Unravelling The Real Estate Buying Process In Canada

If you're a foreign national thinking about investing in the real estate market in Canada heres a run down of the typical buying process you should expect to encounter together with a general explanation of mortgages available to assist with the purchase.

First things first though, you have to find your ideal property of course!

But lets assume youve done that with the help of a good estate agent and youre ready to move forward with an offer.

Its important to know that from the outset the entire process surrounding the buying and selling of real estate in Canada is a regulated process.

This means the process should follow the basic format as described below and that you will be protected throughout by the rules governing the process and the actions of those involved in it.

Once you find your dream home in Canada you make a financial offer to purchase to the vendor - probably via your agent - which your estate agent is legally bound to submit to the vendor whether or not it matches the asking price.

Negotiations proceed until a purchase price is agreed upon between you and the vendor, at which point both parties sign the Offer to Purchase - also known as Agreement of Purchase & Sale.

This is a preliminary contract and it is either firm or conditional

A conditional preliminary contract usually contains terms relating to the successful securing of finance to buy, or to the satisfactory completion of building surveys etc., and it only becomes firm when all the conditions have been met.

If you are using a mortgage to purchase your home it is essential to have this noted as one of the terms, because if you fail to secure your mortgage and the contract falls through you will want your deposit back!

A firm preliminary contract is not subject to any terms or conditions, if it is broken by the purchaser they lose their deposit, if it is broken by the vendor they may be subject to a financial penalty.

Your deposit will be required when signing the Offer to Purchase, and the contract will contain your completion date.

When the completion date is reached and all conditions for the fulfilment of the contract have been met, the remainder of the purchase price together with all fees will be payable.

Monies are paid to the vendor via the solicitor or notaire handling the legalities of the sale. At this point both the purchaser and the vendor sign the definitive contract which is called Acte de Vente in Quebec.

If purchasing in Quebec this final part of the sale is managed by a notaire who in this case is a government official - s/he is responsible for the conveyancing and as a result s/he represents both the purchaser and the vendor...it therefore makes sense to employ your own legal representative in Canada to make sure your best interests are served and protected throughout the process.

Fees you will likely incur on top of mortgage arrangement fees, legal and survey fees include provincial fees and land transfer taxes. Provincial fees are around CAD 100 depending on the province in which youre purchasing, and they are charged for transferring the title of the property etc. Land transfer taxes are again determined by each province and they are calculated as a set percentage of the purchase price.

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