FRENCH, NOSEWORTHY & ASSOCIATES

Featured Service - Home Buying: What You Need to Know

The following is a description of the process associated with the purchase of a new home in Newfoundland and Labrador*.

1. Agreement of Purchase and Sale:
The first step in purchasing a new home is the negotiation and signing of an Agreement of Purchase and Sale with the person selling the property, known as the Vendor. Alternatively, if you are building and have hired a contractor to build your new home you should have a Building Contract with the contractor which outlines in detail the building specifications of your new home. Prior to completing the Agreement of Purchase and Sale and/or the Building Contract you should contact a lawyer to review these documents. One condition agreed upon in the Agreement of Purchase and Sale will be the date upon which you will purchase and take possession of the property, known as your Closing Date.

2. Closing Activities:
The next steps involved in purchasing a new home are those related to the closing or completion of the transaction. Each real estate transaction is unique and as such the information provided herein is subject to change, accordingly.

a. Title Search
In order for your lawyer to ensure that the home and land you are purchasing are clearly owned by the Vendor, a title search at the Registry of Deeds for the Province of Newfoundland and Labrador will be conducted. The title search is mandatory and provides a history with respect to the ownership of the property and enables your lawyer to ensure that you will have clear title to the subject property.

b. Sheriff’s Certificate
A Sheriff’s Certificate is required by your lawyer to determine if there are any outstanding judgments in the name of the Vendor and against the property. The Sheriff’s Certificate ensures that the property you are purchasing is free of any claims against it and your lawyer will conduct this search on your behalf.

c. Survey and Location Certificate
Whether or not a new Survey and Location Certificate (known as a Real Property Report) will be needed depends on the age of the survey and the accuracy of the Location Certificate (i.e., have there been changes to the home since the drafting of the original Location Certificate). The Survey outlines the boundaries of the land to ensure there are no encroachments on the property and that it does not encroach on the neighbouring properties. The Location Certificate outlines the location of the house and any other structures on the land (e.g., fences or sheds) to ensure that they are within the boundaries of the property. The party responsible for the cost of a new Survey and Location Certificate should be set out in the Agreement of Purchase and Sale.

d. Personal Property Security Act (PPSA) Search
If the property you are purchasing has new appliances, a furnace or any items that may be subject to a charge, your lawyer may have to conduct a PPSA search. This search will ensure that there are no charges against the items in the home for which the Purchaser could be liable.

e. Tax Certificate and Compliance Letter
For your benefit and protection as the Purchaser, the Vendor must supply a Tax Certificate from the appropriate municipality certifying that all property taxes, water taxes, and property assessments have been paid. The Purchaser must compensate the Vendor for that period of time subsequent to the Closing Date for which the Vendor has already paid taxes. For example, if taxes have been paid to the end of December and the Purchaser takes possession of the property on the first of December, the Purchaser must reimburse the Vendor for the 31 days of tax already paid. Most municipalities in the province require taxes to be paid six months in advance; as such the cost the Purchaser incurs will be directly related to the date of possession of their new property. For your benefit and protection as the Purchaser, the Vendor must also upon request supply a Compliance Letter from the appropriate municipality confirming the zoning for the subject property, the nature of the subject property (i.e., single family dwelling vs. multi-unit dwelling) and whether or not there are any outstanding work orders against the subject property.

f. Oil/Propane Adjustments
If the property you are purchasing has an oil furnace, a propane fireplace or stove, you may have to reimburse the Vendor for the unused oil and/or propane left in the tank at the date of closing. In addition, the Purchaser must compensate the Vendor for that period of time subsequent to the Closing Date for which the Vendor has already paid the rental fee for the propane tank. These costs will obviously vary depending on the amount of oil and/or propane left in the tank.

g. Registration Fees - Deed and Mortgage
If you are financing your purchase through your banking institution with a mortgage, the mortgage must be registered at the Registry of Deeds for the Province of Newfoundland and Labrador, along with the document transferring ownership of the property from the Vendor to you, known as the Deed of Conveyance. The provincial government charges a fee for both the registration of the Deed and the registration of the Mortgage at the Registry of Deeds. In order to determine the total amount of the fee for registering the Deed, the Registry of Deeds multiplies the purchase price of the property by 0.004 and adds $100.00. To determine the total amount of the fee for registering the Mortgage, the Registry of Deeds multiplies the principal amount of the mortgage by 0.004 and adds $100.00.

3. Insurance
Prior to the Closing Date you will be responsible for arranging with an insurance agent insurance coverage on your new home. Insurance is required prior to the release of any funds if you are financing your purchase through your banking institution with a mortgage.

4. Final Inspection
Prior to the Closing Date you will meet with your lawyer in order to review and sign your mortgage documentation, if applicable. In addition, at that time your lawyer will provide you with your draft Trust Statement which will set out the costs of the transaction in detail. Following this meeting you will schedule with your real estate agent, if applicable, or with the Vendor directly, a time at which you can conduct an inspection of the property, known as the Final Inspection. The Final Inspection generally takes place on the morning of your Closing Date. Assuming no problems arise from your Final Inspection, your lawyer will release funds to the Vendor, keys to the property will be provided to you and your transaction will close.

*Disclaimer: The information contained herein respecting new home buying is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. French, Noseworthy & Associates does not intend to create a solicitor-client relationship by offering this information, and your review of this information shall not be deemed to create such a relationship. You should consult a lawyer if you are purchasing a new home. For further information, please contact a French, Noseworthy & Associates lawyer.