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Buying or Selling a House in 2020: Help Your Lawyer to Help You
If you are considering purchasing or selling a home in 2020, here are five tips to keep in mind to ensure the process goes smoothly with your lawyer:
- Once the transaction is firm, contact your lawyer right away and ensure they have the details of the transaction.
Ensure your lawyer receives the purchase agreement promptly and put your lawyer in touch with key contacts, such as your mortgage agent and property insurance agent. Once your lawyer is looped in with key contacts, he or she can start the information gathering process required to ensure the deal goes smoothly. This will allow your team of professionals to work together cohesively as a unit. By contacting your lawyer early in the process you will save time, money and stress in the long run by avoiding common missteps or delays.
- Let your lawyer know if you are aware of anything unusual about the property you intend to convey or the transaction.
Let your lawyer know if there is anything unusual about the property you are purchasing or selling or the parties you are dealing with. For example, is the property serviced by a septic system? Is the water provided by a well? Do you have reason to believe the vendors are not resident in Canada? If so, it is prudent to inform your lawyer so he or she can be prepared for any issues that may come up. Real estate is very much a buyer beware transaction and when a firm agreement is signed, most times there is little recourse to back out of the deal. If your lawyer is made aware of these issues, there may nevertheless be options available to protect yourself. Your lawyer can help ensure you know what you are getting into and inform you about what your legal obligations or options are.
- Let your lawyer know if you have reason to believe the vendors are not situated in Canada.
When real estate is purchased from a non-resident of Canada, the non-resident vendor is required to pay capital gains tax on the sale of the property. The non-resident must obtain a “certificate of compliance” from the Canada Revenue Agency (“CRA”) before the funds gained from the sale of the house leave Canada. The certificate of compliance confirms the amount of capital gains that will be owing on the sale, and through the vendor’s lawyer, helps ensure that the capital gains tax is paid on closing. If the non-resident vendor does not obtain the certificate of compliance, section 116(5) of the Income Tax Act shifts the unpaid tax liability onto the purchaser. In the absence of a certificate of compliance, your lawyer will have to holdback 25% of the purchase price and remit it to the CRA within 30 days after the end of the month of closing. It is therefore extremely important to let your lawyer know if you have reason to believe the vendors may be non-residents of Canada.
- Be available to respond to inquiries via email.
Your lawyer may need your approval before taking certain actions or your lawyer may have questions regarding third parties such as insurance agents. Sometimes you may be required to sign certain documents by electronic signature via email. Responding to your lawyer in a timely manner and being available by email will ensure that all deadlines are met and make the process much more efficient.
- Ensure you have the necessary technological capacity to have a video conference.
Amidst the COVID-19 pandemic, video conferencing has served as the closest alternative to face-to-face meetings. In the event that face-to-face meetings are not possible, video conferencing technology will allow you to keep an effective line communication between you and your lawyer. Facetime, Zoom and Google Meet are all alternatives to physically attending at the office to sign documents. If this technology is not available to you, your lawyer should still be able to accommodate you but it is helpful to have video conferencing available as an option.
Written by Real Estate Lawyer Patrick Clancy and Summer Student Wincy Ho.
Aug 06, 2020