Specific steps to Buying Real Estate Property in Canada
In Canada, all matters pertaining to the buying and the selling of property is subject
to governmental regulation. Once the parties to a potential sale of property have
agreed on a price (after negotiating between themselves), a preliminary contract
is entered into between the parties. This preliminary contract is known either as
an Offer to Purchase or as an Agreement of Purchase and Sale. At the time the preliminary
agreement is entered into between the parties, a deposit is made by the buyer.
The preliminary agreement can take one of two forms. On the one hand, the preliminary
agreement can be conditional. By conditional, it is meant that certain events need
to occur or certain milestones accomplished before a contract can become firm. An
example of such a conditional provision would be one to obtain financing. If the
condition or conditions within the agreement cannot be satisfied for some reason,
the seller will receive most of his or her deposit back.
A firm preliminary contract is one in which there are no conditional provisions.
If a firm preliminary agreement is not fulfilled, financial penalties can be imposed.
For example, if the seller does not perform under the contract, he or she will lose
the deposit paid. Likewise, some sort of financial penalty will be imposed on the
seller if he or she does not perform under the terms of the firm preliminary agreement.
Within the provisions of the preliminary agreement will be established a completion
date. The completion date is when all of the conditions in the preliminary agreement
need to met. It is at this point that the remainder of the purchase price will be
paid by the buyer to the seller. (Obviously, the buyer will need to have his or
her financing in place by this point in time.) It is at this juncture that the transfer
of ownership of the property from the buyer to the seller will occur.
The money associated with the sale is paid whether through a solicitor or a notary.
At this juncture, the buyer and the seller will sign what is known as a Definitive
Contract. In the French-speaking province of Quebec, this is called Acte de Vente.
In Quebec, the final part of the sale is overseen by a notary (or notaire in Quebec)
who is a governmental official. In other provinces within Canada, a solicitor can
oversee and handle the final steps of the real estate sales transaction.
In that most people will require financing to purchase
property in Canada, it is important to generally understand the lending
process in that country. For the most part,
mortgages in Canada are so-called full status arrangements. Full status
means that the lender will make a thorough and complete investigation of a borrower's
background and credit history.
In Canada, a purchaser of real estate will have to pay about 35% of the total purchase
price out of his or her pocket. In many instances, this will be the size of the
deposit associated with the preliminary contract to purchase property. The mortgage
itself, in most cases, will be for a term of 25 years with the final payment needing
to be made before the borrower reaches the age of 70.
Lenders in Canada pay very
close attention to a borrower's available income. Indeed, in most instances, a lender
will closely analyze what a borrower will be expected to earn over the lifetime
of the loan.
The mortgage loan itself will be secured by the property that is being purchased
within Canada. Oftentimes a foreign national will seek to have property in another
country utilized to at least partial zed collateralize a loan in another country.
In Canada, this is not an accepted practice.
By understanding the ins and outs of the real estate purchase transaction in Canada,
an investor will be in a far better position to make appropriate decisions pertaining
to the buying and selling of property in that country.
Property Abroad always recommends using a
Solicitor or Lawyer
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