Frequently Asked Questions

Real Estate transactions

If I have decided to buy a home, when should I contact a real estate lawyer?
Who qualifies as a first-time purchaser?
Do I need to have a house surveyed before I buy it?
Do I need to buy mortgage insurance?
After buying a home, what information should I provide the seller’s lawyer?
What disbursements should I expect to pay when buying a home?
After selling a home, what information should I provide to the purchaser’s lawyer?
What is land transfer tax?
Am I eligible for a land transfer tax refund—and if yes, for how much?
How do I claim my land transfer tax refund?
How do I transfer public utilities and taxes to the purchaser after I’ve sold my home?
What is the ‘closing date’?
What kinds of adjustments to the sale price should I expect on closing day?
When should I expect to receive the keys for my new home?
Can Williams McEnery help with private sales and purchase?
Do I need to get Spousal Consent to sell our home?
How is HST applied on the purchase or sale of a home?
When does the change of possession happen on a home?
When do I need to get house insurance?

Real Estate transactions

1. If I have decided to buy a home, when should I contact a real estate lawyer?

Individuals involved in a real estate transaction should contact a lawyer as early in the process as possible and confirm your retainer of that lawyer.

2. Who qualifies as a first-time purchaser?

Only individuals who are at least 18 years of age, have not owned an interest in a home anywhere in the world and whose spouse (as defined in Section 29 of the Family Law Act,) has not owned an interest in a home anywhere in the world while he or she was a spouse of the individual, qualify as first-time purchasers. “Home” as used in this paragraph means the same as “eligible home” as defined in the Ontario Home Ownership Savings Plan Act.

3. Do I need to have a house surveyed before I buy it?

Most financial mortgage institutions now require a Purchaser to produce a recent survey for the real property being purchased showing the boundaries of the lands and the location of the dwelling thereon. The term “recent” varies from lending institution to lending institution but as a loose rule a survey 10-15 years old will probably still be acceptable to a lender if accompanied by a Declaration of the Vendor saying it is still accurate. If the Purchaser requires a survey for the lender and the Vendor does not have one, it is the responsibility and expense of the Purchaser not the Vendor to have a new one prepared by an Ontario Land Surveyor. The approximate cost is $1,400.00 to $1,600.00. Most financial mortgage institutions will accept Title Insurance in lieu of a survey. Title Insurance, in addition to meeting the requirement of the said institutions, has many addition coverage benefits for the Purchasers. The approximate cost of Title Insurance is $330.00 and this provides coverage for both the Purchaser and the mortgage lending institution.

4. Do I need to buy mortgage insurance?

In the event that the amount of your first Mortgage on your purchase transaction exceeds 80% of the purchase price, it will be necessary for you to purchase, for the protection of the Lender, mortgage insurance. This mortgage insurance has nothing to do with life insurance on you, the Purchaser. It is insurance purchased to protect the Lender in the event that you fall into the category of a high ratio borrower i.e. in excess of 80% on the purchase price.

The mortgage insurance is normally purchased through Canada Mortgage and Housing Corporation and the Purchaser pays the cost of the insurance. The amount of the mortgage insurance premium is calculated using a loan/value ratio. Your bank or mortgage broker can best advice as to the percentage of tax.
One important change announced in May 1993 Ontario budget is the application of the tax to the amount of the mortgage insurance premium paid by the borrower as set forth above. While the mortgage insurance premium can be added into the amount of the Mortgage, the tax on the premium is payable immediately at the time of the advance of the mortgage funds.

5. After buying a home, what information should I provide the seller’s lawyer?

Upon having bought a home, the purchaser should meet with their lawyer and provide the following:

A. The name of the financial institution to which the Purchaser(s) has applied for a mortgage together with the name of the financial officer and the contact phone number;

B. The name and contact phone number of the home insurance broker to which the Purchaser(s) has applied for home insurance. The home insurance must be in place on the closing date and the insurance broker must fax a letter of confirmation of coverage to your lawyer showing the name of your mortgage lender.

6. What disbursements should I expect to pay when buying a home?

In addition to the payment of Land Transfer Tax, Purchasers are responsible to pay for certain disbursements incurred by their lawyer in respect to various certificates, searches and registrations. Examples of such disbursements are as follows:

	Registration of Transfer/Deed	$71.30
	Registration of Mortgage	$71.30
	City of Ottawa Tax Certificate	$64.00
	City of Ottawa Water Certificate	$64.00
	Municipal Compliance Report (where required)	$205.00
	Execution Certificate	$11.00 per name
	Change of Ownership (tax) – City of Ottawa	$39.00
	Change of Ownership (water) – City of Ottawa	$62.00

These disbursements normally total, on a purchase, approximately $500.00 to $600.00.

The Vendor in a real estate transaction is not required to pay any Land Transfer Tax. However, the Vendor is responsible to pay for certain disbursements incurred by their lawyer such as:

Registration of a Discharge of Mortgage	$71.30
City of Ottawa Tax Certificate (If Required)	$64.00

7. After selling a home, what information should I provide to the purchaser’s lawyer?

Upon having sold a home, the vendor should meet with their lawyers and provide the following:

A. Copy of any survey in their possession;

B. Name of the financial institution having a registered mortgage against the title of the home (if any) and the mortgage reference number of that mortgage which the Vendor(s) should be able to find on past correspondence from the financial institution;

C. The method by which the residence is heated ie. Gas, oil, electric;

D. Copy of your latest City of Ottawa (or other municipality) tax bill together with confirmation s to what taxes have been paid. If the holder of the mortgage on title pays the taxes from a mortgage tax account advise your lawyer.

8. What is land transfer tax?

This tax is paid by the Purchaser at the date of final closing to the Treasurer of Ontario pursuant to The Land Transfer Act. The tax is based on the purchase price and the current rate became effective on June 1st, 1989.

The rates are as follows for a single-family residence:

$0 – $55,000.00	½ of 1%
$55,000.00 – $250,000.00	1%
$250,000.00 – $400,000.00	1 ½%
Over $400,000.00	2%

For a real estate transaction of less then $250,000.00 the easiest way to calculate the Land Transfer Tax is to multiply the purchase price by 1% and deduct $275.00. If the purchase price was $245,000.00, the tax would be [$2,450.00 - $275.00] = $2,175.00.

9. Am I eligible for a land transfer tax refund—and if yes, for how much?

Bill 47, which received Royal Assent on June 27, 1996, provides that effective May 8, 1996, first-time purchasers of newly constructed homes are eligible for refund of land transfer tax, up to a maximum of $2,000.00. On December 14th, 2007, the Land Transfer Tax Refund Program was amended and expanded to include first-time Purchasers of both new and resale homes.

The amount of the refund will be the entire amount of tax paid or payable up to a maximum of $2,000.00. Where the purchaser owns less than 100 percent interest in the newly purchased home, the amount of the refund will be reduced to his or her proportionate interest in the home.

For example, X, a first-time purchaser, buys 100 per cent interest in a newly purchased home for $250,000. The amount of land transfer tax payable is $2225. X can claim the maximum refund amount of $2,000.00. However, if X and Y (who is not a first-time purchaser) each buy a 50 per cent interest in a new home, then X is only able to claim 50 per cent of $2,000.00 as a refund.

Special provisions apply when one spouse is a first-time purchaser and the other spouse owned a home before, but not since becoming a spouse of the first-time purchaser. In this situation the first-time purchaser’s interest plus that of his or her spouse will be added in calculating the amount of refund. In the example above, if Y is X’s spouse and owned a home prior to but not during the spousal relationship, X is entitled to claim 100 per cent of the refund or $2,000.00.

However, if Y owned a home during the spousal relationship, X is disqualified as a first-time purchaser and not entitled to claim any refund.

The refund is not available if the first-time purchaser has received an OHOSP based refund of land transfer tax under Section 9 of the Land Transfer Tax Act and vice versa. If an individual qualifies for this refund as well as the OHOSP based refund, it will be up to the first-time purchaser to decide which to claim. He or she can claim either but not both.

10. How do I claim my land transfer tax refund?

The refund is claimed at the time of registration. The amount of refund claimed will, if granted, offset the land transfer tax otherwise payable to a maximum of $2,000.00.

For example, if the tax ordinarily payable is $2,000.00, and the amount of refund granted is $2,000.00, no payment of land transfer tax is required. If the amount of tax ordinarily payable is $2,100.00, and the amount of the refund is $2,000.00, land transfer tax of $100.00 must be paid at registration.

If for some reason a refund is not claimed at the time of registration, it can later be claimed by forwarding the Affidavit; a copy of the registered Transfer showing the tax a being paid; a receipt showing the tax as being paid (if copy of Transfer does not so indicate) and a copy of the Agreement of Purchase and Sale, to the Motor Fuels and Tobacco Tax Branch of the Ministry of Finance, P.O. Box 625, 33 King Street West, Oshawa, Ontario L1H 8H9.

In the case of qualified taxpayers, individuals will continue to claim the refund of the land transfer tax by filing the refund Affidavit at the land registry office at the time of registration to obtain an exemption from the payment of land transfer tax to a maximum of $2,000.00.

11. How do I transfer public utilities and taxes to the purchaser after I’ve sold my home?

Vendor(s) should take public utility readings for homes being sold and call your local public utility just before closing to provide the reading and an address to which the final bill should be sent. The lawyer for the Purchaser(s) is responsible to notify the municipal tax office and the normal public utility offices of the pending change of ownership (ie. Gas, water, hydro). Public utilities are not normally turned off at closing by the Vendor(s) and hence Purchaser(s) normally have full use of utilities on the Closing Date. The lawyer for the Purchaser(s) normally verifies tax and the water account status by ordering a Tax Certificate ($64.00) and a Water Certificate ($64.00). The City of Ottawa has recently imposed a service charge for changing their accounts from the name of the Vendor(s) to the name of the Purchaser(s).

12. What is the ‘closing date’?

This term refers to the date that Vendors turn over possession of the home they have sold to the Purchaser(s).

13. What kinds of adjustments to the sale price should I expect on closing day?

On closing there will be adjustments to the sale price between the Vendor and the Purchaser which adjustments will appear on a Statement of Adjustments as credits in favour of the Vendor or the Purchaser. If the Vendor is relying on receiving or if the Purchaser is relying on paying a fixed amount on closing, it is unpleasant if these adjustments come as a total surprise to your client.

For example, if taxes for the calendar year are $1,200.00, the deal closes June 30th and the Vendor has paid the taxes for the entire calendar year, there will be a credit on the closing to the Vendor of $600.00. In other words, the Vendor received $600.00 more and the Purchaser pays $600.00 more.

Also if there is a fuel tank at the property, the Vendor usually fills the tank on closing and sells a full tank to the Purchaser. The adjustment is approximately $1.05 cents per litre for 909 litres. The Vendor received $954.45 more and the Purchaser pays $954.45 more on closing.

14. When should I expect to receive the keys for my new home?

Purchaser(s) rarely receive keys to the new home before 2:30 p.m.- 3:00 p.m in the afternoon. This is reality. The lawyer needs the morning and early afternoon of the closing date to complete closing and registrations. Purchaser(s) should book movers or the moving truck for noon on the closing date. If it takes 3 hours to load the truck the Purchaser(s) will be ready to move to the new home when the keys are available from the lawyer. This will prevent the purchaser(s) paying for empty hours of down time for the movers or the truck.

15. Can Williams McEnery help with private sales and purchases?

The current trend in real estate sales and purchases is for many vendors and purchasers to negotiate a real estate transaction privately, with the absence of a real estate broker or agent. In these circumstances Williams McEnery is prepared to assist vendors and purchasers with advice and to assist in the preparation of the agreement of purchase and sale.
Back to Top

16. Do I need to get spousal consent to sell our home?

It should be noted that the sale of a matrimonial home where the title is in the names of both married spouses will require a written consent of both married spouses even if the title is only in the name of one spouse.
Back to Top

17. How is HST applied on the purchase or sale of a home?

We note the HST, presently 13%, applies to real estate commission and legal fees.
Back to Top

18. When does the change of possession happen on a home?

The normal time for vendors to vacate the house they are selling is mid-afternoon because the lawyer for the vendor will pass the keys to the lawyer for the buyer around mid afternoon upon the transfer of sale funds and release of title. Thereafter the home belongs to the buyer who has the right to come to the home and take possession.
Back to Top

19. When do I need to get house insurance?

Buyers should arrange home insurance for their new home being purchased to take effect on the day of closing. If the buyer is obtaining and registering a mortgage on the new home, the mortgage fund cannot be and will not be released by the mortgage lender unless that insurance on the new home is in place. The buyer should address the issue with his or her insurance broker 7-10 days before the closing date.
Back to Top

Wills and administration

1. Do I need a will?

If you die without a valid, executed, written Will and leave assets in your name, you die intestate. The distribution of your estate assets will be governed by Ontario Statute law which Stature law may not reflect the wishes of the deceased. To avoid this, every adult in Ontario who has assets should execute a properly prepared written Testamentary Will.

2. What is a living will?

The Province of Ontario permits, by Statute, individuals to execute Powers of Attorney for Personal Care and for Property. These Powers of Attorney operate, unless cancelled, for the period from the date of execution to death. Together the two Powers of Attorney (which are normally separate documents come to be called “Living Wills”).

The purpose of having Powers of Attorney is to have a spouse, a friend or a family member act for you legally if something happens and you are unable to make decisions for yourself. For any and all financial decisions to be carried out in your name and on your behalf proper legal authority is needed. The person you want to act in your name must have a legally binding, properly executed and witnessed Power of Attorney. The same is true for personal care decisions such as the level of care you are to receive, the locations of the nursing home in which you are to reside, etc. should you be mentally impaired by health problems.

It is my recommendation that you name a primary or first Attorney to act and then an alternate or second Attorney should the first named Attorney be unavailable.

3. What is a testamentary will?

4. How do I prepare a testamentary will?

I set forth some thoughts for you in the preparation of a Testamentary Will:

A Testator in a Will must appoint an Executor and Trustee. The Executor/Trustee can be a family member, friend or a trust company. I discourage you from naming a foreign Executor/Trustee for your Canadian assets as this may result in considerable expense to the estate in obtaining an Executor’s bond.
An Executor/Trustee is entitled to receive compensation for acting as your Executor/Trustee. The compensation amounts to approximately Five (5%) percent of the value of your estate.
The Testator must have testamentary capacity and be free of undue influence. If a Testator is elderly, I recommend that an independent party such as a Doctor or a Lawyer attest to the testamentary capacity and ensure there is no undue influence. This will avoid family fights later.
Assets held jointly or as joint tenants by the Testator and a third party do not pass as an asset under the Will but pass to the surviving joint tenant.
Be specific in the use of language. The Succession Law Reform Act states that the use of the word “child” in a will includes a child born outside or inside marriage as well as a child conceived prior to the death of the parent, so long as the child is born alive. This is true for Wills executed after March 31st, 1978.
The operation of the Children’s Law Reform Act includes adopted children in the definition of a child.
In the event that any of the beneficiaries named in your Will should predecease your, then the gift in the Will to such deceased beneficiary will fail and fall into the residue of the estate. I suggest that you name an alternate beneficiary should the primary beneficiary predecease you.
What happens when the subject of the gift no longer forms part of the Testator’s estate at the time of death. Is the beneficiary to receive something in lieu of the original gift?
You may deal with personal items in your Will by way of a separate list or memorandum. This list or memorandum must exist at the date the Will is signed and must be incorporated by specific reference into the Will.
Back to Top

5. What is a holograph will?

I note that holograph Wills are now legal in Ontario. They first became legal in 1977 under the Succession Law Reform Act of Ontario. A holograph Will is defined to be a written Testamentary Instrument which must be dated, fully in the handwriting of the Testator and signed by the Testator. No witnesses are required if these three elements previously set forth are present. Do not confuse a holography Will with a pre-printed stationary form that you fill in. These must be dated, signed and witnessed. History has shown that the holography Wills are often the subject of contestations by family with the Court often having to interpret imprecise language to infer the wishes of the Testator.

6. What are probate fees?

When a Will is submitted to an Ontario Court to have a Certificate of Appointment issued probate fees are significant. The purpose of submitting the Will of a deceased to an Ontario Court is to have the Will validated by the Court as the last Will of the deceased. The Province collects $5.00 per thousand on the first $50,000.00 of estate value and $15.00 per thousand thereafter. To reduce Probate fees you should consider holding property before death the intended beneficiary in your joint names with the right of survivorship. You should also make beneficiary designations for life insurance policies and Registered Retirement Savings Plans.

The above points are merely intended to encourage discussion and start you thinking about finalizing executed Living Wills and an executed Testamentary Will.