Your Closing Day

From BuildingHomes.ca

Jennifer Orpen, April 8, 2005

Reprinted with the authors permission. Originally found at Hawthorne Villager

I thought that a little light into the closing process may be helpful to those that have their closing coming up and who are purchasing for the first time. Hopefully some of the below will help make your moving experience a smooth one.

Statement of Adjustments

Your lawyer will receive your statement of adjustments, which is a summary of all the flow of money in the transaction; outlining your purchase price, deposits, upgrades (will show up on here regardless if you have paid upfront for the upgrades - will show as a credit) typically 2 weeks before your closing date. However there are times (peak real estate season) where they may not be received so far in advance.

The statement of adjustments (together with the Deed) is also needed in order to confirm the Land Transfer Tax payable. If you are a first time home buyer (must not have purchased a home anywhere else in the world) and you must also not have been married to your spouse at the time that they owned a previous property. (this prevents a wife putting title in just her name, in order not to pay land transfer tax and then the couple purchasing another new home from a builder and putting in the husband's name only to avoid land transfer tax) Just a note that the Land Transfer Tax (LTT) rebate applies only to new homes purchased from a builder and the credit is a maximum of $2,000.00. So if the LTT is 2,500.00 you will only have to pay 500.00 of it.

Unfortunately this is not the only thing that is required in order to calculate the amount of money that you will have to bring on closing. Your lawyer will also have to have your Mortgage instructions from your bank. Mortgage instructions are usually the number 1 reason for a delay in a final number. The bank has to provide instructions to the lawyer as well as the final breakdown of funds. Some banks will not provide the net proceeds of the mortgage to the lawyer until 5 days before closing.

Signing Documents and Fees

Make it your top priority to prepare and sign all documents that are required at your branch level no later than 2 weeks before your closing date. The further ahead you finalize, the longer the head office has to process and deliver instructions to your lawyer. Be sure to check in with your lawyer to see if they have your mortgage instructions and of course let them know what bank that you are dealing with so that they can also make enquiries if they have to. Also keep in contact with your mortgage representative and make sure that everything is running smoothly. This person will be your best contact should there be a delay getting mortgage instructions.

Once your bank has advised how much money they will be advancing to the lawyer for closing [this amount will be less any CMHC fee (for high ratio mortgages - which are when less than 25% is being put down), application fee (usually $165.00), any interest adjustment, PST on the CMHC fee (calculated based on percentage being put down for down payment)]

Your lawyer will then add his/her fees & disbursements (couriers, searches, faxes, photocopies etc), registration fees (Deed and one mortgage is 141.40), LTT (if applicable), title insurance, and the Balance due on closing (purchase price + levies, utility meters + Ontario New Home Warranty Plan (Now Tarrion) enrolment fee+ driveway + survey + etc . deposits) and will subtract the amount advanced from your bank. That will give you the amount that you will have to bring in at your appointment. And these funds do have to be certified (either bank draft or certified cheque). This amount will be anything remaining on your down payment (ie. How much money you are putting down on the house) and your closing costs (legal fees, title insurance, LTT, registrations, builder.s extras)

What You Need

When you go to your lawyer's office to sign your paperwork, you will have to bring the certified funds, and many banks require that you bring a void cheque of the bank account where mortgage payments are to come out of, and 2 pieces of ID, at least one being photo. You should check with your lawyer when you book your appointment to see what other things if any must be brought with you.

Most closings happen mid-late afternoon, depending again on when your mortgage money is received and also when your closing funds are received.

If you are purchasing and selling your home on the same day, be prepared to be closing later in the day as often you become in a chain (where the person buying your home may have to sell to another and so on . before you can purchase your home) Be sure to plan your moving trucks accordingly (for mid-late afternoon and not the morning) so that you are not paying a company by the hour to be sitting outside your house while you are waiting for the closing to take place.

If you haven't already sold your home, you may want to consider selling a few days or even a week after you purchase, so what you can take your time to move out of your old home and into your new home. Most banks offer bridge financing to cover the difference in money between the two closing dates and usually cost relatively low compared to the stress of trying to move out of one place and into the new one on the same day.

Keys are typically picked up from the site office and your lawyer will advise you when your deal has closed so that you can go to the site office. The site office will not release keys until they have been advised by their lawyer that the deal has been registered.

• Jennifer Orpen is a freelance Legal Assistant specializing in Real Estate.