How The Real Estate Transaction Process Works In Downtown Toronto
For contracts and agreements in the sale of real estate to be legal in Toronto they must be spelled out on paper, rather than verbal, and signed by both the Buyer and Seller.
When you have found a Toronto home or condo you would like to purchase here’s how the whole buying process unfolds:
Your real estate agent will discuss with you comparable recent sold properties and once you decide on a price to offer, the agent prepares an Offer To Purchase.
The Offer To Purchase indicates not only the purchase price but also the closing date or the day you want to take possession of the property as well at the amount you will pay as deposit. You do not have to be physically present in Toronto for the closing date.
The deposit is usually 5%-10% of the purchase price. The deposit amount has to be in the form of a certified cheque, bank draft or money order from a Canadian bank made out to the Listing Brokerage. It is held in trust with the Listing Brokerage and on the day of closing goes towards the purchase price.
An Offer To Purchase is not good forever but has a time limit date on it called an Irrevocable Date. If the Seller does not respond to your offer before this date your offer expires and therefore is no longer valid.
As a prospective buyer once you sign the Offer to Purchase, your agent will then present the offer along with the deposit cheque to the Seller through the Seller’s real estate agent.
The Seller can do one of three things in response to your offer. He can counter-offer by making changes to your Offer To Purchase, this is known as a sign-back. He can accept your offer or he can simply do nothing and let your offer expire.
Negotiations proceed back and forth on the Offer to Purchase until the buyer and seller both agree.
Once both the Buyer and Seller agree to the terms of the Offer To Purchase it becomes an Agreement of Purchase and Sale. A copy of the signed Agreement is sent to your lawyer who will review the conditions of the sale and note the closing date.
All conditions of the Agreement, such as home inspection, financing or review of the Status Certificate must be satisfied by the stated date.
For a condo purchase, the Agreement will be conditional upon your lawyer reviewing the condominium documents known as a Status Certificate which includes the by-laws, financials, and declaration of the condo building. It may take up to 2 weeks for the condo building to supply these documents at a cost of $100.00. Once your lawyer has reviewed these documents and finds them satisfactory you will sign a waiver.
If you are purchasing a house, the Agreement may be conditional upon a home inspection. You will only have a few days to do a home inspection so it is important to have an appointment with a home inspector arranged ahead of time.
The Agreement may also be conditional upon the Buyer getting financing for the property. Your agent will send the Agreement to your lender or mortgage broker for approval.
If all conditions are met the Buyer signs a waiver and the sale of the property is no longer conditional but now firm. If any of the conditions are not met during the stated time period a Buyer can cancel the Agreement.
Your lawyer completes a title search on the property to ensure that the seller is the legal owner of the property. The lawyer also prepares a Statement of Adjustment which confirms the selling price and the amount the buyer has to pay the seller on the day of closing. The buyer then provides these funds to the lawyer in trust.
On the closing day, the lawyer pays the funds to the Seller, registers the property in your name and provides you with a deed to the property.
Victoria Boscariol is a real estate agent in Toronto Canada with Chestnut Park Real Estate Limited Brokerage. With over 20 years experience, Victoria has been helping people successfully buy and sell condos and houses in Yorkville and downtown Toronto. As a Certified International Property Specialist (CIPS) she has worked with Buyers from around the world moving to Toronto from China, Russia, Brazil, India, South Africa, United Arab Emirates, Jordan, Cyprus, Italy, Germany, The United Kingdom, Australia and the United States.