TYPICAL REAL ESTATE TRANSACTION IN BRITISH COLUMBIA, CANADA
British Columbia has basically what is an instantaneous registration system, so that virtually every BC purchase completes ON TIME on the Completion Date. In BC purchases, we generally do not have the issue of having to buy Title Insurance or use Protocol Closings to complete deals on time. IF YOU ARE BUYING AND SELLING A HOME AT BASICALLY THE SAME TIME, MAYBE “BRIDGE FINANCING” WILL BE NEEDED, CHECK WITH YOUR MORTGAGE BROKER ABOUT THIS.
The following describes a typical purchase and sale of a single family detached home in British Columbia, Canada.
THERE ARE BASICALLY FOUR MAIN AREAS INVOLVED:
1. From Listing of the Property to Unconditional Offer:
The Sellers decide that they are going to sell their Property and go to talk to the Seller’s Realtor.
The Sellers and the Seller’s Realtor discuss the situation and assuming they are in agreement on the Selling Price, Commission and other terms, enter into a Listing Agreement. The Seller should also advise the Seller’s Realtor of any issues or problems they are aware of such as an encroachment of a fence, generally these are disclosed on a Property Disclosure Statement.
The Seller’s Realtor then develops a marketing plan for the Property which may include holding an open house for all the Realtors in the area, advising all of his colleagues in the office about the Property that has just come on the market, calling potential purchasers advising them that the Property is for sale, preparing advertising materials, measuring the home, taking pictures, doing a drone video or virtual reality tour and placing a For Sale sign on the Property.
Depending upon how active the market is, this phase can be as short as a day or until a point in time where if nothing is happening, the Property is taken off the market. There are many reasons why some properties don’t sell, but some reasons are a bad time of year, downturn in the market or the Seller is asking too much money for the Property.
Then one day, there is an Offer to Purchase the Property. A Buyer’s Realtor has a client who is interested in purchasing the Property and has asked the Buyer’s Realtor to prepare the Offer to Purchase and present it to the Seller’s Realtor.
The Sellers and Buyers may go back and forth many times with respect to counter-offers and further counter-offers, until they reach agreement on the terms of the Contract. Most Offers to Purchase have “Subject To Clauses” which need to be satisfied (inspections, review of title, financing, ability to obtain property insurance, review of the Property Disclosure Statement and many other things). The Buyer’s and Seller’s Lawyers will be retained once all of the Subject To Clauses have been removed and a deposit with the Buyer’s Realtor Brokerage is made (generally the deposit is made upon removal of all Subjects). If there is a Subject To Clause respecting “Buyer’s Lawyer’s approval”, then the Buyer’s Lawyer will need to be retained earlier. When all of the Subject To Clauses have been satisfied, there is a Firm Deal.
In British Columbia, the Buyer’s Lawyer does most of the work, including preparing all of the documents necessary and paying the real estate commissions due on behalf of the Seller. The Seller can calculate approximately how much money they will ultimately receive from the sale of the Property, after deducting their costs such as Legal Fees, Cost of Clearing Title, Real Estate Commissions (plus GST), GST if applicable) and Adjustments.The Buyer can calculate approximately how much money they will ultimately need for the purchase of the Property, after adding their costs such as Legal Fees, Land Title Registration Fees, Survey Certificate (if required), Costs of Mortgage (including mortgage company’s Lawyer, appraisal, Land Title Registration Fees), Fire Insurance Premium, Property Transfer Tax, GST (if applicable) and Adjustments.
2. Completing the Purchase and Sale:
Once there is a Firm Deal, the Listing Real Estate Company prepares and forwards to the Buyer’s Lawyer a letter confirming that you have been asked to act for the Buyers, outlining the Commission due on the Transaction and enclosing a copy of the Contract.
WHAT DOES THE SELLER’S LAWYER DO?
- Reviews the Contract
- Contacts the Sellers, confirms acting for the Sellers and discusses any preliminary issues raised by the Contract, opens Sellers file (very soon after Instruction Letter and Contract arrive)
- Orders a copy of the Title and details of Mortgages that the Seller must discharge
- Contacts Mortgagees for discharge amounts and per diem rates of interest
- Coordinates with the Buyer’s Lawyer when the “conveyancing documents” will arrive
- Arranges for the Sellers to come in to the Office (usually a week before the Completion Date)
- Signing Day – reviews the whole transaction with the Sellers, attends to the signing of all documents and advises the amount due to the Sellers from the sale of the Property. See Seller’s Statement of Adjustments (usually a week before the Completion Date)
- Forwards the Form A Transfer and other conveyancing documents to the Buyer’s Lawyer on the appropriate undertakings
- Obtains confirmation of registration from the Buyer’s Lawyer and advises Seller of closing of the transaction (on the Completion Day)
- Looks after discharging the Seller’s mortgage from title and advises the Buyer’s Lawyer when that has been done.
There is a constant interaction between the Buyer’s Lawyer and Seller’s Lawyer, their staff and others involved in the transaction in order to ensure that a Real Estate Transaction completes smoothly and on time.
3. Possession of the Property:
There will come a point in time when the Completion has been completed and now the Buyers wants Possession of the Property.
WHAT HAPPENS ON THE POSSESSION DATE?
The Buyer’s Lawyer has determined that he has satisfied the Seller’s Lawyer’s Undertakings or can satisfy them and that it is now appropriate to give the Buyer possession of the Property.
The Buyer’s Lawyer delivers his Trust Cheque to the Seller’s Lawyer in the amount due to the Seller as set out on the Seller’s Statement of Adjustments.
The Buyers and Buyer’s Realtor arrange with the Seller’s Realtor to obtain the keys to the property.
PLEASE NOTE: There can be many variations on the foregoing respecting the issues of Possession of the Property, release of the keys and the Walk Through, however the foregoing is the “normal” sequence of events. Please check with your Realtor as to what will be the actual procedure on the Possession Date.
4. Reporting on the Transaction:
Now that the Real Estate Transaction has closed, each of the Buyer’s Lawyer and Seller’s Lawyer must report to their respective clients and others involved in the transaction.
SELLER’S LAWYER:
Prepares a reporting letter to the Seller advising that the transaction has completed and provides the Seller with a copy of all of the relevant documents.
Forwards sufficient funds to the Seller’s Mortgagees to payout and have discharged the Seller’s Mortgage.
Advises the Buyer’s Lawyer when the Seller’s Mortgage is discharged.