Finally, you have found your dream home or property. Now it is time to close the deal. Closing is the last and lengthy step of a real estate transaction that consists of several critical stages. It is where you must pay due attention and care, as this step officially announces you as the property owner, meaning “this step transfers the ownership from the seller to the buyer – i.e., you!
Hence, Nanda from Nanda & Associate Lawyers advise you to familiarize yourself with the critical procedural frameworks and other things associated with the closing process. Nanda has given you a step-by-step guide on the closing process.
#1 Agreement of Purchase and Sale (APS)
The process starts with signing of the APS (Agreement of Purchase and Sale) agreement, which contains stipulations of the transactions such as closing date, down payment, price and other contingent provisions.
Nanda says, “It is advisable for both the parties to review the APS with the help of a renowned real estate lawyer, to ensure all the clauses are fair and the interests of both parties are protected.”
#2 Title Search and Property Survey
Title Search: After signing the APS, it is crucial to carry out the title search to verify the property’s title is clear of any encumbrances such as easements, liens, or any pending legal matters.
Title Insurance: Additionally the buyer can have the advantage of title insurance to safeguard against any potential title-related issues that may arise upon closing. “This crucial step ensures that the seller has the legal authority to transfer ownership and that the buyer is going to get a clear title once the purchase is complete,” says Nanda.
Property Survey: “Depending on the property type and local regulations, a new property survey is necessary in order to confirm the property’s boundaries and ensure that all structures comply with local zoning laws.”
#3 Financing and Insurance
Now, another crucial and risky step is securing the necessary funds. Usually in such cases, the buyers will seek the help of the lenders to finalize the mortgage loan agreements, and discuss some important aspects such as the loan amounts, interest rates and other formalities.
Mortgage Approval: Upon the approval of the mortgage, a ‘Commitment Letter,’ will be issued by the lenders. This will have the outline of the loan’s terms and is essential to proceed with the closing.
Homeowners Insurance: Before closing, it is essential for the buyers to seek and secure profitable homeowners’ insurance. “It is often a requirement for obtaining a mortgage and this safeguards the buyer’s investment in the property.”
#4 Conducting the Final Walkthrough
Again before the closing date, the buyer must conduct a final walkthrough of the property, as outlined in the sales agreement. A buyer must keep in mind that it is their last opportunity to be in its agreed-upon condition and that any post-inspection repairs have been completed.
Fixtures and appliances: While doing the walkthrough, the buyer must verify the appliances and other fixtures are in proper condition and confirm that no new issues have arisen, after the home inspection.
Addressing Issues: During the walkthrough, if the buyer finds any problems or issues, they must immediately bring them to the attention of the seller and the lawyer representing both parties.
#5 Preparing Closing Documents and Adjustments
Closing Documents: The buyer must have their real estate lawyer draft the essential closing documents that contain transfer of deed, mortgage agreements, and other documents required for the completion.
Statement of Adjustments: The seller’s attorney must prepare the statement of adjustments, including the final amount the buyer needs to pay. The final amount here means the purchase price, excluding the deposit already paid, along with any prorated costs such as utility bills, property taxes, and other costs prepaid by the seller.
Reviewing Documents: Finally, both parties should review all closing documents before the closing day thoroughly. This ensures everything is accurate and fully understood.
#6 On Closing Day:
“Closing day is the final meeting between the buyer and seller, typically with their real estate lawyers present.” During this meeting, the buyer’s lawyer will advise the buyer on when to pay the remaining balance of the purchase price, closing costs, and legal fees to the seller.
Transfer of Ownership: After the funds are transferred, the property keys will be handovered by the seller’s lawyer and the buyer’s lawyer will register the title transfer with the local land registry office. “This is the registration that officially completes the ownership transfer and makes the buyer the new legal owner of the property.”
Closing Costs: The buyer should be ready to cover various closing costs, such as land transfer taxes, title insurance, legal fees, and any other miscellaneous fees – that are generally settled on closing day.
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#7 What to Do After Closing Day
Even after the transaction is complete, a few important steps remain. First, it’s crucial to save all closing documents securely, as they are essential for future reference, particularly when preparing tax returns.
Final Statement of Accounts: In the weeks following the closing, the buyer will receive a final statement of accounts along with a reporting letter. This document details the exact costs and fees paid during the transaction.
Property Registration: “The transfer of title will be officially recorded with the local land registry office, ensuring that the new owner’s legal rights to the property are recognized and protected by law.”
In the real estate realm, closing sales demands a strategic approach and mastery of various sales closing techniques. Having a renowned real estate lawyer by your side is crucial at these crucial times.
Nanda & Associate Lawyers is ThreeBestRated® award-winning boutique law firm in Ontario, that specializes in estate, wills & trusts, family law, business law, litigation, personal injury, and immigration law. They have helped over thousands of clients to navigate the legal matters and turn the issues into positive solutions. Call them at 905-405-0199 or visit https://www.nanda.ca/ for a expert level guidance on your legal matters.
Real estate transactions in Ontario can involve several legal details that are easy to miss. Having a professional review the Agreement of Purchase and Sale can make a big difference. This Mississauga real estate legal page is helpful