real estate lawyers

By David Bresver

As a new home purchaser, you will be asked to sign an agreement of purchase and sale at the sales site. The agreement is a detailed document, from 5-20 pages long, that is drafted by the builder's lawyers. Your lawyer must see it before you sign (once you sign you are bound by it) or, in the case of a new condominium, your lawyer must see it during the ten-day statutory rescission period that you are automatically entitled to. During this period you should discuss the content with your lawyer so that you can take direction with respect to renegotiating some of its terms.

In the case of a subdivision home in a non-condominium setting, there is no such statutory protection. If you intend to sign the agreement at the sales site prior to your lawyer reviewing it, it is essential to request that a conditional period be inserted in the agreement. Most builders will have a simply worded condition ready for addition to the agreement if you ask. The condition allows for a short period (usually five banking days) during which you have the opportunity to review the agreement with your lawyer and cancel the transaction if you cannot negotiate the amendments your lawyer recommends.

It is, in most cases, impractical to extensively renegotiate the terms of the agreement of purchase and sale. Most builders will not accept major changes to their agreement, but there are strategies that your lawyer can pursue with the developer to eliminate or cap some of these items, which can save you significant amounts of money on closing.

Even if you are unsuccessful in negotiating these terms, at least you will have the benefit of having discussed and evaluated them prior to your purchase. Thus, if there are additional expenses enumerated in your agreement they can be estimated for closing purposes and you will have a realistic expectation of what your final closing costs will be. Once you have reviewed the agreement with your lawyer and returned to the sales office to negotiate amendments to the agreement, your agreement of purchase and sale will become a final contract.

Prior to even executing the agreement of purchase and sale, you should have pre-approval for a mortgage. Most builders have a financing plan in place with a particular lender. You can use the developer's financial institution for your financing or you can choose another financial institution. The most important issue when buying a newly built home is to ensure that the mortgage commitment does not expire until after your anticipated closing date. In a condominium transaction, this is the final closing date, not the occupancy date. To ensure that your current mortgage rate is protected against a rise in interest rates in the future, the commitment should not expire for at least six months after the final closing date. Having said that, if you can negotiate a commitment that expires after more than six months, by all means do so. The longer the commitment, the greater your safety net.

Once the agreement of purchase and sale has been finalized and your mortgage financing is in place, you should, in consultation with your lawyer, arrange a fire insurance policy. Even though in a condominium the condominium corporation will insure the structure of the property, you still must have a fire insurance policy in place to cover all of the improvements to the property and to protect you for public liability purposes.

You should also discuss title insurance with your lawyer. Title insurance provides coverage for the title-related aspects of your transaction. For a good overview of title insurance, go to www.titleplus.ca.