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Homebuyers should be very careful when reading property purchase agreements

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What happens when there is a significant discrepancy between the way a home is described on an MLS listing, and the details in the Agreement of Purchase and Sale?

That was the issue in a court case decided earlier this year regarding a March 2015 home purchase. The buyer, Shripragas Sivasubramaniam, signed an agreement to purchase a home on Cragg Cres., in Ajax, from Yar Mohammad and Jamila Khudabakhsh for $525,000.

A recent judgment found that details in an Agreement of Purchase and Sale are those that a buyer and seller must adhere to.
A recent judgment found that details in an Agreement of Purchase and Sale are those that a buyer and seller must adhere to.  (Dreamstime)

The Agreement of Purchase and Sale contained the standard printed clause which reads: “Upon completion, vacant possession of the property shall be given to the buyer unless otherwise provided for in this agreement.”

There were no other terms in the agreement relevant to the issue of vacant possession.

Paragraph 26 of the agreement contained the standard “entire agreement clause” which is used in virtually every purchase contract in Ontario. It reads, “This agreement … shall constitute the entire agreement between the buyer and the seller. There is no representation, warranty, collateral agreement or condition, which affects this agreement other than as expressed herein.”

Sivasubramaniam was buying the home to live in with his wife, two children and his mother. Since he was vacating his condominium, it was an important term of the contract that he would receive vacant possession.

The MLS listing for the property, however, stated: “AAA tenant.”

When the buyer’s agent presented the contract to the sellers’ agent, he was told that the tenant would be vacating on or before closing. But, during an inspection of the property by the buyer, the tenant was surprised to find out that vacant possession would be required.

At this point, the lawyers for buyer and sellers began a heated and threatening exchange of correspondence — the buyer’s lawyer insisting that the property be vacant on closing, and the sellers’ lawyer responding that the tenant would remain in possession and the buyer had to accept the tenant because of the notation in the MLS listing.

The sale did not close as scheduled on April 29, 2015, with each side accusing the other of breaching the contract. When the tenant ultimately moved out in December, the seller moved into the house with his family. On May 10, 2016, the property was re-listed for sale at $649,900, but the listing was cancelled after Sivasubramaniam registered a caution on title to prevent the resale.

Eventually Sivasubramaniam brought an application in Superior Court to determine which party breached the contract, and to force the sellers to close the transaction.

The matter came before Justice Robert Charney this past April. In his judgment, Charney noted that the fact the MLS listing stated that there was a tenant in possession was “entirely irrelevant.

“The terms with respect to vacant possession,” he wrote, “are clear and unequivocal … I have concluded that the vendors were in breach” of the contract.

The judge ordered specific performance of the agreement and that the buyers were entitled to a conveyance of the property within 60 days — or the buyer could register his own deed without the consent of the sellers.

When I did a title search last week, the sellers were still shown as the registered owners.

This case provides two valuable lessons to buyers, sellers and agents:

  • If a provision is not specifically written into the contract, it doesn’t exist.
  • The wording of the purchase agreement overrides the MLS listing or any oral promises.

Bob Aaron is a Toronto real estate lawyer. He can be reached at bob@aaron.ca or on Twitter: @bobaaron2

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place. HomeYou’ve been selected.Only $1.49/week for your first 4 months.Special offer just for you. Unlimited access.

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10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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A Simplified Guide for Toronto First-Time Home Buyers

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Toronto is the largest city in Canada, the fourth largest city in North America, which makes it an exciting place to live in.

But as with other major cities, finding the perfect place to move to can get tricky. If you’re planning on buying a home for the first time in this city, it is indeed a big decision and there are things you should know in advance.

Don’t worry, this guide will help explain the basics of what you as a buyer should know when you decide to buy a home. It will make you feel like a true expert during the buying process.

Decide what type of home you are looking for

There is no right answer to what makes a good home. It all depends on your preferences and needs as the resident. It is, therefore, a good idea to determine as early as possible which features of a home are important to you. If you are buying a home and moving in with someone, it can be a good idea for both of you to make a list and compare.

Toronto is a city that offers different styles of living accommodations and its neighborhoods are quite versatile and diverse, same as the people living there who come from all parts of the world.

The most common forms of housing and real estate opportunities in this city include bungalows, two-storey houses, split-level homes, and the very popular Toronto condos. Due to the high property values, the city boasts of construction of many condominiums as they are a more cost-efficient choice and provide a plethora of benefits.

When you decide on the type of home you want to buy, it is good to do some research and learn the biggest differences between them.

What to think of when choosing homes in Toronto

There are certain things you need to consider when choosing your home in this city. 

Being close to the things you need to visit every day makes life a lot easier. Pay attention to the proximity to shops, preschools, schools, and your job. In addition, access to good public transportation is crucial. Being able to move around the city easily and the opportunity to commute is important to many.

Know that having a balcony can significantly increase the value of your home and improve your well-being. Being able to move easily in the area is something that many people underestimate, but can be very convenient, and this is why you should see if there are good cycles and walking paths. 

And finally, make sure that the house is well designed which is a quality that does not disappear with the age of the house or with renovations. 

Set your budget

Before you start the search for your new home, you must know how expensive of a home you can buy. It is preferable to know in what price range to look for. The budget is usually decided based on your mortgage and how large are the monthly costs you can handle.

A mortgage is always about a balance between risk and income for the bank. The higher the risk for the bank to lend to a particular home, the more expensive the mortgage will be. When it comes to the bank’s reasoning when applying for a loan, it is in principle always a question of whether you as a borrower will be able to repay the mortgage.

The bank also takes into account your financial history. If you are a person who has managed your finances well, the chance increases that you will get your mortgage approved. If, on the other hand, you have a bad reputation with banks, it is weighed in as an aggravating circumstance.

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