Buying a home is perhaps the largest purchase most of us will make during our lifetimes. Mortgage rates and prices are quite attractive now, but there are some things you should think about before making your Offer to Purchase.

Agreement for Purchase and Sale

The document governing the transaction is a contract called the Agreement of Purchase and Sale. The transaction will be limited to the terms of the contract and so it should contain all of the things that are important to you in buying the home. The document is signed by the buyer and is the buyer's Offer to Purchase. When the seller accepts the buyer's offer and signs the document it becomes the Agreement of Purchase and Sale. A real estate agent can include in the Offer to Purchase several escape clauses that will allow the buyer to cancel the offer. For example, if it turns out the home is not what you thought it was, if you cannot get a large enough mortgage to finance the purchase, or if you cannot sell your current home. A lawyer can advise you on the words to include in your offer to purchase.

Usually, the purchase price includes a deposit which is given to the seller at the time the offer to purchase is made. The deposit is held by the seller or his agent to ensure the transaction is completed. If failure to complete the transaction is due to the buyer, the seller may keep the deposit.

The price in the Offer to Purchase does not include the land transfer tax, registration fees, various search fees, your lawyer's fees, or the money the buyer may have to pay to the seller to pay for things such as furnace oil, utility bills and municipal taxes that the seller has already paid as shown in the Statement of Adjustments.

Land Transfer Tax

A buyer is obligated to pay Land Transfer Tax to the Province of Ontario on registration of a deed. Land Transfer Tax is calculated on the purchase price at one-half of one percent on the first $55,000.00, one percent on the portion of the price exceeding $55,000.00 up to and including $250,000.00, one and one-half percent on the portion of the price exceeding $250,000.00 up to and including $400,000.00, and two percent for amounts exceeding $400,000.00 where the property containes one or two single family residences. So, for property with a selling price of $200,000.00 the amount of Land Transfer Tax payable on registration of the Transfer/Deed of Land is $1,725.00.

Survey

A bank or mortgage lender will require an up-to-date survey of a house. If a survey is not available, the buyer might be required to obtain one from an Ontario Land Surveyor. The cost of such a survey is approximately $900.00.

Searches and Executions

Executions must be searched for at the Sheriff's office at a cost of $11.00 per name.

Searches must be made for building code violations and utility account arrears A tax certificate must be obtained. Each of these items has a fee which must be paid at the time the search is made.

The lawyer's task when acting for a buyer is to make sure that on the closing date you really own the home, you paid the right amount for it, and all of the paperwork is correct. Estimating the cost is extremely difficult because each transaction has different requirements. So, when buying a home please keep in mind that in addition to the purchase price, there will be many additional costs which must be met at the time of purchase.