Buying Real Estate in Ontario

Nobari Law Professional Corporation provides legal assistance with residential real estate purchases and select commercial real estate transactions in Ontario.
 

A real estate lawyer helps protect the buyer’s legal interests, reviews title to the property, works with the mortgage lender, prepares the closing documents, calculates the funds required for closing, and registers the transfer of ownership.

A buyer may contact a real estate lawyer before or after signing an Agreement of Purchase and Sale.

Having the Agreement reviewed before it becomes binding may help identify issues involving:

• the purchase price and deposit; 
• the closing date; 
• financing and inspection conditions; 
• fixtures, appliances, and rental equipment; 
• condominium documents; 
• vacant possession or existing tenancies; 
• representations and warranties; 
• title, access, and property-use concerns; and 
• other obligations affecting the purchase. 

If the Agreement has already been signed, provide it to your lawyer as soon as possible so the legal work can begin and important dates can be identified.

The buyer’s lawyer manages the legal work required to complete the purchase.

Depending on the property and the terms of the Agreement, the buyer’s lawyer may:

• review the Agreement of Purchase and Sale, title, and ownership information;
• conduct title and related searches;
• communicate with the seller’s lawyer, lender, and other parties involved in the transaction;
• review and complete the lender’s mortgage instructions;
• explain how ownership will be registered and prepare the closing documents;
• arrange title insurance, where selected or required;
• calculate land transfer tax, available refunds, and the funds required for closing;
• register the transfer and mortgage, pay the required closing funds, and report to the buyer and lender after closing.

Depending on the transaction, a buyer may wish to make the offer conditional on matters such as:

• obtaining satisfactory mortgage financing; 
• completing a home inspection; 
• reviewing a condominium status certificate; 
• selling an existing property; 
• obtaining insurance; 
• reviewing a well or septic system; 
• confirming zoning or permitted use; or 
• obtaining legal review of the Agreement. 

The appropriate conditions depend on the property and the buyer’s circumstances. A mortgage pre-approval does not guarantee that the lender will fund the transaction and does not necessarily eliminate the risks addressed by a financing condition.

Conditions should be reviewed before they are removed or waived. Once an Agreement becomes firm, a buyer is generally expected to complete the purchase in accordance with its terms.

To begin the legal work, a buyer should generally provide:

• the signed Agreement of Purchase and Sale; 
• all schedules, amendments, waivers, and notices; 
• valid government-issued identification; 
• the buyer’s full legal name and contact information; 
• marital status; 
• information about any co-buyer; 
• mortgage lender or broker information; 
• confirmation of whether the buyer may qualify for a first-time homebuyer refund; 
• information relevant to residency and land transfer tax; 
• instructions concerning how ownership should be registered; 
• property-insurance information when available; and 
• details of any concerns or special arrangements affecting the purchase. 

Additional information may be requested depending on the property, financing, ownership structure, and transaction.

Do not send original documents, identification, complete account numbers, passwords, or other sensitive information unless requested by Nobari Law Professional Corporation. If requested, please use the document-sending method confirmed by the firm.

Where the purchase is being financed, the lender sends mortgage instructions to the buyer’s lawyer.

The lawyer may be required to:

• review the lender’s instructions; 
• prepare and register the mortgage; 
• verify the buyer’s identity; 
• obtain required insurance confirmation; 
• collect supporting documents; 
• satisfy funding conditions; and 
• report to the lender after closing. 

A mortgage pre-approval does not always guarantee that the lender will fund the transaction. Buyers should remain in contact with their lender or mortgage broker and avoid making significant financial changes before closing without obtaining appropriate advice.

Mortgage instructions should be delivered to the lawyer well before closing. Late instructions may leave less time to satisfy the lender’s requirements.

Where two or more people are purchasing together, they must decide how their ownership will be registered.

The appropriate arrangement may depend on:

• whether the buyers are spouses, partners, relatives, or investors; 
• the percentage contributed by each buyer; 
• whether the buyers intend their interests to be equal; 
• what should happen to an owner’s interest following death; 
• any co-ownership agreement; and 
• the buyers’ broader estate-planning intentions. 

The buyers should discuss their circumstances with the lawyer before signing the transfer documents. Separate or independent legal advice may be appropriate where the buyers have different interests or are contributing unequal amounts.

A title search allows the buyer’s lawyer to review the registered ownership and legal description of the property.

The search may identify matters such as:

• registered mortgages; 
• easements and rights of way; 
• restrictions or agreements affecting the property; 
• construction liens; 
• executions or judgments; 
• condominium registrations; 
• shared access arrangements; and 
• other interests registered on title. 

The lawyer may raise title questions or requisitions with the seller’s lawyer before closing, subject to the Agreement and applicable deadlines.

A title search does not assess the property’s physical condition, environmental condition, value, or boundaries. Any inspection, environmental assessment, appraisal, survey, or other professional report must be obtained from the appropriate qualified professional.

Title insurance is a policy that may protect an owner and mortgage lender against certain losses connected with title or ownership.

Depending on the policy, coverage may include certain:

• unknown title defects; 
• existing liens; 
• title fraud; 
• errors in public records; 
• survey-related issues; 
• encroachments; and 
• other covered title risks. 

Title insurance is not legally required in Ontario, but it is commonly obtained and may be required by a mortgage lender. It is generally purchased for a one-time premium, and an owner’s residential policy usually continues while the insured owner owns the property. Coverage, exclusions, limits, and conditions depend on the particular policy. 

Title insurance does not replace legal advice, a home inspection, or appropriate due diligence concerning the physical condition of the property.

The statement of adjustments is a financial calculation used to determine the amount payable to the seller on closing.

Certain expenses may be adjusted between the buyer and seller according to the closing date. These may include:

• property taxes; 
• condominium common expenses; 
• prepaid rent; 
• rent deposits; 
• fuel or other items addressed in the Agreement; and 
• other property-related amounts. 

For example, if the seller paid property taxes for a period extending beyond closing, the buyer may reimburse the seller for the applicable portion.

The adjusted purchase price forms part of the calculation of the total funds required to complete the transaction.

A buyer acquiring land or an interest in land in Ontario generally pays Ontario land transfer tax when the transfer is registered. 

The amount depends on factors including:

• the purchase price or value of the consideration; 
• the type and location of the property; 
• whether the buyer qualifies for an exemption or refund; 
• whether the property is located in Toronto; and 
• whether any non-resident tax applies. 

Properties located in Toronto may also be subject to the City of Toronto’s Municipal Land Transfer Tax. 

The lawyer calculates the applicable taxes and collects the amount required for registration.

An eligible first-time homebuyer may qualify for an Ontario land transfer tax refund of up to $4,000. Eligibility depends on the buyer’s circumstances, ownership history, spouse, intended occupancy, and other statutory requirements.

Where more than one person is purchasing and not every buyer qualifies, the available refund may be limited to the qualifying buyer’s interest.

Buyers should advise the lawyer early if they believe they may qualify.

Additional tax may apply where a buyer is a foreign national, foreign corporation, or taxable trustee acquiring certain Ontario residential property.

Ontario’s Non-Resident Speculation Tax is currently imposed in addition to ordinary Ontario land transfer tax, subject to available exemptions, transitional rules, or refunds. 

The City of Toronto also has a Municipal Non-Resident Speculation Tax that may apply to certain residential purchases in Toronto. 

Buyers should provide accurate citizenship, permanent-residency, and beneficial-ownership information and obtain tax or immigration advice where required.

Eligible first-time buyers may use a First Home Savings Account to save toward a qualifying home. Qualifying contributions may be deductible, and qualifying withdrawals may be made tax-free, subject to the applicable rules. 

The federal Home Buyers’ Plan currently permits an eligible individual to withdraw up to $60,000 from their RRSP toward a qualifying home. An eligible buyer may use the Home Buyers’ Plan and make a qualifying FHSA withdrawal for the same property if all requirements are satisfied. 

Buyers are responsible for confirming eligibility, completing the required forms, and arranging withdrawals with their financial institution. Tax or financial advice may be appropriate.

A condominium purchase includes ownership of the unit together with an interest in the condominium’s common elements.

For a resale condominium, the buyer may wish to have the status certificate and related condominium documents reviewed. These materials may provide information about:

• the condominium corporation’s finances; 
• common expenses; 
• arrears affecting the unit; 
• reserve-fund information; 
• insurance; 
• legal proceedings; 
• special assessments; 
• declarations, by-laws, and rules; 
• parking and locker rights; and 
• other matters affecting the unit or corporation. 

The status certificate review does not assess the physical condition of the unit or building and does not guarantee that future common expenses or special assessments will not arise.

Purchases directly from a builder may involve additional charges, disclosure documents, occupancy arrangements, HST provisions, construction timelines, and short review periods.

Learn more about new or pre-construction purchases in Ontario.

Before the closing date, the buyer will generally need to:

• provide identification and requested information; 
• arrange mortgage financing; 
• arrange property insurance effective on closing; 
• complete any final inspection or walkthrough through the real estate representative; 
• review and sign the closing documents; 
• confirm how title will be registered; 
• provide certified, wire-transferred, or otherwise acceptable closing funds; 
• arrange utilities and other property services; and 
• notify the lawyer promptly of any concerns affecting the transaction. 

The buyer should not wait until closing day to transfer funds. Financial institutions may impose holds, daily transfer limits, or processing times.

Your lawyer will provide the final amount required after receiving the mortgage instructions, seller’s statement of adjustments, and other closing information.

On the closing date, the buyer’s lawyer completes the required legal and financial steps.

This may include:

• receiving mortgage funds; 
• completing final document exchanges with the seller’s lawyer; 
• paying the required closing funds; 
• registering the transfer of ownership; 
• registering the buyer’s mortgage, where applicable; 
• confirming completion of the transaction; and 
• authorizing the release of the agreed lockbox code, keys, or other access arrangements. 

Closing may occur at any time during the business day. Buyers should avoid scheduling movers or other time-sensitive arrangements based on receiving access at a particular hour.

In addition to the purchase price and deposit, a buyer may need to budget for:

• Ontario land transfer tax; 
• Toronto Municipal Land Transfer Tax, where applicable; 
• legal fees and disbursements; 
• title insurance; 
• registration and search costs; 
• property-tax and condominium adjustments; 
• mortgage lender, broker, or appraisal fees; 
• home-inspection expenses; 
• property insurance; 
• moving and utility costs; 
• condominium fees; 
• builder adjustments for a new property; and 
• additional taxes or charges that may apply to the buyer or property. 

The lawyer can provide an estimate of legal closing costs, but certain amounts may not be known until the closing documents and lender instructions are received.

To begin preparing for your purchase, download our Property Purchase Checklist for a general list of the documents and information that may be required.

Not every item will apply. Additional information may be requested after the Agreement, mortgage arrangements, and circumstances of the purchase have been reviewed.

Download the Property Purchase Checklist

Nobari Law Professional Corporation provides legal assistance with residential purchases and select commercial real estate transactions in Ontario.

Our services may include:

• reviewing the Agreement of Purchase and Sale; 
• reviewing title and ownership information; 
• conducting required searches; 
• communicating with the seller’s lawyer, lender, mortgage broker, and real estate representatives; 
• reviewing and completing mortgage instructions; 
• explaining ownership options; 
• preparing and reviewing closing documents; 
• arranging title insurance, where applicable; 
• calculating land transfer tax and available first-time buyer refunds; 
• preparing the statement of adjustments; 
• completing the electronic transfer and mortgage registration; 
• confirming closing and access arrangements; and 
• reporting to the buyer and mortgage lender after closing. 

Every transaction is different. The legal work required will depend on the property, Agreement, financing, title, ownership arrangements, and surrounding circumstances.

Legal guidance can help a buyer understand the Agreement, prepare for closing, and complete the transfer of ownership properly.

Contact Nobari Law Professional Corporation to discuss the purchase of a house, condominium, or residential investment property in Ontario.