How To Protect Yourself When Buying A New Home

Buying a new home is an exciting process. It can also be a little scary for a new home buyer. A real estate lawyer’s role is to protect new home buyers from legal issues. Most new home buyers will use a real estate agent to buy their home. The residential purchase contracts that real estate agents use are good contracts. Unfortunately, many people see the contract as a form to buy a house and not a legally binding agreement.  Here are some key things to understand before signing off on a contact.

1) Look At The Real Property Report

New home buyers should know what they are buying. A real property report is a survey of the property.  It shows the property lines and all the structures built on the property. It is important to review before signing so that you know what the actual physical boundaries of the property are (fences may not be on the property line). It will also show you easements and right of ways that are areas that owners are not permitted to build anything on.  This is also a way to see if any structure is built part way on the next door properties (or if anyone else’s structures are built onto this property. Real property reports (also called RPRs) are done by a surveyor.

2) Look At The Municipal Stamp Of Compliance

The real property report should have a municipal stamp of compliance.  In some municipalities this is a stamp that is stamped directly on the real property report. In other municipalities it is a separate letter that is stapled to the RPR. The compliance stamp or letter will indicate if the property complies with municipal land use bylaws. It will also indicate if parts of the structures are legal non-conforming structures. This means that they are not OK but have been grandfathered in. All new home buyers should understand that such a stamp does not let you rebuild the offending structure if it needs to be repaired or replaced.

3) Have A Condominium Document Review Done

It is crucial for new home buyers to have condominium documents professionally reviewed. This will let you know better about how well run the condominium corporation is run. When you buy a condo, you are buying your unit but you are also buying into a condominium corporation. The condo document review lets you know how well the condo is being run and the financial condition of the condominium corporation. It will also let you know if the condominium corporation is following what is required under provincial law.

4) Put In The Conditions That You Need

Every new home buyer will have certain uncertainties. Talk to your real estate agent about these uncertainties. With them in mind, your agent can draft a condition. A condition is a term in the contract that states that the contract will not go forward, and a buyer will get their deposit back with no further commitments, if that condition is not waived. For instance, a condition for financing and a home inspection are very common. If you are concerned about asbestos, then you can add a condition on satisfactory review of an asbestos report. This means that if asbestos is found, the new home buyer does not have to proceed with the contract. Conditions can be draft for any concern that you want to do more due diligence on. If, as a new home buyer, you have concerns, speak with your real estate lawyer. The lawyer can help you draft a condition to protect your interest.

5) Do Not Waive Conditions Unless You Want To Be Legally Bound To The Contract

Once you waive your conditions in writing, you become legally bound by the terms of the contract. This means that if you later are unable or unwilling to close for any reason whatsoever, your deposit will be forfeited and the seller has the right to make a claim against you in Court for breach of contract. Be sure that you only waive a condition once you’re fully satisfied with that condition. For example, you should only waive your financing condition (if you have one) once you have received confirmation of financing approval from your lender. Likewise, you should only waive your property inspection condition (if you have one) once you’re completed your home inspection and are fully satisfied with the results. You can also choose to not waive a condition if you’re not satisfied with that condition. In that event, the Contract would be terminated and your deposit returned. For example, if you are unable to obtain financing approval or if you’re not satisfied by your property inspection, you can choose to not waive your financing condition or your property inspection condition, respectively. If you have concerns about any conditions in the Contract, be sure to speak with your real estate lawyer, who can help guide you on your rights and obligations under the Contract.

6) Make Sure Everything Is In Writing

Sometimes, buyers and sellers will agree to certain things verbally. For example, the seller may agree to leave some furniture behind for the buyer or the buyer may agree to accept a Real Property Report as-is rather than requiring an updated one. If you and the other party agree to anything, be sure to add it into the Contract in writing so that it becomes a term of the Contract and thus binding on the other party.

7) Review All Registration On Title

To one degree or another, registrations on title will affect what can be done on the property. While some may benefit you, others will place restrictions on what you can do as a homeowner. Those that place restrictions on you are often registered for the benefit of a utility provider, neighbor or for the neighborhood in general. In any event, it’s important to review these registrations in order to understand what you can do with your property and what you cannot. Moreover, certain writs, liens and mortgages may be registered on title which will have to be removed from title by the seller or their solicitor. If you have any questions or concerns about the registrations on title or would like any particular registrations reviewed, be sure to contact your real estate lawyer.

8) New Home Buyers Should Talk To Their Lawyers

Legal fees, when buying a new home, are usually flat rate. They are not billed by the hour. This means that all new home buyers should ask their lawyer and legal questions that they have. It is always better to understand legal issues before you sign a contract to buy a home.

9) Make Sure There Are Holdbacks In Place For Incomplete Work

If a seller has promised you something at or to the home, then there should be a holdback in place to protect you as a new home buyer. Have your real estate agent call your lawyer for legal advice on how to word the holdback. Lawyers will work with you to protect you. A holdback is a financial amount that is pre-determined in the event that the sellers have not finished the work that they said they would do. The terms of the holdback will spell out when those funds are released to either the buyer or the seller.

10) Ask The Sellers’s Your Specific Concerns

Everyone has different things that are important to them. Always have your real estate agent ask the sellers for specific information about the property. Some people do not want to live in a home where a person has passed away. You will only know if you ask.  Other people want to know other about specific problems such as sewer back up, ground water leaks, problems with neighbours, ets. Once you have all the answers you need, have your real estate agent add those answers to the contract. For example, if you asked if there was ever a grow op or a basement leak in the property, your agent can add, under the additional terms, a representation and warranty that the home has never had a basement leak or has never been a grow op.

Bonus: Not Legal Hint Before Buying: Talk To The Neighbour

You or your real estate agent can go next door to talk to the neighbor. It is shocking how many times a next door neighbor will spill the details of problems with a house and/or condo. Unfortunately, it usually happens after the new home buyer moves in. It also never hurts to know who it is that you will live beside.

New Home Buyer Legal Help!

All the real estate lawyers at Kahane Law Office in Calgary want to make your new home buyer purchase as easy as possible for you. Please feel free to email us anytime you have questions about your new purchase.  You can reach us in Calgary at 403-225-8810 (toll-free at 1-877-225-8817), or email us here directly.