Newsletter: December, 2015

by Howard Oldham

REFLECTING ON SOME DIFFICULT REAL ESTATE DEALS THAT COULD HAVE BEEN EASIER

THE LENDER WILL WANT TO BE NAMED AS AN ADDITIONAL INSURED

It is surprising how many clients are not aware that their lender will require that they be named as an additional insured on the purchaser’s insurance policy.  Obviously, if the building burns down, the lender will want to be protected as part of their security.  We have had deals where purchasers refused to close because they were unaware of this requirement.

YOU NEED TO SPECIFY THE CHATTEL LIST

Wording such as “All contents as seen on property at time of the offer to purchase”, or “Excluding all personal items”, mean nothing and everything.  Such wording leads to a lot of unhappy buyers and sellers, never mind numerous small claims court actions.

IF THE PURCHASER IS GETTING A MORTGAGE, THEY NEED TO TELL THEIR LAWYER

You would not believe the number of times that we are on the eve of closing a purchase and the purchaser then mentions that they are getting a mortgage.  We then have to scramble to attempt to get the mortgage in place for closing.  Often the mortgage instructions require a water potability test, septic permit, confirmation of zoning etc., that cannot be obtained quickly.  Getting mortgage instructions late is the number one reason closings are delayed because the lawyer simply can’t get the mortgage money quick enough.

Another major problem is when purchasers switch lenders on the eve of  closing.  Many purchasers don’t understand that the lawyer cannot complete the mortgage work on short notice.  For instance, it often takes two days just to requisition the mortgage funds even if all the other requirements and paperwork of the lender are already completed.

 

YOU NEED TO TALK TO YOUR LAWYER BEFORE YOU CHANGE THE CLOSING DATE

For instance, where an estate is selling, a Certificate of Appointment of Estate Trustee (formerly referred to as Letters Probate or Letters of Administration) is required to authorize the executors to sell the property.  This process can take weeks since you have to wait for a judge to approve the Application.  The Vendor should not obviously move up the closing date without consulting their lawyer because the transfer cannot happen without the Letters of Administration – but this happens and causes grief to everyone involved since the Purchaser is ready to move and the Vendor cannot transfer title.                                   

As an aside, you should be aware that a Certificate of Appointment of Estate Trustee is not required for an estate transfer IF the transfer from the estate would be the first dealing with the property since it was converted to the Land Titles Registry system.  This is an odd “loophole” that avoids the cost of obtaining Certificate of Appointment of Estate Trustee. If the Estate is valued at less than $50,000.00, it may also be possible to avoid having to obtain a Certificate of Appointment of Estate Trustee.                                                             

THE PROPERTY HAS NOT BEEN CONVERTED TO LAND TITLES DUE TO A TITLE ISSUE

If the parcel abstract indicates that the property remains in the Land Registry System, this is because there was a “red flag” when the government attempted to convert the property to the electronic registry system.  The client and/or the realtor need to discuss this with a lawyer who can talk to the Land Registry office to find out why the property was “red flagged”.  Often, there is a dispute with the boundaries or a conflict whereby it appears there is more than one owner of the property.  Other times, it is a simple fix such as forgetting to state that all debts of the estate were paid on an estate transfer.  Whatever the case, a lawyer will most often have to prepare an application to correct the problem which is then registered on title.  Sometimes, a court order will be required and depending on the issues involved it could take weeks and considerable expense to obtain the court order.

IF YOU ARE SELLING – CHECK TITLE FIRST!

Many times vendors bring in a deal with a short closing date and we discover that there is a problem with title that may take some time to correct.  If a vendor thinks that there may be an issue with title, they should have their lawyer look into it before they set a closing date on a sale.  For instance, often we see the following: one of the owners is deceased and Letters of Administration (probate) are required, there is an old mortgage on title that has been paid out but never discharged, there is an old lien on title etc.