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How to Buy Real Estate in Canada

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Do you need to pay a deposit? Is there a difference between deals with and without a mortgage? Is it necessary to inspect the property before buying? Read in details below.

Step 1. Reservation of the property

Once you have selected a suitable apartment or house, you need to negotiate a deal with the seller. For this purpose, you send them an offer to purchase.

The offer usually indicates:

  • the price you are willing to pay;
  • items of furniture that you would like to include in the deal, such as appliances or furniture;
  • the amount of the deposit;
  • financial parameters of the mortgage you are taking out;
  • the date on which you want to take possession (the day of the transaction) – the secondary market usually indicates the date 30-60 days after the signing of the offer;
  • the period during which the offer is valid;
  • other essential conditions – for example, you can insist on fixing a leak, replacing a door, or repairing a fence.

If it's an attractive property, you probably won't be the only interested buyer. In the Canadian real estate market, the conditions are dictated by the seller, so be prepared to compromise on the price to win. After accepting your offer, the seller signs it, and you make a deposit.

The standard deposit amount is 5-10% of the property value. It is paid within 24 hours from the moment your offer is accepted. The deposit is returned in case of refusal of the transaction, but if the buyer changes their mind without a valid reason, they may lose the money. The deposit is usually kept in a trust account of the agent or notary.

See the list of properties available for the purchase in Canada:

Step 2. Checking the condition

The next step may be to check the technical condition of the property (home inspection). This procedure is not mandatory and is usually carried out when buying a house, not an apartment. The inspection is carried out by specialists whose activities are regulated in some provinces and not in others, so it is useful to check the details on the website of the Canadian Association of Home and Property Inspectors before choosing.

Inspectors will examine the condition of the building and fix the detected defects (breakdowns, cracks, etc.), check the condition of plumbing, communications and electrical wiring. If significant defects are found, your agent must insist on reducing the transaction amount by the price of the necessary renovation.

Calgary, Canada
Calgary, Canada

Step 3. The conclusion of the contract

After making a deposit, a purchase and sale agreement is concluded between the buyer and the seller. The buyer's lawyer checks whether the seller has the right to carry out the transaction, whether the property has overdue debts, including mortgages, or other obligations (this check is called title search). Based on the results of the work, the lawyer draws up a statement of adjustment (statement of adjustment), in which they indicate the final price and the amount that the buyer must pay, taking into account the deposit and possible changes due to the buyer's debts, defects in the house and other circumstances. Title insurance is also provided – the buyer's ownership of the property (title insurance). The contract is signed at the office of the buyer's lawyer.

Documents

  • Passports of the seller and the buyer.
  • Confirmation of the seller's rights to the property (extract from the land register).
  • The result of technical expertise (for an individual house).
  • Certificate of estoppel (when buying an apartment in a condominium or cooperative). This document is issued by the condominium council. It indicates the presence of debts, fines or other encumbrances that may be registered for the apartment or house as a whole, as well as the amount of regular fees that are charged on the apartment being sold. This document is not required in Quebec.
  • Receipts for payment of duties, especially the tax on the transfer of property.

Also read:
How to Move to Canada: Advantages of Speasking French
How to Move to Canada: Regional Programs for Immigrants

Step 4. Payment transactions

If the property is purchased without a mortgage, the buyer transfers the purchase amount directly to the account of the lawyer. With the presence of a mortgage the payment goes through the bank. At the beginning of the process, a deposit is reserved, and after the transaction is concluded, the full amount is transferred to the lawyer's trust account. The buyer also transfers the lawyer's fee and other closing costs to the lawyer's account.

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Step 5. Registration of ownership rights

The lawyer registers the transaction in the land registry, then transfers the money to the seller, and the buyer issues a certificate of ownership and the keys to a new home.

From the moment of choosing a property, the entire procedure can take two to three weeks. If you use a mortgage when buying, add the same amount of time.

Can I seal the deal remotely?

It is possible to conduct a transaction remotely, but it is very difficult to take out a mortgage without a personal visit to a Canadian bank. An exception will be made only if you are a client of a large international bank with a representative office in Canada.

You can close the transaction with a notary in your country, scan the signed documents and send them to a Canadian lawyer by e-mail. You can also give a power of attorney to a lawyer in Canada.

Since 2015, electronic signatures of real estate transfer documents have been recognized in Ontario, so remote contract signing is also available.

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