Common Mistakes People Make When Buying Real Estate Property
A majority of people are quick to invest in real estate due to its high returns and security offered. For instance, when the market prices dip, many let the excitement of owning a dream home get the better of them and rush into a purchase. However, one wrong decision or a poor investment could end up putting their future at risk.
Before you can own property, as a potential buyer, you must scrutinize things from a legal perspective. You need to go over the terms in the purchase contract and the condition of the property to determine if everything matches your requirements.
Skipping these and other steps to obtain ownership quickly, will only result in slip-ups and the possibility of purchasing a complete nightmare. You could end up with a property that requires repairs, doesn’t give you full ownership, or worse forces you to forfeit the finances you’ve struggled to accumulate. To help you dodge these and other errors which could prove to be costly, Everstone Law Professional Corporation has put together a list of the most common mistakes people make when buying real estate property.
1. Not getting the agreement of purchase and sale reviewed by a lawyer.
Purchaser(s) do not get the agreement of purchase and sale reviewed by a real estate lawyer when purchasing real estate property from a builder. This type of real estate closing transaction should be given priority as the purchaser(s) have a ten-day “cooling off period,” in the case of new builder condominium properties to back out of the agreement of purchase and sale within the manner specified in the agreement of purchase and sale. Purchaser(s) should hire a lawyer to review the legal terms and conditions associated with their agreement of purchase and sale and any associated condominium documents so that they are aware of their obligations and the terms and conditions related to their purchase. This will also help avoid pitfalls associated with their transaction and ensure a smooth closing transaction.
2. Dismissing the importance of the title search date (requisition date).
Purchaser(s) do not understand the relevance of title search date or when the title search date is, even while specified in the agreement of purchase and sale and often retain a real estate lawyer close to the closing date. However, this is a mistake. Purchaser(s) should instead retain a real estate lawyer well in advance to ensure they pay attention to the details of the purchase contract. The Ontario Real Estate Association (OREA) standard agreement of purchase and sale agreement states that the title should be good and clear of liens, charges, restrictions, liens, and encumbrances except as otherwise specifically provided in the agreement of purchase and sale and those enumerated in the contract. Apart from the details, the purchaser(s) needs to be aware of the risks associated with their purchase which include but are not limited to knowing whether there are any outstanding work orders on the property, whether an occupancy permit has been granted, whether there are any arrears for property tax/utilities, whether the building is compliant with Municipal zoning bylaws and the Planning Act, etc. Further, the purchaser(s) needs to be aware of what liens, charges, are registered against the property. Purchaser(s) must also know if the vendors are the actual, registered owners of the property to mitigate against a fraudulent sale. If a proper title search is not conducted by the title search date (due to the failure of retaining a lawyer well in advance of the requisition date), the purchaser may be limited in its recourse options and in certain scenarios will be deemed to accept the sellers’ title to the property.
3. Not conducting a further inspection before closing on a resale purchase transaction.
If a “further inspection right” is provided for in the agreement of purchase and sale which allows the purchaser a number of further visits before the closing date for inspection purposes, often, the purchaser(s) does not exercise this right. It is crucial to inspect a property after the closing, as some common scenarios arise that include but are not limited to: purchaser(s) finding out that damage is prevalent throughout the house; the house is not in a clean condition; chattels are not in working order; windows and locks are not in good condition, etc. If a “further inspection right” is provided in the agreement of purchase and sale, it is prudent for the purchaser(s) to visit the property at a time arranged between the seller and the purchaser to inspect the property to ensure all items are in working order and that the property is in a condition satisfactory to the buyer(s).
4. Arranging a closing date of the sale of their own home (Transaction #1) on the same date as that of the purchase of their new home (Transaction #2).
This is often not recommended. If a delay occurs on the sale of the property (Transaction #1), it will lead to a delay on the purchase transaction (Transaction #2). Usually, the purchaser(s) relies on the proceeds from the sale of their current property (Transaction #1) to finance the purchase of their new home (Transaction #2). Often, there are scenarios where a delay in the sale transaction (Transaction #1) may prevent the purchaser from obtaining financing on time. As a result, they are unable to close the buying transaction on time (Transaction #2). If this occurs, things can get messy quickly, as a chain of litigation can possibly ensue.
5. Hiring a lawyer who is either incompetent in real estate law or charges low fees while ignoring various assessment criteria.
Home buyers should remember that when retaining the services of a real estate lawyer, they should consider various criteria rather than a single determinative factor. A solicitor-client relationship is one based on a fiduciary relationship, and customers should have confidence in the lawyer they hire. Some pointers that may assist the buyer in choosing a real estate lawyer would be to ascertain their qualifications or merits and experience in handling transactions. Read their reviews, assess for any practice restrictions placed on the lawyer by the law society, the quality of the work the lawyer provides; etc. This is not a complete list, but it should help purchasers understand what considerations to make when retaining the services of a lawyer.
To avoid mistakes such as these, make sure you hire a sound legal expert who fits the profile. For a reliable real estate lawyer in Brampton and Mississauga, reach out to the professional at Everstone Law Professional Corporation. As an expert in real estate law, I thoroughly understand how the legalities of real estate work, and can handle all of your property paperwork. I can help you get the best possible outcome regardless of the nature of your requirements and ensure every real estate transaction is transparent.
Besides real estate law, I am also experienced in criminal defense law in Mississauga. My other legal services include immigration, drafting wills and trust agreements, preparing contracts, notarizing documents, and more.