Our involvement in a residential purchase normally starts with a review of the Agreement of Purchase and Sale. The Agreement of Purchase and Sale, once signed and once all conditions have been waived or fulfilled, is a binding contract. Should a real estate transaction fall through and become the subject of litigation, a judge will closely examine the Agreement of Purchase and Sale. Given its importance, we recommend making the Agreement of Purchase and Sale conditional upon our review.
In a condominium purchase, the review of a Status Certificate is frequently conditional upon a lawyer’s review. The Status Certificate provides the buyer current information about the unit as well as the physical and fiscal situation of a building. A lawyer’s review of the certificate will confirm the unit and level number of the condominium, the amount of common expenses, the existence of a budget and audited financial statements and a reserve fund study. Other matters disclosed in the certificate are the names of the board members and management company, the building’s insurance coverage, whether there are any anticipated special assessments or common expense increases, and whether the corporation is involved in any litigation.
Subsequent to the review of the Agreement of Purchase and Sale, we complete and review a search of title to the property, as well as a search for executions against the seller. Any outstanding executions against the seller would attach to the property and must be resolved prior to the closing date. A title search is necessary to confirm ownership, outstanding encumbrances, compliance with appropriate legislation, and to investigate signs of fraudulent activity. Agreements of Purchase and Sale normally establish a specific deadline for the buyer to complete the title search and to raise any valid objections. As such, it is very important to retain a lawyer as soon as possible after signing the agreement. If the title search is not done in time the buyer may be precluded from insisting on the correction of any title defects.
Most purchases of real estate are financed with mortgage loans. We are typically asked to act on behalf of both the lender and borrower to avoid some duplication of effort. This is common in residential purchase transactions. The lender will instruct us on the manner in which the mortgage is to be registered against title, as well as outline any outstanding conditions that must be fulfilled for them to advance funds. It is important for the borrower to finalize financing with the lender well in advance of the closing date to ensure we receive the mortgage instructions in a timely fashion and are able to facilitate a smooth closing.
On the closing day.