8. Preparing For Close

 

Scheduling Your Closing

Choosing Who to Represent You For Closing

Unless agreed to otherwise, the Purchaser usually has the right to choose the real estate attorney or title company who will conduct the close.

  • Relocation companies and new home builders routinely require closing with a predetermined law firm.

Representation

Ordinarily, the title company or attorney does not represent either of the parties but is retained to follow the instructions of the sales contract, agreed to by the two parties.

Timing of Close

Closing should be scheduled as soon as possible to insure that the most convenient time will be available. Real Estate attorneys become our liaison to determine closing cost and dates Request for a change in the date and time may not be possible as the settlement date approaches.

Title Search & Surveys

The real estate lawyer will search the title and order any required surveys.

 

Preparing For Close

You will be required to bring several items to the closing, including a copy of your homeowner's insurance policy (for fire, theft and other contingencies) and a paid receipt representing one year's coverage. You must also have a cashier's or certified check for the balance of the down payment and closing cost.

Although the lender will have provided you, as the purchaser, a Good Faith Estimate of Closing Costs as part of the loan application process, your lawyer will also calculate for you approximately what you will owe. The following checklist includes some of the items included in the closing costs. Some of them are tax-deductible and some of them may not be applicable in your situation:

Closing Costs May Include:

  • Loan origination fee
  • Loan discount(s) or points
  • Appraisal fee (due with mortgage application)
  • Credit report (due with mortgage application)
  • Underwriting and document preparation fees
  • Mortgage insurance fee
  • Assumptions fee
  • Settlement or closing fee
  • Abstract or title search
  • Title examination
  • Title insurance binder
  • Survey fee
  • Transfer tax
  • Recordation tax
  • Escrow for taxes and insurance

Once all inspections have been done and your financing finalized, you will need to attend to the following. The earlier these are done, the fewer last minute surprises will arise.

Contract with your mover.

Unless otherwise agreed in writing, you will not receive keys to your new home until close and recordation of the deed transfer. Any arrangements for your early access of the seller staying after close must be arranged through your Realtor®, and will require a written agreement.

Contact utility companies.

Gas, Electric, Water, Telephone, Cable

Obtain cheque for required cash to settle.

Certified funds - The amount of cash needed at close can be obtained from the attorney or title company several days prior to close. This number can be obtained from your Good Faith Estimate, but it is best to call your attorney 1-2 days prior to closing for the most accurate number.

Are you going to be using funds generated by the sale of another residence as all or part of your own down payment on this one? If so, be sure that we have discussed this with your attorney and have coordinated the timing of the two settlements to allow for an Assignment of Funds.

Personal cheques may be used only for small amounts owed at close if the final figures change at the last minute. Otherwise, a cashiers check or bank cheque will be needed. This can be obtained from your bank and will usually require a small banking fee.

Establish time of walkthrough.

I will coordinate the walkthrough with both you and the seller. Normally the walkthrough will take place within 24 hours before close and after the seller has vacated the property.

 

Purchasing Title Insurance

At Closing, You Will Be Offered Title Insurance. I Always Recommend Purchasing It.

What is Title Insurance?

Before answering “what is the title insurance”, it might be best to first answer “What is title?” “Title” is the ownership in real property. Among other things, it means that you have the legal right to possess, occupy, peacefully enjoy and sell your property without interference from others, subject only to restrictions imposed by governmental authorities or previous owners. In most cases, title is transferred by deed which is recorded in the land records of the municipality or city in which the property is located. Generally, when property is sold, an attorney for the Buyer or a title examiner goes to the record room and searches the land records for any title defects. A title defect is anything in the entire history of ownership of a piece of real estate which may encumber the owner’s rights under the title. A title defect may cause the owner of real property to lose all or part of his land to a superior ownership interest or claim of another. This is the type of loss which title insurance protects against.

In short, if you own a title insurance policy, the title insurance company will defend you, without cost, against an attack or claim upon your ownership interest in your property as insured and you will be protected against financial loss caused by a title defect.

If my title has been examined for defects, why do I need Insurance?

There are many defects which even the most meticulous search of the land records will not uncover: For instance, it is impossible for an examiner to know whether the marital rights of all previous owners have been relinquished; whether all deeds, mortgages and judgments affecting the property have been properly indexed in the land records; whether all signatures are valid; or whether an unknown heir of a previous owner had a valid claim against the property. Without owner’s title insurance you may have no avenue of recovery for these types of problems.

If I have to purchase lender’s insurance, why do I need owner’s coverage as well?

In almost every instance, a lender will require you to purchase lender’s title insurance protecting it up to the value of its loan on the property. This coverage only protects the lender, not you, and the coverage diminishes as the loan is paid off. As you build more equity in the property, you expose yourself to a higher risk of loss occasioned by a title defect. In this situation the protected lender will suffer no loss while you as the owner of record bear the substantial risk of the damage. Owner’s title insurance will protect you against any covered loss from failure of title up to the full amount of the policy.

What are some reasons or examples of why I should have Owner’s Title Insurance?

Owner’s Title Insurance will protect you against those hidden risks which would not be disclosed by even the most meticulous search of the public records. Some examples of those hidden risks are:

  • Forgery
  • Inadequate Surveys
  • Fraud in connection with execution of document
  • Incorrect legal descriptions
  • Undue influence on a grantor or executor
  • Non-delivery of deeds
  • False impersonation by those purporting to be owners of the property
  • Unsatisfied claims not shown on record
  • Incorrect representation of the marital status of grantors
  • Deeds executed under expired or false powers of attorney
  • Undisclosed or missing heirs
  • Confusion due to similar or identical names
  • Wills not properly probated
  • Mistaken interpretation of wills and trusts
  • Incorrect indexing
  • Mental incompetence of grantors
  • Clerical errors in recording legal documents
  • Conveyance by a minor
  • Delivery of deeds after death of grantor
  • Birth of heirs subsequent to date of will

Do I need title insurance?

Title insurance is not a requirement in Ontario. It is critical that you make an informed decision based on your unique needs and circumstances. Discuss this decision with your lawyer, insurance provider, and realtor to learn more.

What is the premium?

Title insurance is relatively affordable and requires only a single premium paid at the time of closing. Your lawyer or notary will be happy to provide you with a premium quote in advance of your closing day. Coverage remains valid for the duration of your ownership. The policy coverage amount is typically the amount you paid for your property. In many cases, premium costs are offset by the savings from the reduced number of required searches your lawyer or notary must complete at closing. Your title insurance policy can often satisfy the lender’s requirement for an up-to-date property survey, Real Property Report, or Building Location Certificate, which can save you significant additional costs.

What is “title fraud”?

Title fraud is a form of real estate fraud that harms individual homeowners and their lenders. Title fraud typically involves a fraudster using stolen personal information or forged documents to transfer your home’s title to him or herself (or another party) without your knowledge. The fraudster then takes out a mortgage on your home and disappears with the money.

What does title insurance not cover?

Note that title insurance is not a home warranty or home insurance policy. As such, it does not cover property damage, general wear and tear, theft, or other losses due to issues that are not title related. It is important to carefully review your title insurance policy as it may include a number of exclusions and exceptions, potentially including but not limited to:

  • Known title defects that were revealed to you before you purchased your property
  • Soil contamination and other environmental hazards
  • Native land claims
  • Problems that would only be discovered by a new survey or inspection of your property
  • Matters that are not listed in public records (e.g. unrecorded liens and encroachments)
  • Zoning bylaw violations from changes, renovations or additions to your property or land for what you are responsible.

What types of policies are available?

Various title insurance providers offer a number of different policies, including what is known as “extended” title insurance coverage. Policies are available for residential dwellings of up to six units, vacant land, cottages, condominiums, cooperatives, or leased land. Title insurance is also purchasable for commercial properties.

In general, there are two main types of title insurance policies:

  • Owner’s policy: Protects the property owner from various title-related losses that are listed in the insurance policy for as long as the property is owned.
  • Lender’s policy: Protects the lender from losses in the event that the property’s mortgage is invalid or unenforceable. A lender’s policy usually provides coverage for the amount of the property’s mortgage.

What do i need to do before committing to a title insurance policy?

  • Ensure that your property is insured for its full value.
  • Make certain your policy becomes effective on the same date as your closing.
  • Review your policy to ensure that it correctly describes all of the property you are purchasing.
  • Understand what title-related losses your policy will cover.
  • Know what your policy does and does not cover.

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