Cameron Horne Law Office

Real Estate Transactions

JUMP TO LAND TITLES OFFICE
JUMP TO SALE OF LAND
JUMP TO PURCHASE OF LAND
JUMP TO REFINANCING

The purchase and sale of real estate represent major financial commitments by both the purchaser and the seller of the land, and the execution of very significant legal documents. Legal advice is a critical component of any real estate transaction, and should be sought prior to signing any purchase or sale contract. Lawyers should be consulted before an offer is signed, or at least during the condition period; getting legal advice after conditions have been waived is often too late.

There is no such thing as a “simple” real estate transaction, which doesn’t require legal advice in advance; even the most straightforward transaction can turn sour, resulting in years of expensive litigation. CAMERON HORNE LAW OFFICE provides professional service at all stages of your transaction, from providing advice prior to signing any purchase or sale contract, to efficiently completing the transaction.

CAMERON HORNE LAW OFFICE focuses on 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 sale or purchase of real property, or to discuss your sale or purchase transaction.

The Land Titles Office
The ownership of land, and the registration of any interests relating to land, is governed by the Land Titles Act (the “Act”). The Act establishes a public registry of land ownership and the registration of other interests in land at a central registry, the Land Titles register, which interests are then guaranteed by the Province of Alberta. The registration of an interest in land at the Land Titles Office is proof of the validity of the interest, absent any evidence to the contrary.

The basis of the land titles system in Alberta is a systematic survey of all parcels of land in the province. Initial surveys were completed in the late 1800’s, and are updated and further surveyed and sub-divided as land is developed. All parcels of land in Alberta can be traced back to the original surveys, and a continuous chain of title can be established to the date of the original survey.

All interests in land must be registered in order for them to be valid. Original titles and original instruments (such as mortgages, or other caveats) are retained at the Land Titles Office as proof of their validity. This registration is mandatory, if one wishes to assert their claim against land, and if one wishes to assert their claim against any other party. Any instruments that are registered on any title, as well as the titles themselves, are public record, and anyone dealing with the land is deemed to have knowledge of any registrations on title.

Alberta has two Land Titles Offices, one located in each of Edmonton and Calgary. Instruments can be registered at either office, and are equally valid notwithstanding the Office they are registered in.

The Land Titles register is a public registry; any person can search any title registered in the Province of Alberta, and can also retrieve the particulars of any transaction relating to that title.

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Sale of Land
In the most general sense, a sale of land is completed when the seller delivers a Transfer of Land, signed by all of the sellers, to the buyer, and that Transfer is then registered at the Land Titles Office. The registration of the Transfer is a notice that the buyer is now the registered owner of the land, and the seller has no further interest in that parcel of land.

The basis for any sale of land is the Real Estate Purchase Contract (the “Contract”). Most sellers will work with a real estate agent to complete this Contract, and usually use the Alberta Real Estate Association standard form of the Contract.

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 seller may wish to include in the Contract.

The Completion Date is a very significant day in the closing of the sale 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.

In most cases, the seller of a parcel of land is also required, under the Contract, to provide a current Real Property Report (“RPR”) to the buyer prior to closing. The RPR is intended to provide a “top down” view of the house and any other permanent structures on the land, showing their location relative to the property lines. RPR’s must also show any fences that are located adjacent to the property lines, regardless of who has constructed them, simply because fences tend to indicate boundaries.

The word “current” as it relates to RPR’s has been interpreted to mean “current as to the improvements on the property” and not necessarily “current in time.” That is, there is usually no time limit on the validity of an RPR, provided that it shows all permanent structures on the property.

The RPR must also be accompanied by a certificate from the City of Calgary, or from the relevant municipality, that the house complies with municipal planning bylaws, and that no part of the structure is located on a utility right-of-way or some other restricted part of the property.

RPR’s may, or may not, be required if the property is a condominium unit. CONDOMINIUM PAGE Bareland condominium units require that an RPR is provided; a conventional unit does not. If a seller, or their real estate agent, is unsure if an RPR is required, Cameron Horne Law Office can assess the type of unit and provide our advice as to the need for an RPR.

The seller will meet with their lawyer 10 to 14 days before the closing date of the sale to discuss the financial component of the transaction, and to sign the Transfer of Land.

The lawyer’s role in a sale of land is to receive the completed Contract from the seller, and coordinate the delivery of the Transfer of Land to the purchaser’s lawyer. The seller’s lawyer also contacts any lenders that have registered mortgages on the seller’s title and request that the lender provide a discharge statement so that these mortgages can be paid out and discharged from title. The seller’s lawyer pays the balance of the mortgage to the lender and obtains a discharge of that mortgage, which is registered at the Land Titles Office. The lawyer also orders an updated Real Property Report (if necessary), pays the balance of real estate commissions owing to the real estate brokerage and, finally, provides the balance of the net sale proceeds to the seller of the house.

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 sale of real property, or to discuss your sale transaction.

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Purchase of Land
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 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.

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Refinancing
“Refinancing” of a current house is a process whereby the ownership of the land does not change, but a new, or a second, mortgage is registered on the title to the land.

Refinances are usually done for one of several reasons. First, a home owner may wish to take advantage of lower mortgage interest rates and substitute a new mortgage for the existing one on title. Second, an owner may wish to obtain a new first mortgage loan over their land, which also includes a debt-consolidation component; that is, to pay other debts which are at a higher interest rate than a new first mortgage loan would be. Third, a home owner may place a first mortgage on the title as a method of gaining access to equity in their home to finance other purchases, such as other real estate. Finally, an owner may register a “true” second mortgage on the title to accomplish any of the first three goals.

With few exceptions, the process for refinancing an existing property is nearly identical to the registration of a first mortgage when the property was originally purchased. Mortgage instructions are provided by the lender (a bank, or a private lender) to the home owner’s lawyers, who prepare the mortgage for execution. In a debt-consolidation scenario, the bank will also provide instructions that certain debts (existing mortgages, credit cards, vehicle loans, etc.) are either paid to a certain level, or that the accounts are to be paid in full and closed.

Once the new mortgage has been executed and submitted to the Land Titles Office for registration, the lender will advance the required funds to the home owner’s lawyers for distribution in accordance with the lenders instructions.

Owners who are considering refinancing their property should be aware that penalties to discharge existing mortgages can be significant. The owner should discuss this pay-out penalty with their lender thoroughly, to be sure they are fully aware of the short-term consequences of discharging their current mortgage.

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