Real Estate Closing
How to find Legal Description of Property- Consequence of wrong description or mistakes here (You may miss on right owner, or right description or worse, any previous encumbrance including mortgage, charge, easement etc.)
Most Common Method
- Beginning of paragraph of the agreement of purchase and sale
Doesn’t end here, look behind to get the exact legal description from Government records
Most Common Methods
- Tera view (Municipal Address or owner’s name search available)
- Registry Offices
- Vendor’s Solicitor (If solicitor is engaged)
- Survey of Property
- Assessment Department.
Conducting a Search
- Determining the commencement date of search of title (Registry System only) 40-year concept/root of title/first sale concept
- Gather all the documents, which have possible effect on chain of title, look into the legal effect (more relevant in Registry System), and any other encumbrances or documents affecting title (abstracting)(Applicable to both Registry and Land title System).
- Conduct a Planning Act search (applicable to both systems)
- Conduct all Miscellaneous searches, such as executions, writs, crown patent, corporate owner and executions (applicable to both the systems)
- Reviewing the entire search and documents gathered.
- Preparing Lawyers abstract of Title (both the systems)
- Checking for fraud indicators
What do you do in Registry System? Back until 40 years subject to Root of title (First conveyance principle).
- Noting of the names of the parties to the instrument
- Ensuring that the names of parties are consistent from one to another, with description as well.
- Check recitals and look for conformity
- Check for legal description
- Documents duly signed and sealed by appropriate parties.
Most Current Transfers are carried out through Land Registration Reform Act (LRRA), and certain below stated COVENANTS AND A RELEASE are DEEMED INCLUDED.
But deeds registered prior to April 1, 1985, such clauses were usually in the actual deed.
1. Granting clause- Typically vendor granting property to vendee, in fee simple as Joint Tenant or Tenant in common, or partnership or Trustee
2. Habendum Clause- usually follows granting clause. “To have and to hold”. Basically, any restriction on grant, if any, is placed here.
Commonly used clause
a. Grantors have a right to convey
b. Grantee will enjoy quiet possession
c. Grantor will execute further assurances of the land as may be required
d. Grantor has not done any encumbrance
RELEASE- it basically releases any claims vendor has on the property.
If purchasing a property of deceased. – search
1. Look for ET in the will, if joint, then consent of all.
2. Before closing, appoint of ET by Court
3. Contents of ET appointment by court and document search should be done in the respective court.
4. If person died, between Jan 1, 1970 and April 10, 1979, and document affecting title should have the consent of “Treasurer of Ontario” (alternative certificate of consent may be subsequently registered).
5. Estate Tax release for a federal tax, - commonly used if person died between 1959 to 1971. (Pursuant to amendments in EAT Act, 1998, unpaid taxes are not a lien on the property, so release not required here).
Look for Deposit Notations such as “see Deposit No. XXX” on abstract pages- basically means that documents have been deposited in “Deposit Index”.
- This doesn’t amount to any notice.
- However, Solicitor should review such deposition notations, and contents of such deposit.
Adjoining owners search.
1. To ensure no encroachment
2. To ensure no planning act violation.
FLA requirement.
1. Registry System. 40 year- spousal consent.
2. Land Title System. Current owner spousal consent.
Lant Title System (Automated Registry Systems)
Properties have been parcelized, mapped and assigned PINS, based on most recent change in ownership.
- Most recent change will be loaded on the PIN
- No registration and deposits prior to that will be brought forward on the PIN.
- All documents registered, or deposited after automation will be abstracted on the automated parcel, i.e. Since 2001(since only abstracted and not full details, so both automated and paper search is necessary here)
- POLARIS print out of the Parcel Register is a complete copy of the paper parcel register, and contains all active instruments affecting the property.
- To make things easier, discharge of mortgages is entered in full on the automated system, and the affected mortgages are deleted from the paper record.
- Any required correction to pre automation entries will be also be made in automated systems.
- More or less duty of Government.
- Those not farming part of LTA system, Carry out full 40 years search.
- In LTA system, once guaranteed, it’s a guarantee of title from the Provincial government of good title.
- PIN pages don’t set out the measurement of the parcel, so underlying plan of subdivision, or reference plan must be reviewed to the measurements set out in the agreement of purchase.
Exceptions to the Guarantee of title under Land Title Act system. – Section 44, LTA.
- Crown Claims- if Corporate owners there, look for Corporate Escheat by Crown, throughout chain of title.
- Planning Act Violations- search of such violations until 1967.- say for example PIN issuance started in 2001, and sale in 1999, then more often used.
Writs against previous owner don’t affect, unless writ registered against the title.
Other searches
1. Crown patent- More related to crown’s initial grant to private party, more relevant to huge parcels and were granted long time ago.
Relevant as
a. Any instrument attempting to affect unpatented lands is of no effect. Section 22(3) Registry Act.
b. 40-year limitation claim doesn’t apply to crown patents.
2. Corporate Owners
If corporation involuntarily dissolves, then land escheat to the crown, so prudent solicitor will require all corporate owners to be noted down for search, in order to ensure that the corporation was in existence during the period it owned the lands. (Not done in Registry, but with Provincial Ministry of Government and Consumer Services or Federal Innovation, Science, and Economic Development of Canada)
- Look for Escheats Act, 2015
- Forfeited Corporate property Act, 2015.
3. Executions
Registry Act- all beneficial owners’ executions to be searched in last 40 years as per root of title.
Land Title Act- Current owner Execution to be searched.
4. Registered Plan of Sub division.
- Check for notation of “one foot reserve” located on the streets, put up by Municipalities.
- This means, if developer defaults in its obligations, the one foot reserve goes to the city, who can block access using the “reserve”.
- Once obligations cleared, bye law will come, dedicating the reserve as highway.
5. Charge/mortgage of land and assignment and discharges
- Any outstanding mortgages should be cleared through requisition before closing.
- Any assumed mortgaged should be made subject to review of mortgage agreements, and due consents of respective persons.
6. Sub division agreement (Homes in new development or fairly new development)
- Look for any financial obligations on the part of developer vis a vis city.
- Lawyer can write a letter seeking good standing from relevant authority.
7. Easement or right of way
- Look out for the same.
- Any such previous easements were validly conveyed.
8. Planning Act.
- Whole Review process under Section 50 Planning Act. (Not discussed here)
Solicitors Review of Title in every Sale of Property.
Review includes
1. Search of “List of instruments that affect title (Registry only)
2. Copy of plan of sub division or reference plan survey or sketch referred to in legal description, that could be of any assistance.
3. Copy or abstracts of each instrument affecting title
4. Chain of title (registry)
5. Sketch of property
6. Search of adjoining lands
7. List of all corporate owners from crown patents (except LTCQ)
8. Details of crown patent
9. Name of all owners on the title over last 40 years (registry)
10.Notation of the last instrument registered on title.
Letter Inquiry Searches as per Requirement.
Prudent Solicitor should carry out Letter Inquiry Searches to see if there is any arrears, permissions, defects if any, are there in the property, through respective Boards
1. Realty Taxes
2. Water Account
3. Local Improvement
4. Hydro Arrears
5. Gas Arrears
6. Zoning Compliance
7. Legal Non conforming use
8. Work Orders
a. Property standards by law, building by law, Ontario Building code.
b. Electrical Safety Authority Orders
c. Fire Protection and Prevention Act, 1997
9. Occupancy Permits
10. Tarion- Builder, Home, Condominium Common Element- all have enrollment No.
11. Unregistered Hydro (Easement)
12. Bankruptcy.
13. Waste Disposal Search
14. Heritage Designation
15. Corporate Status
16. Compliance with Registered Agreements
17. Airport Zoning Regulations
18. Development charges
19. Environmental Searches
20. Undergoround fuel Oil Storage Tanks
21. Farm Property
a. Realty Taxes
b. Water
(I) Serviced by a water main system.
(II) Serviced by a privately owned well
(III) Private Water System.
c. Septic Tank or Sewage System
d. Hydro Arrears and Work orders
e. Unregistered Hydro Easement
f. Tile Drainage Act
g. Bank Act
h. Farm Property Tax Program
i. Highway entrance
j. Controlled Access Highway
k. Ontario Heritage Act Inquiry.
l. Funeral, Burial and Cremation Services Act, 2002
m. Airport zoning regulations
n. Development Charges
o. Conservation Authorities Act.
p. Weed Control
q. Beds of Navigable waters Act.
r. Local Improvements
s. Drainage Act.
t. Corporate Status
u. Under Ground Fuel Oil Tanks.
22. Cottage properties
a. Cottage properties compliances
(I) Realty Taxes
(II) Hyrdo arrears and work orders
(III) Wells as to potablity and quantity flow of water
(IV) Sewage systems, permits and outstanding work orders
(V) Unregistered hydro easements
(VI) Highway entrances
(VII) Controlled access to highways
(VIII) Conservation authorities act
(IX) Drainage act
(X) Beds of navigable waters act
(XI) Corporate status
b. Zoning
c. 66 foot reservation
d. Other reservations in crown patent
e. Installation of Boathouses, docks in water
f. Shore Property Assistance Act
g. Local Improvements
h. Underground fuiel tanks
i. Vacant land
j. Unorganized territories
k. Zoning
l. Taxes
m. Tile drainage
n. Northern Services Board Act.
Planning Act Violations
Survey
Two Part Report prepared by Qualified Ontario Land Surveyor, pursuant to Surveys Act- Bear the seal of Surveyor. – Quantity of the title the client is dealing with.
- Consist of Plan showing the features of the land, such as building, fences, improvements and written report (often endorsed on the plan) indicating any encroachments or other problems revealed by the surveying process.
- Extent of title including frontage, depth etc.
- It’s similar to photograph
Caution for Solicitor- Don’t give opinion till you have both, Title Documents and Survey, as Survey goes to quantity, and Title Goes to quality, or else Qualify it accordingly.
Two Part. 1st part deals with Quantity
Second part Deals with Quality- basically claim of adverse possession, if any.
As lawyer,
Check for boundaries, and fencing, and overlaps with the adjoining land owners. Look for demarcations.
- If dispute arises, look for 6-part test of adverse possessions,
- Evaluate minor or major deviations, and possibility of consents, waivers etc.
- Look that the deviations involve necessity of outright purchase from the adjoining land owner or easement purchase.
- If yes, look for amendment of agreement, requisition, and possibility of planning act severance requirement here.
- Look for applicability of Land Title Act, or crown lands or municipalities land.
- Look for zoning and applicability of Municipal Bye Laws.
- If possible to avoid, then Title Insurance can also be a good option, otherwise litigation or amendment as the case may be.
Requisition.
1. Title- Review of title based. – as per Time noted in Agreement. In absence, as per OREA its 30 days from the date of the Agreement.
A. Root of Title- Such Requisitions, which if missed, seller will sell, which was not originally agreed upon. – until the date of closing.
2. Conveyancing- satisfaction of such, is within control of seller. – until the closing.
3. Contract- requirements of contract, such are normally controlled by contract, else till date of closing.
If able to resolve, then look for abatement issues.
Caution, put a clause, that if unable to resolve, then can terminate- detailed para. Note. However, capricious/arbitrary terminations are not permissible.
Note: Declaration of possession document must be got issued (Registry/LTCQ properties). – contents- no claims made against registered owners during the time of ownership.
Limitation Dower- 10 yerars
Mortage 10 years.
Closing Steps
Note: Contact your Lawyer, as soon as possible, as different requisition period for defects commences or ends, differently as per the agreement. For Ex. Title Requisition. 30 days from agreement.
Jobs to be done.
1. Review the agreement
a. Look for important dates
(i) Closing date
(ii) Date for compliance with conditions or waiver of conditions
(iii) Any deliveries to be made.
(iv) Requisition date
(v) Irrevocable date
2. Conduct Title Search
3. Conduct off title searches
4. Conduct Letter Searches
5. Review the Survey
6. Recommend Title insurance, if required.
7. Send Requisitions to be completed before the closing, as per type of Requisition.
a. If requisition is such, that it requires deferring of closing, then amendment of the agreement required.
b. If circumstances, or the parties want Escrow Closing, then do Document Registration Agreement, and get consent of parties and vendors solicitor(amendment not needed here)- Under DRA, closing document, funds and keys are held in escrow, till computerized documents are electronically registered.
8. At closing, look for (Pt 2 to 7 are to be completed before, and made part of Pt. 8)
a. Document to be prepared and delivered
b. Document to be received
c. Document to be registered on closing
d. The payment or receipt of balance due
e. Matters to be attended after closing.
What is to be done in Teraview
1. Open a Teraview docket for the Transaction
a. At this stage itself conduct a sub search of Title
b. Obtain and print parcel register for the subject land and abutting lands (Performing the abutting owners searches while the parcel is open will reduce the cost of obtaining the abutting parcel register).
c. While docket is still open, start preparing the
(i) Transfer and Search Executions against the vendor using the “writ search”. (Note: if not done here, then later search is to be done, so that proper statement may be made removing the executions from the parcel register without separate applications.
(ii) If execution is there against vendor, then particulars will attach to the document, and be available to the Vendors Solicitor to satisfy without need to do separate execution search.
(iii) Request that Vendor review these documents in Draft Electronic file, and carry out and modifications and amendments, as necessary, subject to access being given to right person, after consent from Vendors Solicitor.
d. Identify the transfer adequately with the name of both Vendor and purchaser and Solicitor for the “Party to”. “Party to” is the person responsible for payment of fees.
e. Then Advise the Vendors lawyer, that Transfer is being drafted and request the exact name of person in Vendors lawyer’s office to be given access to E-reg.
f. When Vendors lawyer responds, grant E-reg.
g. Note, when acting for Purchaser’s lawyer, complete full title search in Teraview by imaging the documents to view from the parcel register, and obtaining plans and documents that are not available in this manner by email or fax or directly from the Land Registry Office.
If solicitor for Vendor, retrieve vendors Report from the purchase of the property for assistance in answering purchase requisitions, and preparing necessary sale documentation.
Mostly, all the closing work done electronically.
Mortgage Issues
1. Assuming the Mortgage. Look to the Mortgage Agreement.
- Mortgage Assumption statement. – Principal amount outstanding. As of closing date, the interest rate, the term of mortgage, and whether mortgagee has approved the new purchaser to assume the mortgage.
- If mortgagee is paying taxes for mortgagor, then tax account reflecting such adjustment also to be indicated, so that it can be adjusted as per Statement of adjustment.
- Note, its purchaser responsibility to ensure, that anything prior to the date of closing, towards mortgage is paid by the Vendor.
2. Not Assuming the Mortgage. IT MUST BE DISCHARGED.
- Typically, vendors solicitor will write to mortgage company for mortgage statement, so that lawyer knows exactly how much is to be paid at the time of closing for getting discharge.
- As vendor lawyer, look for accommodation being done for prepayment privileges.
- If agreement, requires registered discharge, then vendor lawyer should confirm with the Bank, if it willing to provide registered discharge in the time frame.
- If bank is aggregable, then Vendor’s lawyer will typically undertake to the bank, not to release the signed discharge has received full funds with interest to pay the outstanding mortgage balance (Rarely happens, as no bank issues discharge statement before receiving the funds in full)
- Mostly banks, issue discharge statement 30 to 60 days after receiving full and final.
- If certain discharge wont be available at the time of closing, then see if agreement allows “undertaking route”, if not, take instructions of purchaser on the “undertaking route”.
- Then if purchaser still adamant, and doesn’t get in time, defer
- In non-institutional lender, always defer.
- Look for any PPSA registrations as well, and get the discharge in that regard as well.
At closing, or prior to that (as vendors lawyer)
- Ask for Title Report from time the vendor purchased the property (helpful in determining title difficulties)
- Vendor should also supply the copy of Vendors existing transfer/deed of the land
- Vendor should also for survey (review with Line Fence Act, if required), tax bill, utility accounts, copies of any mortgage to be assumed by the purchaser or discharge on closing.
Advisories (as vendors lawyer)
1. Have the utility meter read at the closing and where utility meter should be sent.
Advisories (as Purchaser’s lawyer)
See requisitions duly replied, and if not take immediate action. Including any utility bills, which can be adjusted through statement of account.
- Ask for if jointly, whether wish to take as JT or TC.
- This info, should be communicated to Vendor’s solicitor.
Statement of Adjustment- prepared by Vendors Solicitor
Direction Regarding Funds.
Vendor often signs two directions. One, to pay whatever amount due, to the vendors solicitor, by the purchaser
2nd one. Vendor’s direction, to have exact certain funds payable to certain people.
Declaration of possession.
Mostly used in registry, but can be given in land titles as well.
Income Tax Affidavit or Statutory Declaration.
Bills of sale for all the chattels.
Insulation warranty. UFFI related.
Affidavit or Statutory Declaration regarding Executions.
Undertakings. – given by one party to another, to complete a matter after closing which couldn’t be closed by the closing date.
1. Client undertaking on own behalf.
Mostly prepared by Purchaser’s solicitor for signatures by Vendor for readjustment of statement of account, since some bills don’t arise by closing date. Look that they don’t expand
your obligations.
Mostly.
a. Deliver vacant possession.
b. Keys on closing
c. Pay all utilities a day before closing.
d. Realty accounts.
e. Mortgage payments to the date of closing.
2. Solicitors undertaking on behalf of client. Avoid, if possible, usually done in client’s absence. Reserve with “no personal liability” or “neither give undertaking without client instructions”.
3. Solicitors Personal Undertaking. Used in Institutional lending situations.
4. Best Efforts Solicitors Undertaking.
Purchasers Documents
1. Directions regarding title. Give direction that in whose name you wish to get the property registered. If two or more, ask for TC or JT. In absence of the term, TC assumed.
2. Land Transfer Tax Affidavit. ON. Requires LTT on registration of any transfer.
- Commercial Property- ½ of 1% on the first 55k, 1% of the balance of purchase prince up to 250k, 1.5% on the balance of the purchase price up to 400k, and 2% over and above 400k.
- Residential property- same as commercial, except where one or two single family dwellings and property above 2 mil. For them. It 2% tax rate over and above 400k till 2 mil. Over and above 2 mil, its 2.5%
1st time Home Buyer gets refund of all or part of tax.
1. Be 18-year-old.
2. Cannot have home or interest in home anywhere in the world. Yourself or your wife.
3. Beginning Jan 1, 2017, max amount is 4k.
HST is payable which is 13% for chattels transferred.
Check payable to Ministry of Finance, both for LTT and HST.
HST is governed by Excise Act.
Exempted supplies are. Part of Schedule V..
- Sale of used residential property
- Condominium
- Common element expenses
- Certain sales of farm land
- Sale of personal use property.
If not exempted, duty to collect is on Vendor, unless vendee registered under Excise Act. And some more circumstances
NRST (Non Resident Speculation Tax). If bought, by non-resident. 15% in addition to LTT. Note, certain exemptions there, including having got PNP, and applied for PR.