First-Time Home Buyer in Alberta

real estate sold sign

I’ve got a purchase contract for buying a house.
What’s next?

Congratulations, you’ve done it! It’s been a long journey. You thought about it and talked about it and finally decided, “it’s time to buy our new home!”

As a first-time homebuyer, you wisely picked Alberta where there is no land transfer tax! I’m writing from the perspective of an Edmonton real estate lawyer, but the process is the same all over the province, from Calgary, Lethbridge, and Medicine Hat, to Grand Prairie, Fort McMurray, and Red Deer. You probably started the search by looking on the Net, found a realtor, and started looking at houses. Your realtor helped you with not just buying a house, but finding the perfect home. You signed a conditional real estate purchase agreement sometimes called the ‘offer’ or ‘contract.’ You applied for a mortgage and were approved, had the home inspected, and all was well. You removed the conditions on your contract and now you have a deal!

At this point, like most folks, you probably have lots of other questions. What are the next steps to buying a house (we prefer home) in Alberta? You may have some idea that you need a lawyer, but how does a lawyer fit in?  What else do you have to do or know? Let’s start with a summary of the steps in your home buying process. Then, lets move on to the steps and important info bits that apply after you have an unconditional contract.

Initial Steps for a First-time Homebuyer in Alberta:

  1. Find dream home
  2. Get approved for a mortgage
  3. Make purchase offer
  4. Have house inspected
  5. Remove conditions on the purchase contract

Next Steps after Unconditional Real Estate Purchase Contract:

  1. Paperwork
    You still have more documents to sign, but they won’t be ready immediately. Don’t leave town without first checking with your lawyer.
  2. Money
    Most folks will use a mortgage, but there are other monies to consider. The balance of funds for the transaction is usually paid with a bank draft, so you’ll need to get one once you get your final financial calculations from your lawyer. If some of your purchase price is coming from RRSPs or other investments, get going now on the often-slow process of cashing-in those investments.
  3. Home Insurance
    If you’re getting a mortgage, your bank absolutely requires you to have home insurance.
  4. Renovations
    Are you renovating as soon as you get possession of your new home so it will be done before you move-in? Getting City permits, if required, almost always takes a big chunk of time. In Edmonton, 6-8 weeks If you really want to get going on your renovation the minute you get a key, you will most likely have to work with your seller pre-closing to apply for permits.
  5. Utilities, Deliveries, and Cleaning
    Getting utilities connected, having furniture/appliances delivered, getting carpets cleaned, anything that requires scheduling 3rd party access? Make sure you know when you will be getting your keys. Then do your scheduling.
  6. Change of Address
    The amazing number of people and services that need to know you have moved can be surprising. The big ones are financial institutions (bank and credit card) and various branches of government (health, tax, driver’s license), but don’t forget about friends and family, too!
  7. Miscellaneous (but Important!)
    School changes, health care providers, neighborhood associations; there are lots of other things to think about, depending on your personal situation.
  8. Moving Day
    Moving yourself or hiring a mover? If hiring, do lots of research on potential movers to find someone who is reliable. If doing it yourself, you probably want to rent a large truck so you can do the move in as few trips as possible. Either way, book in advance to make sure you can pick a date that works for you.

For further reference, CMHC (link) and Century 21 (link) both have their own helpful checklists for moving to a new home. The most important things are to start early, have a plan, and work on it a bit at a time. A big move like this doesn’t happen in a day!

First-time homebuyers (and really all homebuyers) have a long list of things to do. We get that! As you are working on your next steps, your team still has work to do. Your lawyer, realtor, and mortgage lender continue to work together behind the scenes to make sure that your deal closes smoothly.

Here’s a list of all the things that my Edmonton law firm, RMLO Law LLP, takes care of so that our real estate clients can focus on getting ready for their new homes. As you’ll see, there’s a lot to do, which is why the process takes time. We can do rush closings, but costs more because we have to drop whatever else we’re doing and expedite everything on the list below…

The Role of Alberta Real Estate Lawyers, Realtors, & Lenders

  1. Your realtor immediately tells your bank that your contract is now unconditional, and then your bank sends mortgage paperwork to us here at RMLO (we are the buyer’s lawyer).
    1. If there’s no realtor involved, you’ll need to notify the bank yourself.
  2. The seller’s realtor sends the Real Estate Instructions, including a copy of the contract and all amendments, to both the seller’s lawyer and the buyer’s lawyer (RMLO).
    1. If there’s no realtor involved, you’ll need to get us the paperwork.
  3. Here at RMLO, we open a new file in your name and start our due diligence on your behalf.
  4. We email you a checklist so you can easily provide the info we need.
  5. We start preparing the mortgage and related paperwork.
  6. We contact the seller’s lawyer, give them your proper legal names and sort out any obvious issues.
  7. We go over paperwork from the seller’s lawyer with a fine-toothed comb.
  8. Financial calculations are prepared and sent to you. The financial calculations tell you, bottom line, how much money you still need to come up with (balance of funds required). These calculations take into account the deposit(s) you have already paid, your projected legal account, and all other costs we are aware of.
  9. Home insurance memo is prepared and sent to you. The memorandum is for you to give to your insurance agent. It tells them exactly what kind of insurance your bank requires.
  10. Now it’s time to sign your paperwork. We contact you to arrange a convenient appointment.
  11. Your appointment to sign paperwork takes between 30–60 Minutes. We will carefully review with you the seller’s paperwork and the bank’s paperwork.
  12. Usually at your signing appointment, you also bring us a bank draft for the balance of funds required as set out in our financial calculations. Make you bring identification, too!
  13. We send all your paperwork to the Land Titles Office to register the title to your new home in your name(s).
  14. In cooperation with your bank, we organize getting your mortgage funds deposited to our trust account.
  15. On your closing (possession) day, we send the seller’s lawyer the balance of funds required to finish paying for your new home. And, very importantly, we ask the seller’s lawyer to authorize release of keys.
  16. The seller’s lawyer authorizes the seller’s realtor to release keys. Your realtor gets those keys and puts them in your eager hand. Congratulations, you now can take possession of your new home!

Even with this summary, you probably still have lots of concerns.
Below are some of the frequently asked questions (FAQ):

 

Do We Need a Real Estate Lawyer?

Yes, you do. Most people buying a new home are also getting a new mortgage, and lenders demand that their paperwork be prepared by a lawyer. Typically, on residential purchases, the same lawyer acts for both the bank and the buyer. Besides, a real estate lawyer protects your interests, so it’s the smart move even if you’re paying cash with no mortgage.

When Does the Lawyer Get Involved?

At RMLO Law LLP, we would love to hear from you as soon as you are reasonably serious about a particular new home. But for straightforward real estate purchases you may not need to talk to a lawyer until you actually have an unconditional contract. Either way, it’s never a problem, we can often solve issues or give you some comfort at any point in the buying process. So, please shoot me an email. I really do enjoy speaking with first-time home-buyers and am glad to help with any questions.

Realtors are professionals trained to represent your interests, so a lawyer isn’t usually required in the negotiation phase. In most cases the lawyer gets involved soon after you remove all conditions from the contract. On the other hand, if you have a strange situation or a question your realtor can’t answer, then, by all means, my colleagues and I at RMLO Law LLP can help. Your realtor is assisted by today’s standard real purchase contract. The standard contract has been revised and improved. It does a good job of protecting the buyer so that lawyers are most often not involved in the negotiations, but it doesn’t hurt to get in touch with us early, just in case.

How Does a Real Estate Lawyer Help?

Here’s how it works. The listing realtor’s office sends buyer’s lawyer and seller’s lawyer full copies of the paperwork. That is the first direct involvement your lawyer will usually have.

The lawyer’s job is to protect you, to ensure that your new home purchase proceeds smoothly, and to close on time according to the details in your signed contract. To do this, your lawyer and their staff analyze the paperwork received from the realtor. That paperwork is generally a covering letter, a real estate purchase contract, and all amendments to that contract, along with the documents from the bank. On receipt of these sets of documents, the law office opens the file in your name. They then start doing ‘diligence’ or ‘searches’ on your behalf. This means they start with getting a copy of the legal title or deed to the property from the Alberta Land Titles Office. They also search the taxes to see whether they have been paid or not. The contract may lead them to do other searches. The searches are done to protect you and ensure your purchase proceeds correctly.

Next, your lawyer should contact you, advising you they have the contract. They will ask you for personal data and the contact information required to properly set up their file and stay in touch with you. They should discuss any issues that have arisen from their analysis of the contract and mortgage paperwork. Then the lawyer and their staff prepare all of the required documentation including mortgages and other lender requirements.

How to Choose an Alberta Real Estate Lawyer?

As you work your way through finding a home and negotiating a contract, your realtor and/or lender will ask you, “who’s your lawyer?” If you don’t already have a lawyer, your real estate agent or banker might be able to recommend one, but I’d suggest thinking critically about their suggestions relative to your needs.

  1. You’re best off with a full-time real estate lawyer.
  2. Do not use your family lawyer just because they are the family lawyer.
  3. Especially don’t pick a lawyer who is in court all day long!

The RMLO real estate department is made up of dedicated professionals who focus on helping people like you buy and sell real estate in Alberta. The team consists of lawyers Richard M. Bell and myself, as well as our assistant, Sharon Aiston. We’re in Edmonton, but our clients come from all over Alberta, from other Canadian provinces, and even from other countries.  We are more than happy to help you at any stage of your new Alberta real estate purchase, and we have the experience to make the process easy for you.

How to do Final Real Estate Financial Calculations?

Financial calculations are prepared advising how much money you still have to bring in. Typically, those financial calculations include the balance of money required to purchase the property along with closing costs. This is the part of the money not coming from your new mortgage. Those financial calculations are sent to you and an appointment is arranged to sign the paperwork.

What Are Real Estate Closing Costs?

Closing costs are all the money it takes to buy a new home over and above the purchase price. Let’s say you are buying a new home for $400,000. You put down $10,000 as a deposit, you get a mortgage for $320,000. A mortgage for 80% or less of the purchase price without CMHC insurance is called a conventional mortgage.

This leaves you to pay the $70,000 balance commonly referred to as the cash to close. Apart from these monies, you also have your closing costs, which consist of legal fees, possibly CMHC fees, tax adjustments, property inspection, insurance, appraisal, utility deposits, and perhaps other costs. At my Edmonton real estate law firm, we recommend that you budget between $2000 and $2500 for closing costs.

When Do We Bring the Money to Close?

First, your lawyer sends you detailed financial calculations. Then, one week before the closing date, you will pay the balance of cash to close, plus closing costs. A bank draft for the balance of cash is typically used to expedite the process, and you bring it when you come in to sign your documentation.

When Do We Sign Paperwork?

In our law office, we like you to come in one to two weeks before the closing date. You must bring in proper identification. There are many new government rules for realtors, lenders, and lawyers—all aimed at protecting Canadian society from mortgage fraud, terrorism, and money laundering. Along with your identification, you will bring the balance of money required (consisting of cash to close plus closing costs), as set out in the financial calculations you have already received.

You then sit down with the real estate lawyer, not an assistant, to review and sign the paperwork, including: mortgage, statement of disclosure, life insurance app/waiver, commitment letter, assignment of rents if it’s an investment property. Then affidavit of value attached to the transfer of land. Then, in-house things like statement of adjustments, conflict letter, various statutory declarations re down payment and whether the buyer is living in the property or not, whether they are renting out any part of it or not, whether there have been any changes to an older real property report, whether they are ‘politically exposed’ persons, down payment verification.

It’s always a big stack of things to sign, but RMLO makes sure that everything is taken care of properly and that your real estate transaction is fully documented, protected, and completed.

What’s Next After Signing the Paperwork?

Once you sign the documentation, the lawyer will have the title changed into your name at the Land Titles Office, pay funds to the seller’s lawyer on your behalf, and request the keys be released so you can take possession of your new home.

After you have possession, and typically within one month of closing, you should get a reporting letter from your lawyer providing copies of all the paperwork and a financial accounting of all funds. Somewhat later, three to six months after closing, you should get a final copy of the title from your lawyer showing that the seller’s mortgage has been discharged and your purchase is complete.

When Do I Get My Keys?

Today’s typical Alberta real estate contract says that you will be given possession and keys at noon on the closing date. Watch out for setting a closing date that is on a weekend or holiday as that can complicate matters!

How Much Are Edmonton Lawyer Legal Fees?

The legal account with your lawyer consists of three parts. There is a legal fee, which is money the lawyer gets paid for doing the work. There are disbursements or out-of-pocket expenses such as search costs for copies of title and tax information, as well as registration costs at the Alberta Land Titles Office. And, there is always the dreaded GST!

There is no standard legal fee that lawyers charge. Your legal account will vary from law office to law office. Most law firm prepare their legal accounts on the legal fee plus disbursements and GST basis. Because the disbursements are variable numbers, it is sometimes difficult to get an exact quotation for your costs. This can be irritating for buyers, so at RMLO we have developed a new model called Homeowner’s Plus.

We simplify the cost of lawyer’s fees by making them flat-rate. Homeowner’s Plus is your full legal account that includes both flate-rate legal fees and disbursements. It’s easy, it’s fast, and you know exactly what to budget for in your legal account. To read more about the cost of lawyer’s legal fees, click here.

Affordable Trustworthy Edmonton Real Estate Law Firm

If you’re buying a house or home in Alberta, choose RMLO Law LLP for your all your legal needs. Remember, in the law as with everything else in life, the lowest price is not necessarily the best value. Price is what you pay, value is what you get. We make real estate easy; contact us today!

“House Sold” image by http://www.aag.com/ CC Attribution-ShareAlike 2.0