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A TYPICAL REAL ESTATE TRANSACTION IN CANMORE, ALBERTA, CANADA
There are many people involved to bring the purchase and sale of
Property to a successful conclusion including the Seller, Buyer, Listing
Realtor, Selling Realtor, Selling Brokerage, Listing Brokerage, Seller's Lawyer,
Buyer's Lawyer, Mortgage Broker, Lender, Appraiser, Home Inspector, Insurance
Agent, Property Managers and all of their staff.
I have prepared this based on an actual transactions where I acted for the
Buyer and Mortgagee respecting a SINGLE FAMILY DETACHED HOME. Every Real Estate
Transaction is different but generally follows what is outlined herein.
Throughout the text, you will find hyperlinks to the various terms used herein and
which can be viewed in the Real Estate Terms Section.
The following describes a typical purchase and sale of a
single family detached home in Canmore, Alberta, Canada.
THERE ARE BASICALLY FOUR MAIN AREAS
INVOLVED:
A. From Listing of the Property to Unconditional Offer:
1. The Sellers
decide that they are going to sell their Property and go to talk to the Seller's
Realtor.
2. The Sellers
and the Seller's Realtor discuss the situation and assuming they are in
agreement on the Selling Price, Commission and other terms, enter into a Listing
Agreement. The Seller should also ensure that they have an acceptable Real
Property Report with Compliance available, for in most Contracts, the Seller is
obliged to provide a Real Property Report. See
Real Property Reports for more information
3. The Seller's
Realtor then develops a marketing plan for the Property which includes holding
an open house for all the Realtors in the area, advising all of his colleagues
in the office about the Property that has just come on the market, calling
potential purchasers advising them that the Property is for sale, preparing
advertising materials and placing a For Sale sign on the Property.
4. Depending
upon how active
the market is, this phase can be as short as a day until a point in time where
nothing is happening and the Property is taken off the market. There are
many reasons why some properties don't sell, but the main reason is that the
Seller is asking too much money for the Property.
5. Then one day,
there is an Offer to Purchase the Property. A Buyer's Realtor has a client
who is interested in purchasing the Property and has asked the Buyer's Realtor
to prepare the Offer to Purchase and present it to the Seller's Realtor.
There really is no need for the Buyers to retain the Buyer's Lawyer at this time
unless there is something unusual with the Property. It is generally preferable
to obtain an accepted Offer first; in other words, see if you can get the
Property for the price you are willing to pay and insert a Subject To Clause indicating that the Offer needs to be
reviewed and approved by the Buyer's Lawyer if you have some concerns.
6. The Sellers
and Buyers can go back and forth many times respecting counter-offers and further
counter-offers until they reach agreement on the terms of the Contract. Most
Offers to Purchase have Subject To Clauses which
need to be satisfied. The Buyer's and Seller's Lawyers will be retained once
all of the Subject To Clauses have been removed. If there is a Subject To
Clause respecting "Buyer's Lawyer's approval", then the Buyer's Lawyer will need to
be retained earlier. When all of the Subject To Clauses
have been satisfied, there is a Firm Deal.
7. The Seller
can calculate approximately how much money they will ultimately receive from the
sale of the Property by using the Cash to Seller
Calculator.
8. The Buyer can calculate approximately how much money they will
need in order to be able to purchase the Property by using the
Cash Needed by Buyer Calculator.
B. Completing the Purchase and Sale:
1. Once there is
a Firm Deal, the Listing Real Estate Company prepares and forwards to the
Buyer's Lawyer and Seller's Lawyer, a letter confirming that you have been asked
to act for the Buyers or Sellers, outlining the Commission due on the Transaction
and enclosing a copy of the Contract.
2.
What does the
Buyer's Lawyer do?
- reviews the Instruction Letter and Contract
- contacts the Buyers, confirms acting for the Buyers, confirms personal
details, discusses any
preliminary issues raised by the Contract, opens Buyers file
- orders a copy of the Title and any Charges that will be remaining on
Title
- advises Buyers of any concerns re Charges that will remain on Title
(generally the existing Charges on Title are acceptable)
- reviews Mortgagees Instruction Letter
- prepares the conveyancing documents including Mortgage Documents,
Tenancy at Will Agreement, Transfer Back,
- ensures Property Insurance is obtained
- arranges for the Buyers to come in to the Office and advised the Buyers
of the amount of the Cash Shortfall See Buyer's
Calculator
- review the whole transaction with the Buyers, attends to the signing of
all documents
- Confirmation between the Buyer's Lawyer and Seller's Lawyer as to which
"Closing Technique" will be used
- registers the Transfer of Land and Mortgage
- obtains confirmation of registration and advised the Buyer, Seller's
Lawyer and Realtors that the "Deal" has registered.
3. What does the
Seller's Lawyer do?
- reviews the Instruction Letter and Contract
- contacts the Sellers, confirms acting for the Sellers, confirms personal
details, discusses any
preliminary issues raised by the Contract, opens Sellers file
- orders a copy of the Title and details of Mortgages that the Seller must
discharge
- Contacts Mortgagees for discharge amounts and per diem rates of interest
- prepares the conveyancing documents including Transfer of Land and
Statement of Adjustments
- arranges for the Sellers to come in to the Office
- review the whole transaction with the Sellers, attends to the signing of
all documents and approximate amount due to the Sellers from the sale
of the Property. See Seller's Calculator
- forward the conveyancing documents to the Buyer's Lawyer on the
appropriate undertakings
- Confirmation between the Buyer's Lawyer and Seller's Lawyer as to which
"Closing Technique" will be used
- obtains confirmation of registration from the Buyer's Lawyer
- See also the section below on "Possession of the Property" and
"Reporting on the Transaction".
There is a constant interaction between the Buyer's Lawyer and Seller's Lawyer,
their staff and others involved in the transaction in order to ensure that a
Real Estate Transaction completes smoothly and on time.
C. Possession of the Property:
However the
Closing is done, be it a Normal Closing, Cash Closing, Protocol Closing or Title Insurance
Closing, there will come a point in time when the Closing has been completed and
now the Buyers wants Possession of the Property.
What happens on the Possession Date?
- The Buyer's Lawyer has determined that he has satisfied the Seller's
Lawyer's Undertakings or can satisfy them and that it is now appropriate to
give the Buyer possession of the Property.
- The Buyer's Lawyer delivers his Trust Cheque to the Seller's Lawyer in the
amount of the Cash to Close.
- The Buyers and Buyer's Realtor do a "Walk Through" of the Property to
determine that the Property is as contracted for in the Contract.
- Assuming the Buyers are satisfied, they advise the Buyer's Lawyer that
they are satisfied.
- The Buyer's Lawyer contacts the Seller's Lawyer and advises that it is
appropriate to release the Cash to Close to the Sellers.
- The Seller's Lawyer then advises the Seller's Realtor to release the keys
to the Property to the Buyers.
- See also the section below on
"Reporting on the Transaction".
PLEASE NOTE: There can be many variations on the foregoing respecting
the issues of possession of the Property, release of the keys and the Walk
Through, however the foregoing is the "normal" sequence of events.
D. Reporting on the Transaction:
Now that the Real Estate Transaction has closed, each of
the Buyer's Lawyer and Seller's Lawyer must report to their respective clients
and others involved in the transaction.
BUYER'S LAWYER:
- Prepares a reporting letter to the Buyer advising that the transaction
has completed and provides the Buyer with a copy of all of the relevant
documents.
- Prepares a reporting letter to the Lender advising that the transaction
has completed and provides the Lender with a copy of all of their relevant
documents including the Mortgage.
SELLER'S LAWYER:
- Prepares a reporting letter to the Seller advising that the transaction
has completed and provides the Seller with a copy of all of the relevant
documents.
- Pays the balance of Commission to the Realtors
- Forwards sufficient funds to the Seller's Mortgagees to payout and have
discharged the Seller's Mortgage.
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