The purchase of real property is the largest single transaction that most people will ever undertake. Effective legal representation will ensure that the purchase is completed efficiently, and a review of a proposed purchase contract with your lawyer, prior to execution, should be an essential part of any real estate purchase transaction.

Purchases of land in Alberta are always completed pursuant to a written contract between the buyer and the seller. This contract is usually written using the Alberta Real Estate Association standard real estate purchase contract (the “Contract”), and is most often negotiated with the assistance of a real estate agent.

Before signing a purchase Contract, the prospective buyer should review the title and any instruments registered against the title to the land in question, all of which can be obtained through any registry office in Alberta or at Cameron Horne Law Office. The instruments must be reviewed to determine if there are any restrictions on the title which would prevent the purchaser from using the land in the manner in which they desire. Instruments such as Caveats, Restrictive Covenants, and Utility Rights of Way should be reviewed carefully, and with legal advice.

Condominium purchases have additional matters which must be carefully considered and reviewed with a lawyer prior to closing. CONDOMINIUM PAGE

The significant portions of the Contract include: the purchase price of the house and land; the Completion Date, or the day on which the buyer will take possession of the house; and any conditions which the buyer may wish to include in the Contract.

The Completion Date is a very significant day in the closing of the purchase transaction. Obviously, the seller must have moved out and left the house ready for the buyer by noon on that day, but it is also the date on which the buyer and seller adjust certain annual expenses. The seller is responsible for their share of municipal property taxes from January 1 of the year up to, and including, the Completion Date, and the buyer is responsible for their share of taxes from after the Completion Date to December 31 of the year. Depending on the Completion Date, either the seller or the buyer may receive a credit for property taxes.

Adjustments are also made for community association fees and condominium fees, where applicable, as of the Completion Date.

Most purchasers will also insert a number of conditions into the Contract which will act to allow the buyer to satisfy themselves that the property will be suitable for their use, and that they can obtain mortgage financing. Most commonly, buyers will insert a financing condition into the Contract which will give them time to obtain a mortgage commitment from their lender to allow the buyer to pay for the house. Many buyers will also insert a home inspection condition to allow a home inspector to assess the condition of the house prior to removing the condition and proceeding with the purchase.

Once all conditions have been waived, the Contract must be completed and is forwarded to the buyer’s lawyer in advance of the Completion Date. The buyer is responsible to notify their lender of the identity of their lawyer.  Mortgage instructions are then delivered by the lender to the lawyer’s office for preparation, execution and registration on the title to the land.

When the mortgage documents have been prepared, the buyer meets with the lawyer to complete the transaction. This meeting entails a discussion of the current state of the title, a review of any instruments which will not be removed from the title, and a thorough discussion of the Transfer of Land and the mortgage documents that the buyer will sign.

The buyer will also be asked to bring in a bank draft or certified cheque to the meeting with the lawyer. This bank draft or certified cheque represents the difference between the Contract purchase price and the buyer’s mortgage, together with a sum to pay for any adjustments, legal fees and disbursements.

After the mortgage is signed, the lawyer’s office submits the completed mortgage, together with the Transfer of Land (which has been delivered by the seller’s lawyer to the buyer’s lawyer) to the Land Titles Office. At this time, the buyer’s lawyer requests that the lender forward the mortgage loan money to the buyer’s lawyer so that the property can be paid for.

When the mortgage money has been received, the buyer’s lawyer forwards the total cash purchase price to the seller’s lawyer to complete the transaction. The cash purchase price is made up of the mortgage loan funds, the cash difference as stated on the Contract, and any adjustment monies which are payable to the seller.

CAMERON HORNE LAW OFFICE specializes in real estate transactions, and we are committed to providing quality legal services at competitive rates. Please contact our office for a fee quotation for the purchase of real property, or to discuss your purchase transaction.

INTRODUCTION LETTER – SELLER [PDF]

INTRODUCTION LETTER – PURCHASER [PDF]