Residential Real Estate Purchases - The Process
GENERAL INFORMATION FOR PURCHASER(S) OF RESIDENTIAL PROPERTY
The following is for general information and is designed to outline the steps that will be taken in connection with the purchase of your property, and to clarify the role of the purchaser's solicitor. The document which controls many of the steps involved in the purchase of the property is the Real Estate Purchase Contract (there are “standard” Alberta Real Estate Association forms typically used) which you have likely signed. If you have not yet signed the Contract, and would like us to review it, we would be pleased to do so. Once the Contract is signed, there is very little that can be done to change any terms. While many of the terms are standard, each transaction will have specific conditions written in. Also, municipality in which the property is located, the nature of the property and many other factors will affect the details of how the transaction proceeds. Particulars of your transaction will result in some variation of the general process described below.
The following discussion assumes that you and the seller both have a licensed Realtor engaged to act on your behalf on the purchase. Where there are no realtors involved, we can assist with the preparation of a Contract and completion of the transaction, however the process is slightly different from the following description.
In addition to the terms of the Real Estate Purchase Contract, Alberta real estate practice involves the use of "trust conditions" between the solicitors acting on behalf of the seller(s) and the purchaser(s). Essentially, these are "rules" imposed by one solicitor and accepted by the other to facilitate the completion of the transfer of ownership of the property. There is additional information on trust conditions below.
What You Need To Do
Once your Contract is signed, and all conditions (for example, approval of satisfactory financing, satisfactory inspection, etc.) are met or waived, advise your realtor that we will be acting on your behalf, and advise your mortgage lender that we will be acting for the lender to prepare the mortgage documents (more on this below). The Realtor will forward the Contract and related information, and the lender will provide us with the information necessary to complete the mortgage.
Preparation and Execution of Documentation, Cash Required to Close
Approximately a week or so before the date of closing of the transaction, we will meet to execute the various documents required to close the transaction (some of which are referred to below). In addition, prior to that meeting, we will contact you to advise you what funds you will be required to bring with you to permit the transaction to close. This is typically the purchase price, less anticipated mortgage proceeds (if you are obtaining new financing) or the amount owing on any existing mortgage (if you are assuming an existing mortgage), plus estimated costs (discussed below), and plus or minus estimated adjustments (discussed below). These funds must be provided by certified cheque or bank draft payable to LARKIN LAW OFFICE, or TIMOTHY D. LARKIN, PROFESSIONAL CORPORATION, In Trust. As the funds are being placed in my solicitor’s trust account, governed by the rules of the Law Society of Alberta, they must be certified or by bank draft, failing which your transaction may be jeopardized or delayed. At the conclusion of the transaction, you will be given a complete accounting for actual receipt and disbursement of funds. We are also required to obtain copies taken from your original identification, this is both a Law Society of Alberta requirement and a requirement of all mortgage lenders. The requirements of what identification forms are acceptable will vary depending on your mortgage lender, however, in virtually all cases two forms are required, and a valid Passport and Operator’s (Driver’s) Licence are acceptable.
Certificate Of Title
Pursuant to Alberta's Land Titles system, there is a Certificate of Title for each parcel of land. A Certificate of Title identifies the land by its "legal" description, sets out who the registered owner(s) is (are) and identifies all of the encumbrances that have been registered against parcel of land in question. We will review the Certificate of Title to the property and discuss with you any documents registered or to be registered against the land and which will registered after "closing" (meaning the completion of your purchase), including any mortgage to be assumed or obtained.
When your purchase closes, a new Certificate of Title will be issued for the property showing you as the registered owner and I will provide a copy of this Certificate to you.
Adjustment Of Purchase Price
The price that you are paying for the property is subject to adjustment. Usually the only adjustment made to the purchase price is for municipal realty taxes. The nature and amount of the adjustment depends on whether the seller of the property was paying taxes annually or monthly, and on the date you take possession of the property. For example, in some cases the seller will have paid the property tax bill for the entire year, and therefore you will be required to reimburse the seller for the portion of the tax bill paid for the number of days in the current year that you own the property. Some communities will also have homeowners’ association/amenities fees, which are also adjusted for. If your purchase is a condominium property, there may also be an adjustment for condominium fees. I will review all adjustments with you prior to closing.
Cash To Close And Closing Arrangements - New Mortgage Financing
If your purchase involves you obtaining new mortgage financing to be registered against the property, typically I will be requested to act on the lender's behalf in connection with the transaction. While it is permissible, indeed a common practice, to have a single solicitor act for both the purchaser(s) and lender, it is important that you understand the consequences of this decision from the outset. You should note that any information we receive from either party cannot be treated as confidential as regards the other party. In addition, should an irreconcilable dispute arise between yourself and the lender, it may be that I will be unable to act for either party from that point on, and each party will be required to obtain independent legal advice. As soon as your Contract is "unconditional" (all conditions, such as financing approval, inspection, etc. are met or waived) you should advise your lender that we will be acting for the lender to complete your new mortgage financing.
I anticipate that I will be provided with the Transfer of Land by the solicitors representing the seller on the trust condition that prior to submitting the Transfer for registration, I have in my possession the following:
(a) cash equal to the difference between the cash to close and the net mortgage proceeds;
(b) an irrevocable assignment of the mortgage proceeds to the seller;
(c) a "transfer-back" of the property from yourself to the seller; and
(d) a tenancy at will agreement, should possession be granted prior to the mortgage monies being advanced.
Should the transaction not close for any reason, I will be obligated to forward these documents to the solicitor representing the seller and you will be responsible for the costs of restoring title to the seller and of the seller re-taking possession of the property.
In many cases the closing process can be done in a streamlined manner using the Western Law Societies’ Conveyancing Protocol. More information on the Protocol can be found here: 
https://www.lawsociety.ab.ca/resource-centre/key-resources/substantive-legal-knowledge/conveyancing-protocol/ .
In order to obtain registration of the Transfer and the mortgage documents and requisition the advance of mortgage funds on or before your possession date, you should be prepared to deliver to me the balance of your cash by way of certified funds approximately one to two weeks prior to the possession date. I will provide you with the figure for the balance of your cash as well as an exact date for delivery of such funds to me in due course.
Real Property Report and Municipal Compliance
It is my recommendation that, even if you are not arranging new mortgage financing, a real property report in respect of the property be obtained to ensure that the location of the buildings on the property complies with municipal land-use by-laws and that there are no encroachments on utility rights of way or adjoining properties. The present cost of obtaining such a report is approximately $750.00. The standard form Real Estate Purchase Contract used by the Calgary Real Estate Association provides that the seller is required to supply a suitable real property report but, in some cases there is an agreement that the seller need not do so, and in such cases I strongly recommend that you arrange for a report. Where new mortgage financing is being obtained, the mortgage company will almost always require that a real property report be available in any event. Title insurance can be purchased, and we can discuss this option if necessary. The foregoing comments are not applicable to condominiums, except “bare land” condominiums (which have land included in the property being purchased).
Insurance
You are responsible for obtaining adequate insurance on the property. I recommend that you immediately consult your insurance agent and in addition to other coverage, you obtain insurance for the full replacement value of the buildings and any other improvements on the property. If you are obtaining or assuming a mortgage on the property, the lender will have to be named as a payee under the policy. You should provide me with the name of your insurance agent, and I can contact them in respect of this. Where the property purchased is a condominium, the condominium corporation will have insured the buildings, and it is not necessary for you to insure the building. In either case, you may want to discuss other homeowner's insurance coverage with your insurance agent.
Utility Accounts
Utility accounts are not adjusted between sellers and purchasers. I recommend that you, as purchasers, contact the utility companies, open utility accounts and arrange to have utility meters read as near as possible to the date of possession.
Property Taxes
After the possession date, you should advise the municipal taxing authority of your purchase of the property at which time you may elect to pay the taxes monthly, or once per year.
Possession
The practical aspects of obtaining keys and taking possession of the property are normally handled through the Realtors involved with the transaction. An inspection of the property ("walk through") is usually conducted on the closing date to determine if the property has been damaged after the date the Real Estate Purchase Contract was signed, and to ensure all unattached goods including in the purchaser are present and in good working order. Risk of damage to the property prior to the possession date rests with the sellers. Generally, the standard form of Real Estate Purchase Contract does not, however, permit purchasers to "hold back" any of the purchase monies to cover the cost of repairing any damage that may have occurred, or for replacement of any items that may have been removed contrary to the Contract. A purchaser's remedy would, in the absence of an agreement with the seller, be to sue the seller after closing.
Notwithstanding the above, I am in certain instances able to make arrangements for the withholding of purchase monies if damage has occurred. Accordingly, on inspecting the property prior to possession please advise me immediately of any damage to the property or issues with included goods.
Designated Land Use
The designated land use of the property or of other properties in the neighbourhood determines whether uses of the property for other than single family dwellings are allowed. Unless you specifically request us to do so, we will not be conducting any searches with respect to the designated land use of the property or of other properties in the neighbourhood.
Chattels (Goods included with Property Purchase)
The Certificate of Title to the property indicates the state of the title to the lands and buildings being acquired. It does not, provide any information relating to the title to, or encumbrances against any chattels, such as appliances, included in the sale. Inquiries with respect to encumbrances registered against chattels must be made to the Personal Property Registry for Alberta. Searches at this registry are made using the name of the owner and not the description of the goods and, as a result, unless the names of all previous owners of a particular chattel are known, I could not provide you with a definite opinion as to encumbrances against that chattel. In addition, such searches would involve further expense to you. Without your specific instructions to do so, I will not be making any searches against the chattels that are being acquired.
Trust Conditions
As mentioned, real estate conveyancing in Alberta is done pursuant to trust conditions agreed upon by the solicitors representing each of the sellers and purchasers. Trust conditions are used in order to facilitate the transfer of title and the advance of funds with a minimal amount of inconvenience and delay while providing the required degree of security for both parties. What is important to realize is that the use of trust conditions may represent a modification of the mechanism for transferring title and discharging non-assumed encumbrances set out in the Real Estate Purchase Contract. If you have any concerns or questions on this point they should immediately be brought to my attention.
Basic Fees And Disbursements for Residential Purchase
The base fee in connection with a typical purchase is $750 (no mortgage) to $1,000 (with mortgage). This fee includes all work typically done to complete a “standard” purchase or purchase and mortgage. If your transaction requires work in addition to this basic service, additional fees will be applied, based on an hourly fee basis. If you are buying your property without the use of a Realtor, there will be additional legal costs as more time will be required for us to complete the transaction. If we have to prepare the Contract, it will take extra time and incur additional costs. You should also be aware that you will be responsible for disbursements (out of pocket expenses) in addition to my fees. Some of the more significant disbursements that you can anticipate are estimated as follows (these are approximations only):
(a) Land Titles registration fees:
(i) registration of Transfer $50.00 + $1.00 per five thousand dollars of purchase price;
(ii) registration of Mortgage $50.00 + $1.00 per five thousand dollars of mortgage amount.
(b) Encumbrance and Title Searches $50.00
(c) Delivery and miscellaneous charges -- depending on many factors, typically ranges from $30 to $60
(d) Estoppel and Insurance Certificate (condominiums) -- as billed by Condominium Corporation (rarely a purchaser cost)
(e) Real Property Report, if applicable, approximate $750.00 (rarely a purchaser cost)
(f) Certificate of Compliance on Real Property Report (rarely for purchaser) $ check municipality
GST will be added to our fees and to most disbursements.
A full report and accounting is provided after closing.
Any quotation of fees is for standard services as outlined above and is based on the assumption that the transaction will not include unusual matters. If unusual matters arise that are likely to increase the costs, we will advise you as soon as is reasonably possible.
The foregoing is intended as a general overview of the transaction and role of purchaser's solicitor. Each transaction is different and we will contact you further in connection with the particular aspects of your purchase. We trust that you find the above to be informative and in the event that you wish to discuss any matters further, please contact us.