Selling Your Home in Ontario--Some Frequently Asked Questions

By Jan Jaluvka

Selling Your Home - Some F.A.Q.'s

Do I need a lawyer when I sell my home?

Yes, you do. Here’s why. There are many legal issues connected with selling your home, some of which can turn into traps for the inexperienced or unsuspecting seller. You need to know that all these legal issues and any legal problems which may arise will be properly dealt with on your behalf. You want to rest assured that your home sale is completed efficiently and on time. You want to feel comfortable knowing that, upon completion of your sale, you will receive the full amount of money you expected when you signed the sale contract. Your lawyer can help steer you safely through the home selling process and ensure that your legal rights and financial interests are protected.

When should I get a lawyer involved?

The simple and best answer is: As soon as possible. Once you bring your lawyer into the picture, he/she can start working to protect your interests. It is often advisable for you to consult a lawyer before you sign an agreement with a real estate agent to list your home for sale (commonly called a “listing agreement”).

Consulting a lawyer is strongly recommended in situations where an offer to purchase your home contains any kind of unusual conditions or stipulations which, by their nature or wording, go beyond the standard financing and home inspection conditions commonly included for the buyer’s benefit. When selling your home, your lawyer can ensure that the sale contract contains the necessary legal language to protect you, should your sale transaction not progress as you originally anticipated.

When it comes to buying and selling real estate, “the devil is in the details.” All too often, a fact or item incorrectly set out or completely overlooked in the original sale contract develops into a legal issue or matter of dispute between the buyer and seller. Such problems can be avoided by obtaining legal advice from a real estate lawyer early on in the process of selling your home.

How do I choose a lawyer to represent me for the sale of my home?

The important point here is to select a lawyer who is knowledgeable and experienced in real estate law. Typically, this is someone who does a lot of real estate work and has been around long enough to have developed the expertise required to protect your interests. A lawyer who devotes the major or a large portion of their law practice to real estate matters is usually a good choice to assist you in selling your home. For a fuller discussion of this topic, please see our companion article entitled "Buying a Home in Ontario---Some Frequently Asked Questions" found on the Publications Page of our website.

Which conditions or escape clauses should be included in my home sale contract?

The answer to this question will vary according to real estate market conditions and your own particular circumstances. For example, you may receive an offer to purchase your home from a prospective buyer which you may not be fully satisfactory to you. The sale price offered might be close to what you’re looking for but the offer contains one or more conditions for the buyer’s benefit which could tie you up waiting for them to be fulfilled. On the other hand, you may not wish to reject this offer out of hand, because you have no assurance you will ultimately receive a better one.

As the saying goes, “A bird in the hand is worth two in the bush.” In this case you might choose to accept this offer but include a condition (commonly called a “resale condition”) which would permit you to continue to offer your home for sale to other prospective buyers. The condition would further provide that, in the event you receive a better offer from another buyer, you would have the right to put the original buyer to the option of either removing the conditions in their offer and make it firm and legally binding or choosing not to do so. If they remove the conditions then you have a firm deal with your original buyer. If they do not, the first offer is cancelled and you are free to accept the second, more attractive offer.

If you are also planning to purchase another home and have been unable to find that special home you’ve been looking for, you should consider including a condition in your sale contract (commonly called a “relocation condition”) which would enable you to get out of the deal if you fail to secure a purchase contract on the home of your choice. Otherwise, you could be left in the unfortunate situation of having to vacate your existing home with no suitable home to move into. In this desperation scenario, people often end up settling for a new home which they otherwise wouldn’t have even considered had they not been put in such a predicament.

Depending upon the requirements of your individual situation in selling your home, your real estate lawyer can help ensure that the language of the sale contract protects your legal rights and financial interests.

Wouldn’t I be better off selling my home myself and avoiding having to pay real estate agents’ commissions?

Unless you are in the fortunate position of being able to sell “privately” as outlined in the following section, my answer is always “No.” A trustworthy, able and diligent real estate agent working on your behalf in selling your home almost always ends up netting you more money after commissions than you would have gotten doing it on your own. Here's why. With no real estate agent involved, a prospective buyer believes there will be money saved on real estate commission. The problem for you as the seller is that the buyer expects that they and not you are entitled to that money. With this prevailing buyer’s mindset, a “lowball” offer with a lower purchase price is the usual result and it becomes difficult if not impossible for the seller to get a higher sale price.

A good real estate agent knows the best approach to marketing and selling your home. It’s their business. Real estate agents, especially those working with larger companies or networks, have much greater resources at their disposal to market your home than you as one individual could ever muster. Multiple listing services, online nationwide marketing programs and associations with other agents provide them with powerful marketing tools to find qualified buyers prepared to pay you a realistic price for your home.

Conversely, a do-it-yourself home marketing program is pretty much limited to running newspaper ads, displaying a “for sale” sign on the property and having your property listed on a generic, low traffic marketing website in the hope that the right buyer will come along. Such a program is more likely to attract tire kickers, bargain hunters and even would-be burglars than serious potential buyers. It can also waste a lot of your time and money in a futile attempt at selling your home.

That is why my advice is to list your home with a good real estate agent and let them do what they do best. When all's said and done, you’ll end up with more money in your pocket and a lot less hassle.

What do I do when I have the opportunity of selling my home “privately”?

This scenario usually occurs when the seller has either been able to find a prospective buyer or has been approached by buyer, without having employed the services of a real estate agent. The information set out above would also apply to this situation. You would provide the information which the buyer’s or seller’s lawyers will need to prepare an offer to purchase (purchase/sale contract). Your lawyer will advise you as to the information required in this regard. Either the buyer’s or seller’s lawyer can prepare the purchase/sale contract for selling your home. Your lawyer can ensure that the contract contains the necessary legal safeguards to protect you as the seller in selling your home. The purchase contract would then be finalized by the buyer’s and seller’s lawyers and the transaction would proceed to completion in the normal course.

I’m planning to sell my existing home in one Ontario city and purchase a home in another Ontario city. Can I have both transactions close on the same day?

If you require funds from the sale of your existing home to complete the purchase of the new one, then you ought not to have the sale and purchase transactions close on the same day. There are sound reasons for this decision. The buyer of your existing home is legally obliged to complete your sale transaction sometime on the day of closing which, in practical terms, due to the hours of operation of the electronic land registration system, means sometime before 5:00 p.m. on that day. Even with the best of intentions and even in the situation where your buyer has no home sale which he/she must complete prior to completing the purchase of your home, things beyond your buyer’s control can occur to delay the closing until later in the day—things like mortgage funds arriving later than expected, unanticipated traffic jams etc. Stuff happens and it seems to happen all too frequently in such situations. If your buyer closes your sale at 4:55 p.m. (as is his/her legal right under the purchase contract) there will be insufficient time left for your lawyer to complete your purchase transaction. If the transaction doesn’t close before 5:00 p.m. then you may not get possession of your new home on that day and, worse still, you would be exposing yourself to the legal consequences of failure to complete as outlined above.

How do you avoid such a nightmare scenario? If you absolutely must have both the sale and purchase transactions close on the same day, then arrange a temporary loan from your bank (commonly called a "bridge loan") to give you all the money you need to close your purchase on time on closing day. A bridge loan will normally cost you two or thee hundred dollars in interest and setup charges but it is money well spent, when you consider that it will buy you some peace of mind and can help avoid some big legal headaches. The other way of avoiding the nightmare is to arrange the closing for selling your home to occur on one day and the closing for purchasing your new home to occur one or two days later. This may or may not be feasible depending on time constraints and/or moving arrangements

This article has dealt with some of the important legal issues involved in selling a home in Ontario. If you are considering selling your home, you should obtain proper legal advice from a knowledgeable, experienced real estate lawyer.

For other legal articles dealing with real estate please see the following: Buying a Home in Ontario, The Land Transfer Tax Rebate for First Time Home Buyers in Ontario – Do You Get It? and Why Use Title Insurance When Buying a Home?

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