June 7, 2013
Contract of Purchase and Sale:
1. These are typically prepared with the assistance of a Realtor;
2. These are binding legal agreements, and obtaining legal advice on any issues prior to acceptance of offers is recommended;
3. These contracts are commonly subject to appropriate financing and inspection terms;
1. Mortgage financing should be looked into prior to finalizing any Contract of Purchase and Sale.
2. It is typically recommended that pre-approval be obtained prior to finalizing the Contract of Purchase and Sale, and to have the agreement subject to financing.
The Conveyance Transaction:
1. Once you have an accepted Contract of Purchase and Sale, the process of completing the transaction transferring the title of the property from the Sellers to the Buyers is commonly referred to as the “conveyance”.
2. Lawyers or notaries will conduct the needed searches, prepare the necessary documents and make appropriate arrangements to complete the conveyance.
3. Frequently conveyances may include one or more of the following additional costs/fees:
A. Appraisal Fee: Occasionally this is required by lenders as a term of the mortgage;
B. Home Inspection Fee: This is usually a subject for the benefit of the Purchaser;
C. Survey certificate: Frequently required by lenders unless a recent survey is in place or title insurance is purchased;
D. Life Insurance: Lenders will frequently require insurance policies on all owners on title;
E. CMHC Mortgage Loan Insurance: Typically required on transactions with less than 20% down payment;
F. Title insurance: May be required by lender, frequently cheaper than obtaining a survey;
G. Adjustments for Prepaid tax or utilities: Adjustments made to compensate Buyers/Sellers for tax and utility payments;
H. Strata Forms Fees and Move in/Move out Fees: Typically applicable to strata properties only;
Property Transfer Tax:
1. Property Transfer Tax is calculated as 1% on the first $200,000 and 2% on the balance of the price of the property; and
2. There is a First Time Home Buyers exemption from Property Transfer Tax but you must meet the following conditions:
A. Fully exempt for properties valued up to $425,000, proportionately exempt for value between $425,000 and $450,000;
B. The property must be 1.25 acres or smaller;
C. The property must be used as your principal residence;
D. You must be a Canadian Citizen;
E. You must have lived in BC for one year prior to the purchase or have filed 2 income tax returns as a BC resident during the 6 years before registration of the transfer;
F. You have never owned any property anywhere in the world as your principal residence; and
G. You have never received any first time home buyer’s exemption or refund.