Selling a home is a lot simpler than purchasing, but it can still be stressful. There are a lot of steps involved, and a lot of language is used that will feel unfamiliar at first. This could raise a lot of questions such as:
We will try to answer those questions (and many more) here. If you cannot find the answer you are looking for, you can always call, email or come see us and we would be happy to answer your questions.
The first step is to list your home for sale. At this point, you will need to decide whether you are going to use a realtor or if you are going to sell your home yourself.
Once your home is on the market, a prospective buyer will make you an offer to purchase your home, which you may choose to accept.
The offer will be in the form of a contract, and the offer may be conditional or unconditional. An unconditional offer becomes firm and binding the moment you accept it.
Most offers, however, will be conditional, meaning that certain conditions must be satisfied before the buyer pays a deposit and the contract becomes firm and binding.
These conditions are referred to as “subjects” and satisfying the conditions is referred to as “removing subjects” If you accept the offer, the prospective buyer must then remove subjects before the “subject removal date” (deadline by which conditions must be satisfied, or else the offer becomes void).
The most common subjects are:
Once the conditions of the contract have been satisfied and the subjects are removed, the buyer will then pay the deposit (if applicable), and the contract becomes “firm”, meaning the parties can no longer back out of the deal.
If you are using a realtor, the realtor will hold the deposit until the sale completes.
If you are selling privately, then you and the buyer can decide who will hold the deposit.
It is recommended that a 3rd party hold the deposit, such as the legal representative (notary or lawyer) of either the buyer or the seller.
Once the contract becomes firm, you will then need to choose a notary or a lawyer to represent you in your sale.
Your realtor may suggest someone, but you are free to choose whoever you like. Some properties can be complicated to deal with and not all legal professionals can do all properties (e.g. leasehold properties).
If you are not sure if your notary or lawyer can deal with the property you are selling, it is best to call them to confirm in advance.
Once you have chosen your legal representative, you can tell your realtor and the realtor will send them a copy of the contract.
Once we receive a copy of the contract, we will contact you to confirm that you want us to represent you, book an appointment to sign the closing documents, and will request the following information:
The first step of document preparation involves gathering documents and information, including:
Other documents of importance will be gathered by the buyer’s legal representative, such as:
The next step is to prepare and assemble the documents for the transfer of title.
Once the documents are ready, you will meet with us to sign them. We will go through and explain each document and answer all of your questions.
You will need to bring two pieces of identification, with at least one being government-issued, unexpired photo identification.
See below for more information on what types of identification are accepted.
After the documents are signed, the transfer form and other documents are sent to the buyer’s legal representative. The buyer’s representative will register the transfer of title on the completion date and funds are then transferred to our trust account.
If you have a mortgage or any other financial charges registered against the title of your home, they will need to be paid from your sale proceeds before you receive any sale proceeds. This is necessary so we can deliver a “clear title” to the buyers.
Once the sale completes and we have paid out all costs and financial charges, we can deliver the net sale proceeds (money leftover) to you.
Normally, you will either receive a cheque or a direct deposit on either the completion date or the following business day (see below for more information).
After the transfer completes, we will make sure that any financial charges (mortgages, judgements, liens, etc.) that were on the title have been properly removed.
This is known as “clearing title”.
This involves sending money to any financial charge-holders (e.g. bank) in exchange for documents required to remove the charge from the title.
Once the charges are successfully removed from the title, we can report that the title has been cleared. This process can take several weeks.
Once the title has been cleared, we report to the buyer’s legal representative and the file is closed.
You are selling your home and choose a notary to represent you.
Your realtor sends a copy of the contract to your notary’s office, and they call you to confirm your information. You confirm that you have a mortgage on title with HSBC.
Before the completion date, your notary orders a payout statement from HSBC, indicating how much money is required to payout and discharge your mortgage.
On the completion date of your sale, your notary receives sale proceeds from the buyer’s legal representative.
Your notary uses that money to pay out the mortgage with HSBC and gives you the remainder. A few weeks later, your notary receives a signed discharge from HSBC.
Your notary registers the discharge and then reports to all parties that the title has been cleared.
When you come to our office to sign documents for your purchase, we will need to confirm your identity.
Typically, we will need two pieces of ID: a primary piece and a secondary piece.
Your primary piece must be government-issued, unexpired photo identification. We cannot accept employment badges or cards, even if your employer is a government agency.
The most common forms of primary ID provided are:
We will also need a secondary piece of ID. The most common forms of secondary ID are:
When an offer to purchase your home is being made, you will need to agree upon a completion date, an adjustment date, a possession date.
This is the most important day. The completion day is the day that the buyer becomes the registered owner of the property. It is the day that the title transfers to the buyer, and money transfers to the seller.
If you are selling your home and buying a property at the same time, the completion date for your sale must be on or before the completion date for your purchase. This is important because we will likely need funds from your sale to complete your purchase.
This is the day that you are no longer financially responsible for the property (e.g. property taxes, utilities, strata fees, etc.).
For example, when we adjust for the annual property taxes we use the adjustment date to determine how much of the annual property taxes each party is responsible for.
Usually, the adjustment date is the same as the possession date.
This is the day by which you must vacate the property so the buyer can move in.
Typically, the possession date is one or two days after the completion date, but it can be any date that the buyer and seller agree on.
The Statement of Adjustments is the breakdown of all the costs of the purchase and shows how those costs are being paid.
Adjustments are also made here for recurring property-related expenses such as property taxes, utilities, strata fees, and rent (if the property is tenanted). The seller is only responsible for these recurring expenses until the Adjustment Date.
The expenses are referred to as “debits” and the funds used to pay the expenses are called “credits”.
At the bottom of the Statement of Adjustments, you will see the amount of money that we will receive from the buyer’s legal representative.
Please note that this is not what you will be receiving. There are further deductions from this amount, that will be explained in the Order to Pay
The Order to Pay will show how much money we will receive from the buyer’s legal representative and how that money will be distributed.
Here is where you will see the payout of your mortgage, legal fees, and how much money will be left over (the net sale proceeds).
A holdback is when a certain amount of money is withheld from the sale proceeds until confirmation that a term of the contract has been satisfied.
Holdbacks can be for many reasons such as for deficiencies or builders’ liens when buying a new home, or to ensure that an appliance will be repaired or replaced, or that a fee or levy was paid by the seller.
A common example is a holdback for strata fees. When you are selling a strata property, you will receive a credit for the buyer’s share of this month’s strata fees, but you may also see a holdback to ensure that those strata fees were paid.
In this situation, the holdback amount is usually equal to the amount of the monthly strata fees, but can sometimes include a little extra for an insufficient funds fee.
If we are paying out an existing mortgage, there will be a holdback to ensure that no mortgage payments were missed.
We simply hold the amount at our office until we receive a discharge from your lender.
When we receive a payout statement from the bank telling us how much money is required to obtain a discharge, it will often account for any payments you will be making up to the completion date.
If you miss a payment just before the completion date, we may not find out until several weeks after your sale completes. If this happens, the bank will not give us the discharge until we pay the outstanding amount.
We hold back a certain amount to make sure we have enough to obtain the discharge and provide a clear title to the buyer.
Lawyers and notaries do not make GST determinations, meaning we do not decide whether the purchase is GST applicable or not.
There are certain situations where GST is normally exempt, or normally applicable, which will be discussed below.
The seller of a property is responsible for remitting GST if it is applicable, whether they collect GST from the buyer or not. If you are uncertain whether GST applies to your sale, you should contact an accountant.
If you are selling a used (not brand-new) residential property, then you should not have to remit GST on your sale.
If you are selling a brand-new home, extensively renovated home, commercial property, farmland, or land that is part of your business activity (e.g. you subdivided the land to sell the divided lots), then you will likely have to remit GST on the sale.
There are other types of sales where GST may or may not apply, but these are the most common.
The amount of GST is 5% and will be paid in addition to the purchase price unless the contract states that the purchase price includes GST.
If you are selling a property that is both residential and non-residential, then you may only have to remit GST on the non-residential portion of the property. If your property falls into this category, please contact an accountant to determine how much GST is payable.
If GST applies to your sale, the buyer will normally have to pay it to you in addition to the purchase price. You will then need to remit the GST to Revenue Canada.
If the buyer does not want to pay the tax at the time of the purchase, the buyer can choose to self-assess and self-remit the GST at a later date.
If they choose to do this, they will require your consent and must provide you with confirmation of their GST number.
By providing you with confirmation of their GST number and their intention to self-remit the GST, you will no longer be responsible for remitting the GST to the Canada Revenue Agency.
In British Columbia, the sellers are responsible for paying all realtor fees from the sale proceeds, unless a different arrangement has been made in advance.
On rare occasions, the buyer will pay the realtor fees. This can happen when the buyers have a realtor, but the sellers do not. In most cases, however, the seller will pay both realtors.
Giving a “clear title” means ensuring that all financial charges (mortgages, liens, judgements, etc.) have been discharged (removed) from the title of the property, and the buyer is receiving the title free and clear of any financial encumbrances.
After the transfer completes, we will make sure that any financial charges (mortgages, judgements, liens, etc.) that were on the title have been properly removed.
This is known as “clearing title”.
This involves sending money to any financial charge-holders (e.g. bank) in exchange for documents required to remove the charge from the title.
Once the charges are successfully removed from the title, we can report that the title has been cleared. This process can take several weeks.
In most cases, you will receive the net sale proceeds on the Completion day or the following business day.
The net sale proceeds will be in the form of a cheque or can be directly deposited to your bank account if you provide us with your account information in advance (e.g. void cheque or pre-authorized deposit form from your bank).
If you choose to receive a cheque, the cheque will be made out to all registered owners on the title. For example, if the property was owned by three individuals, then all three of their names will be on the cheque.
If you choose to have the funds directly deposited to your account, then all the registered owners’ names must be on that account.
For example, if the property was owned by three individuals, then all three of their names must be on the bank account as joint account holders.
We do not divide the net sale proceeds (i.e. “split cheques”) for the sellers. We do not want to be responsible for determining or confirming who is entitled to what percentage of the funds, regardless of any previous arrangement the sellers may have.
If you are considered a non-resident under the Income Tax Act of Canada, then there will be some tax implications.
Under the Income Tax Act, we are required to hold back 25% of the purchase price until you obtain a “Certificate of Compliance” (commonly called a tax clearance certificate) from the Canada Revenue Agency.
Once your sale completes, we hold back 25% until we are advised how much is needed to obtain the certificate.
We then pay the amount required from the holdback and give you whatever is leftover. This process can take several months.
This requirement can be an issue if there are not enough sale proceeds to payout your mortgage and still retain 25% of the purchase price for the holdback. If this happens, your sale will not complete until we can comply with the requirements under the Income Tax Act.
If you are concerned there may not be enough funds to do the holdback at the time of Completion or if you wish to be proactive (which is recommended), you can obtain the Certificate of Compliance before the Completion date of your sale. Your accountant can facilitate this.
If you obtain the Certificate of Compliance in advance, then a holdback will not be required. Instead, you will receive all the net sale proceeds upon completion of the sale, no different than if you were a resident.
If you will not be able to attend our office to sign the closing documents, there are a few options:
Depending on the Power of Attorney, your attorney may be able to sell your property on your behalf. If this is the plan, then the attorney should let your legal representative know well in advance of the Completion date.
The original Power of Attorney document must be registered with the land title office, which can occasionally be problematic.
The more notice your legal representative has, the more time they will have to identify and correct any issues that may prevent successful registration.
There is also an additional fee to register the Power of Attorney with the land title office.
If the deceased was the sole owner of the home (not “joint tenants” with another person), then the home becomes part of the deceased’s estate.
To sell or transfer that property, you must first obtain a Grant of Probate from the Supreme Court.
If you wish to sell the property, in most cases you may do so as soon as you obtain a Grant of Probate.
If you need to transfer the property to one of the beneficiaries of the deceased’s Will, then you must obtain a Grant of Probate and wait 210 days before you can complete the transfer.
The purpose of the waiting period is to give the beneficiaries time to file a claim against the estate (if they want the terms of the Will to be changed).
In either case, we will require a court-certified true copy of the Grant of Probate, the Statement of Assets and Liabilities, and a copy of the Will.
If you used a realtor, then you should give your keys to your realtor. If you did not use a realtor, then you will need to make arrangements with the buyer to deliver the keys.
We are not responsible for delivering keys to the new owners or providing physical access to the property in any way.
