Legal Tips: Real Estate Sale
Sell your home problem-free with these valuable legal tips:
- First Steps
- The Mortgage
- The Listing Agreement
- Dual Agency
- The Real Estate Sales Agreement
- Don’t Sign Before Seeing Your Lawyer
- Where Does the Money Go?
- When Do You Get Your Money?
- Before Closing
You should receive a Real Property Report that accurately shows the current location of the home and all additions and improvements on the property. If it doesn’t, you must get an updated one.
Although an RPR is not normally required when selling a condominium, there are some exceptions such as Bare Land Condominiums. We can let you know if that’s the case.
Check title to ensure accuracy of information and that there are no unpleasant surprises such as liens against the property. Better to be prepared and deal with these issues ahead of time than to try to resolve a dispute in the middle of a real estate sale.
Check that the property complies with municipal zoning laws. A prudent buyer will do this so it’s better to know upfront.
Choose an experienced Realtor®. It’s best to have a knowledgeable and experienced Realtor® to advise you on preparations you need to make and represent you when you receive an offer.
Choose your lawyer. Make sure your lawyer has experience in real estate sales and please consider us. We don’t pretend to be experts in personal injury law or divorce matters, but we sure know our way around a residential real estate sale!
Consult us to determine whether you will allow the buyer to assume your mortgage. In Alberta, the buyer may be able to assume your mortgage without qualifying. With a CMHC insured mortgage you may, however, still be liable if the buyer fails to meet the mortgage obligations. We can help you determine whether you should let your mortgage be assumed or whether you should discharge it and let the buyer arrange new financing.
Remember that your payout penalty can be extremely high if you are selling your home or refinancing your mortgage before your term is finished. We have recently begun actively working to reduce our clients’ payout penalties as they try to take advantage of today’s lower interest rate. Please visit our mortgage refinancing page to find out how you may be able to save thousands of dollars!
When you sign a listing agreement with your Realtor®, consider the length of the agreement. An experienced Realtor® will work hard on your behalf to sell your home. You should be confident in your Realtor’s capabilities. If you’re unsure, negotiate a shorter listing period.
The listing agreement also provides that you are paying the commission on the sale. If another Realtor® represents the buyer, they will receive part of the total commission you have agreed to pay.
Realtors® in Alberta are allowed to be dual agents. You will be asked to agree to this when signing the listing agreement. Many sellers do not completely understand the implications of having an agent represent both parties and simply sign the dual agency acknowledgment without giving it any thought.
Generally, it is our practice not to provide legal representation to both parties and you should carefully consider whether you want your Realtor® to have that power. As a dual agent, your Realtor® is ethically bound to be fair to both parties but you may not be comfortable with that situation. This issue deserves careful consideration.
Once a buyer is serious about buying your home, his/her REALTOR® will complete an offer to purchase on the standard “Real Estate Purchase Contract” form.
The offer will contain all the essential terms of the contract and you may accept it, reject it or make a counter offer. Once the price, terms and conditions have been accepted by both parties, it becomes a valid and binding final contract. It is important, therefore, that you understand all the terms and conditions in the offer before signing. For example, one area that causes disagreements is personal property. Make sure you specify exactly which non-real property items stay with the house and which ones you will take.
The buyer is likely to include some conditions on which the purchase is dependent, such as financing, home inspection or subject to the sale of the buyer’s home. During the period between the signing of the purchase agreement and the dates for removal of the conditions, your hands may be tied. You may not be able to negotiate with other buyers during this time and must wait until the conditions are removed or the deal falls through. We suggest you try to keep this period to a reasonable length, usually three weeks.
If the purchase is subject to financing, don’t just assume the buyer is able to get the financing. Find out if they have been pre-approved for the amount of financing.
If the purchase is subject to the sale of the buyer’s home, you must consider whether you’re eager enough to sell to wait weeks or even months for this to happen.
It is important that you have your lawyer review any contract before you sign it. Once signed, it is usually legally binding and some terms or conditions may cause problems if you don’t understand their implications.
Realtors typically prepare the contract but they are not lawyers. It is critical that you get expert advice before you sign or there may be problems that can’t be fixed.
If you can’t see us before signing, advise your Realtor® to make the purchase conditional upon your lawyer’s approval.
We will prepare a calculation sheet with a reconciliation of all funds relating to the sale:
- Legal fees and disbursements
- Property tax adjustments
- Commission paid to Realtor®
- Mortgage payout
- Funds to be disbursed to you on closing
You will get your funds after the proceeds are received and any mortgages have been paid, usually within a few days after the proceeds are received. Normally, your funds will be released on the day of closing but, in some cases, there may be delays with the Land Title Office or with the buyer’s financing.
Once you have a firm agreement with all conditions removed:
- Arrange to cancel your utilities
- Ensure your home and property will be in the same condition at closing as on the date the purchase agreement was executed
- Don’t cancel your insurance until the deal is closed and you have received your funds
- Don’t give the buyer a key as we will release the keys on the date of closing through your Realtor®