purchasing a home owned by a non-resident. The buyer's lawyer will then hold back a portion of the sale proceeds until the seller complies with the CCRA regulations as noted above
How much deposit do I have to put down?
- Usually 5-10%
How long is Completion period usually?
- Typical time is 60-90 days.
What items are included with a home?
- In most cases appliances, window coverings & fixtures, unless the Seller states in the Contract of Purchase and Sale that certain items are to be excluded.
How long offers are open for acceptance?
- Usually for the day written or up to 24 hours
As a Buyer, what information do I need to give my lawyer?
- Once you've negotiated the sale of your new home, your real estate lawyer will need to see a copy of the accepted offer, the PDS, all mortgage information, and any other property ownership documents. The Macdonald Realty conveyance department (or whatever Brokerage represents you) will forward all this information to you Lawyer for you.
What are the possession and adjustment date?
- The possession date is the day that you take ownership of the house, i.e. the day you get the Keys. The adjustment date is usually the same day as the possession date and it is the day you start paying for the property taxes. i.e. if possession and adjustment date for your new home is today, the previous owner will pay the portion of this year's property taxes from beginning of the year to yesterday and then from today till the end of the year you pay the remaining of the property taxes.