By Winnie Luk
Congratulations on the purchase of your home! The following are typical closing documents that the Purchaser must sign in a resale house purchase transaction explained in plain language. The terms Purchaser and Borrower are used interchangeably.
Acknowledgement and Direction (Transfer)
In this document, the Purchaser authorizes the lawyer to transfer ownership of the condo unit to the Purchaser on closing day and to electronically register the Purchaser’s name on the title deed for the condo unit with the Land Registry Office.
Purchaser’s Undertaking & Direction re Title
In this document, the Purchaser provides the Seller and the Seller’s lawyer with an undertaking (ie promise) to readjust for any expenses owed by the Purchaser to the Seller for any prepaid expenses made by the Seller (for eg. prepaid property taxes).
This document also sets out how the Purchaser wishes to take title to the property. It will include the Purchaser’s full legal name, birthdate, and address for service. If there is more than one Purchaser, the manner in which they wish to take title must also be specified (i.e. as joint tenants or tenants and common).
Consent to act re: Joint Retainer (where there are multiple Purchasers)
If there are more than one Purchaser’s, this document should be executed to provide that in the event of a conflict, the lawyer must cease to act for one or both parties depending on the nature and the severity of the conflict.
Acknowledgment and Direction re Title Insurance
In this document, the Purchaser consents to the procurement of a title insurance policy instead of a lawyer's opinion on title. Title insurance is used by practically all law firms. It is a substitute for a lawyer’s opinion which involves independently searching/contacting various government organizations for claims against the property that might not be captured in standard searches. Such non-standard searches are costlier and more time-consuming than title insurance and may not necessarily be conclusive. The industry created title insurance to effectively and affordably protect title for new owners.
Acknowledgement and Direction (Charge/Mortgage)
In this document, the Purchaser authorizes the lawyer to electronically register the mortgage in favour of the lender on the title deed for the condo unit with the Land Registry Office.
Acknowledgment of Receipt of Standard Charge Terms
This document acknowledge’s that the borrower has received a copy of the Standard Charge Terms (SCT) for the mortgage. The SCT for a mortgage generally include (but may not be limited to):
- lender has right to register mortgage on property title with Land Registry Office
- borrowers title to the property is lawful
- borrower is to maintain the property/repair/pay taxes
- borrower promises to pay mortgage payments and lender can sue for shortfall
- Interest is compounded when there is a default – (ie double interest)
- lender can initiate a power of sale after a specified number of days after payment default. After property is sold under a power of sale, if there is still any loan balance outstanding, the lender may sue the borrower to recover any deficit.
- lender can have the right to distrain or seize personal assets located on the mortgage property
Above are some common terms in the SCT. However, every lender has their own set of SCT.
Acknowledgement re Conflict / Joint Retainer by Borrower and Institutional Lender
This document acknowledges that the lawyer law represents the Purchaser in the real estate transaction, and that the same lawyer has also has been requested by the institutional lender to represent it in register the mortgage. Accordingly, the lawyer cannot treat information as received from either party as confidential from the other with respect to the transaction. (ie, there are no secrets between the Purchaser, lender, and lawyer respecting the transaction.) If a conflict of interest arises between Purchaser and lender, the lawyer cannot act for either party in the transaction.
Note: For a private mortgage, there cannot be a joint retainer by Borrower and Private Lender (unless there is an exemption available under the rules of the law society). There must be separate legal representation for each the Borrower and Private Lender.
Direction re Mortgage Advance
In this document, the Borrower directs the Lender to make mortgage proceeds payable to the Borrower’s lawyer in trust in order to complete the real estate transaction.
Declaration re Construction Lien
In this document, the Borrower warrants to the best of its knowledge that the property does not contain urea formaldehyde and declares generally that mortgage proceeds are not being used to finance a building mortgage, property alterations or construction.
Land Transfer Tax Affidavit
The Land Transfer Tax Affidavit should be executed by First-Time Purchasers and commissioned. This affirms the validity of the information that the Purchaser is providing to their lawyer, and that the lawyer is relying in to include in the tax statements of the electronic transfer on behalf of the Purchaser.
Statutory Declaration re Same Name
Where the names on the Purchaser's identification do not match each other or that on title (for e.g. name change, married versus maiden name), a statutory declaration stating that the identifications with different names refer to the same person must be executed and commissioned.
Landmark Law Professional Corporation will be pleased to assist with your real estate purchase. Please call us to book your free consultation on 647 797 8LAW (8529) or e-mail info@LandmarkLaw.ca
Disclaimer: This article does not contain legal advice and only provides general information. It is not intended to replace advice from a qualified legal professional and should not be relied upon to make decisions. In all cases, contact your legal professional for advice on any matter referenced in this article before making decisions. Use of this article does not establish a lawyer-client relationship.