There are generally three steps to escalate towards the purchase of an immovable:
1. The Offer to Purchase
You must present the vendor with an Offer to Purchase, which shall contain your conditions surrounding the purchase of the property – the most obvious one being the price. The vendor may then either reject your Offer or make address you with a Counter-offer.
2. The Promise to Purchase
Once accepted by the vendor, the Offer to Purchase becomes a Promise to Purchase with terms and conditions that may no longer be negotiated. However, signing a Promise to Purchase does not mean that you automatically become the owner of the property contemplated.
3. The signing of the Deed of Sale
To officially become the owner, you have to sign the relevant Deed of Sale, which most frequently takes place in a Notary’s office, where the transfer of property indeed occurs.
Your Notary shall advise you on the conditions and terms that are best included in your Offer to Purchase, such as the date of sale and date of occupancy, what rent if applicable is to be negotiated when the dates of signing and of occupancy are different, the obligation to obtain an updated certificate of location, the carrying out of an inspection by a certified expert, the inclusions and exclusions of appliances, and the like. If you are buying a condominium unit, you must also request the feasibility of verifying, to your satisfaction, all minutes of general meetings of the co-owners for the last three years, the declaration of co-ownership and the existing by-laws.
The Promise to Purchase is especially a very important document considering that the terms and conditions of the sale may no longer be negotiated thereafter, unless otherwise agreed to in writing by both parties. In the event that the purchaser changes his mind and does not want to buy any longer, the vendor can apply to the Courts for a compensatory indemnity should he sell at a lower price. And if the vendor does not want to sell anymore, the purchaser can seek enforcement of the sale before the Courts.
The purchaser who pays cash for such transaction, has the choice of the acting notary, unless stipulated otherwise in the Promise to Purchase. The legal warranty shall automatically apply as at the sale of a property without the need for same to be mentioned therein. Said warranty has two components: the first one being the warranty of quality (hidden defects) and the second one being the warranty of a good title.
Your notary shall carry out a title search to ascertain that you title of ownership is clear and shall inform you of all servitudes, mortgages and other registrations. He shall verify the identity and capacity of the vendor, examine the certificate of location, the municipal and school taxes, any encroachments, and shall set up the list of adjustments. He shall also prepare a mandate detailing the scope of his legal services.
If it is your first property, you can find help to build up your down payment. The Canada Revenue Agency put up a program called ‘Home Buyers’ Plan (HBP) which may allow you to withdraw funds from your registered retirement savings plans (RRSPs) to buy or build a qualifying home. You can withdraw up to $25,000 ($50,000 for a couple) in a calendar year without paying income taxes on such withdrawal. A repayment period of no more than fifteen (15) years is allowed for you to redeposit into your RRSPs the amounts so withdrawn under the HBP. The City of Montreal equally offers a subvention in certain areas and under certain conditions in the case of new houses. Exceptionally, a builder or a promoter of an existing or planned residential property must have a preliminary contract which includes that a buyer may withdraw his Promise to Purchase within a ten-day period after signing. There may be an indemnity imposed in such a case of withdrawal that cannot exceed 0.5% of the agreed sale price. Usually, the preliminary contract shall also provide that the Deed of Sale shall be signed in the present of the promoter’s notary.
If you borrow money from a financial institution to buy your house, the Deed of Hypothec has to be signed before a notary who is an impartial expert and who plays a preventive role. Seize the occasion to ask your notary for more information as to the situation that may happen in case of your death, of mental incapacity, divorce or separation. Remember that if your down payment comes from a succession or a gift, this occurrence must be stipulated in the Deed of Sale. In cases where the property becomes the family residence and that you are married, the property will form part of the family patrimony provided for in the Civil Code of Québec. Your spouse may thus have a right to half of the value in the case of your death or divorce. However, there shall be no such partition if the property is paid in full before the marriage, unless otherwise provided for in the marriage contract.
In order to purchase an immovable property, you will require a twenty percent (20%) down payment, failing which you will be required to buy insurance on your loan. The Canada Mortgage and Housing Corporation informs you how to figure out the future instalments that you shall be submitted to pay in such cases.
Do not hesitate to contact us. A Notary holds the greatest pertinent knowledge in real estate laws and is the best expert capable to help you resolve your problems.