Frequently Asked Questions
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If you’re looking to buy a property, the first thing you need to verify is what you can afford. While a real estate agent can help you find a home, a financial or mortgage specialist can first help you determine your limits and what’s financially within your reach. Regardless of your situation, you’ll need to know the basic legal requirements.
All deals for purchasing property must be in writing. Whatever is in the agreement will prevail, so it’s important that all the necessary points be included. As a buyer, your main job is to inspect the property, because what you see is what you get, unless something else is agreed upon explicitly in your contract.
In short, pick a property you can afford, so your closing can be smoother and help you minimize any risks and involve a lawyer you trust, so they walk you through the process on closing.
You should start looking for a lawyer you trust when you want to engage in a private deal, need your contract reviewed, or have a binding offer. The sooner you get them involved, the better, but if you’re working with an experienced real estate agent, they’ll point you in that direction as soon as the contract is signed.
The land registry system in Ontario is handled almost entirely by lawyers, and that’s the main reason why lawyers are needed for any real estate transactions. When you buy or sell a property, it’s your lawyer’s job to ensure that the deal is made in accordance with the terms of the agreement, and once completed, they are responsible for registering the change in ownership with the Land Registry Office.
Properties may carry with them problems from previous owners that, if not attended to, are inherited by the new owner. It’s your lawyer’s duty not to make you the owner of a property with a bad title and to ensure you don’t inherit any issues you’re not agreeable to.
It’s also important to know that mortgage lenders won’t generally give money to a buyer directly. Money is sent to a lawyer on the condition that the mortgage, which was promised, is registered against title to a property, before the money can be used. Lawyers become in charge of that process and your lawyer is the one accepting the mortgage money and paying on the day of closing.
By the time the closing date of a real estate transaction comes around, most of the legal work has already been done. The parties should be satisfied with the condition of the property and lawyers exchange keys, money and official documents. Once exchanged, they change the property records to effect the change in ownership. The deal is then finished, and keys can then be given at that time.
A seller’s lawyer is responsible for paying the mortgage(s) on the property and distributing funds to the seller. Sale funds typically are given to a seller either the day of closing, or the next banking day.
When a deal can’t close on time, the focus is usually to negotiate an extension. While this is typically accompanied by additional costs, it’s often the most favourable option for all parties. There can be a variety of reasons why a deal doesn’t close, however, and each circumstance needs to be reviewed by a lawyer.
Knowing the ins and outs of the real estate world is very important in these circumstances. Knowing how to deal with technicalities and with negotiating favourable terms are tools that are invaluable. It’s important to have a lawyer who understands the area and can advise you well if this ever should occur.
A Status Certificate is a compilation of documents that relate to a condominium property. When you are buying a condominium property you get title to the unit you agreed to under the Agreement of Purchase and Sale. You’re also buying, however, a percentage of the corporation that holds all the areas commonly shared by all the owners. This might include lobbies, elevators, recreational facilities, parking, or many more. This condominium corporation is made specifically for the purposes of the property’s management and is very regulated.
A condominium corporation must collect money on everyone’s behalves, maintain the common areas, pay property taxes on them and have a reserve fund. That reserve fund is a bank account for future maintenance and repairs.
A Status Certificate is a series of documents that confirms a condominium corporation follows its obligations under law and gives a picture of the corporation’s standing at the time it’s issued. If there are repairs to be made, or there are court cases to which the condominium is a party, these details are described. The Status Certificate also shows whether the individual unit owner is compliant or in arrears of any payments and includes the condominium’s financial statements.
It’s important to ensure you’re purchasing in a well-managed condominium to avoid risks of future costs or sale problems down the line. A condominium with a Status Certificate wrought with problems, will often lead to an inability to get mortgage approval. For this reason, almost all condominium purchase agreements will be conditional on a lawyer reviewing the Status Certificate.
Some properties, while they may look to be full freehold properties, are what we call Parcels of Tied Land properties (POTL). A POTL property is one where you have a regular home or town home, which enjoys all the rights that a regular freehold property would have, but also has some sort of shared element with its neighbouring properties. Most often, this is a shared private roadway or lane. Since the roadway or lane is not a public road, the group of properties that are attached to it share its ownership and therefore its obligations too. This form of group ownership falls under the Condominium Act and that’s why a Status Certificate is needed.
A corporation is created to deal with the group’s interests. Using this body, money is accepted by all the parties, a reserve fund is created for future maintenance and repairs, and the funds are also used to maintain the shared property.
This kind of property is therefore very much like a hybrid between a freehold property and a typical condominium property.
Simply put, a Will expresses your desires when it comes to how your affairs and your things are dealt with after you’re gone. Most people usually think a Will is only for identifying who gets what, but the reality is that it’s so much more than that.
Writing your Will means you choose who is legally appointed to carry out its terms. This person, people, or party is responsible to everyone (including the government) that your wishes are carried out correctly. When you don’t have a Will, having one appointed can often be time consuming, costly and can create conflicts.
Wills do other things as well. They create tax planning strategies, provide guardianship provisions for minors, and have an undeniable emotional value to the people we care about. If you pass away without one, the law will dictate who will inherit your assets. These laws often exclude a variety of different types of relationships, making writing one especially important to care for those who are not blood or legally related.
The benefits are numerous and vary for each person. That’s why it’s very important to consult a lawyer to help walk through your circumstance.
Estate planning is a process that involves planning for after death affairs. Its focus is to manage and arrange your assets and affairs while you’re living, so that you leave the most behind to those you care about, while dictating exactly who and how they will be managed.
While there is often a big emphasis on tax planning, estate planning also involves managing relationships among, and between, the people closest to us at the time of passing.
Common law spouses do not share automatic protection in the case of death without a Will. This can often be disastrous and challenging for a common-law partner who has shared most aspects of life with you, and the importance of a Will cannot be overstated.
If a common-law partner is not related to someone who has passed away without a Will, they will be left to commence a claim for what they may be entitled to. That’s usually a long and costly battle that most people don’t want to take, especially in the context of grieving.
If you’re in a common-law relationship, a Will is critical to protecting your partner and planning should take priority.
If you have assets located out of the country, it’s prudent to talk about future planning with your lawyer. While you can have a Will that works internationally, we have found that this can often create delays and complications in finalizing your affairs after death. Each country has its own set of succession laws and having a plan that works seamlessly with all jurisdictions is not always easy. Not to mention language differences that can create additional hurdles.
We often recommend that in such cases a Will be made for each jurisdiction, therefore separating the administration process down the line. This strategy often saves your estate costs and headaches, which can be worth the time it took to plan it.
When you have children or dependents, you are legally obligated to care for them. This means that your Will should anticipate their needs and provide terms to ensure your children or dependents are taken care of.
Most notably is the care for such minor(s) or dependent(s). Who will take carriage, if needed, is an important topic that should be addressed. This includes both physical carriage as well as financial carriage.
If someone passes without a Will and has children or dependents, a government body will typically step in to ensure that the minors or dependents are taken care of. Ultimately a plan will be created to make up for the lack of planning, but this may not reflect your wishes. It also might lead to disagreements and court battles.
Writing your Will ahead of time ensures that you create measures to appoint guardians for your minor children or dependents, so that they are well cared for in the case of urgency.
If you lose the capacity to deal with your own affairs, your Power of Attorney document will appoint someone to make those decisions for you. If you don’t have a Power of Attorney document, it will depend on whether the decision to be made on your behalf is financial or health-related.
In the case of health-related decisions, your family is entitled to make decisions for you. In Ontario, the Health Care Consent Act provides for that, although any specific decisions you may have wanted will not be addressed.
In the case of property or financial affairs, there is no law that grants someone the automatic right to deal with your finances and a guardian must be appointed. This appointment is usually handled by either a government body, the Public Guardian and Trustee, or appointed by the Court.
The term “Estate” is used to describe the affairs of someone who has passed away. For example, if John Smith passed away, all of John Smith’s affairs left behind would be described as the “Estate of John Smith.” This includes everything from assets, to liabilities, and obligations.
The terms Executor, Estate Trustee and Administrator are often used interchangeably to describe the person, people, or party that are responsible for an Estate. The decisions of when or how to sell assets, complete tax and legal requirements and to deal with the rightful distribution of assets to beneficiaries (to name a few) are all part of the Executor, Estate Trustee or Administrator’s role.
This role is appointed in a Will. When there is no Will, a court appoints a party, or parties, to take on the role. This can sometimes be long and costly when there are disagreements or when beneficiaries are hard to find. That’s why naming your choice of Executor in a Will is always the best option.
The decision to start a business is a big one, and once made, you’ll want to think about what type of business vehicle is right for you. There are various options—from a sole proprietorship, a partnership, joint venture or a corporation, the choices can be confusing.
It’s very important to determine what kind of a business you want to start and what your future goals are. Each type of business vehicle has its pros, its cons, and its cost implications, so it’s crucial to know what each one is.
A Corporation is a legal person that’s created for the purposes of handling some type of business affair. This could include running a business or an organization, holding property, or even just holding financial assets. The owners of a corporation are its shareholders. The decisions a corporation makes are dictated by its Directors, Officers and Shareholders.
A corporation can be sued, just like a regular person, but can also protect an individual from being sued personally. Its income is taxed differently and is often used as a vehicle for tax planning in a variety of circumstances.
A Shareholder Agreement is a document that is drafted to manage the relationship between shareholders of a corporation. A corporation is owned by its shareholders and a whole wealth of planning within a corporation can define not only classes of shares (and therefore classes of shareholders) and their related rights and obligations, but also how a shareholder is admitted, or what happens in the case of conflict, death or disability.
Having a Shareholder Agreement helps to minimize shareholder disputes and to provide mechanisms on how to admit a new shareholder into the corporation. It’s also important when dealing with the death or disability of a shareholder, when outside parties entering the corporation is not the desire of the surviving shareholders.
Many court battles between shareholders have been fought over a lack of a Shareholder Agreement and many have been saved from battles for having written one. If you’re thinking of entering, starting, or already are part of a corporation with other shareholders, this type of agreement can be an invaluable tool and resource for the future.