THINGS TO THINK ABOUT WHEN BUYING A NEWLY BUILT HOME
Purchasers have the option to buy a newly built or resale home. However, they are generally unaware of the legal implications of purchasing a newly built home versus a resale home.
When purchasers buy a newly built home and obtain financing from a bank to assist with the purchase of that home, they should be advised that their bank will, generally, not fund (i.e. release mortgage proceeds to their lawyer) unless the Transfer of Land and Mortgage have been successfully registered at Land Titles and the bank obtains a copy of Title as proof. However, due to the backlog at Land Titles, those documents may not be registered for, at least, 1 to 3 weeks – assuming there are no errors on those documents. Conversely, when a purchaser buys a resale home, the bank can fund before the Transfer of Land and Mortgage are registered on possession date – if prefunding requirements are satisfied within 48-72 hours prior to possession or as their bank advises.
As such, real estate agents should ensure that their clients are: (a) advised about the risk of last minute new home purchases; and (b) that the buyers should provide themselves enough time to meet their bank’s prefunding requirements – as it can cause clients to incur significant late daily interest payments to the sellers at the Prime Lending Rate + 3%.
If you have any questions concerning the new home purchases, please don’t hesitate to contact Khemka Law or counsel of your choosing. If there’s a topic you’d like us to cover, please let us know! We are always here to assist you and your clients. Thank you for your time and consideration.
Pranav Khemka, Barrister & Solicitor
P: (403) 457-9577 | F: (403) 457-9578
Suite 202, 5403 Crowchild Trail NW, Calgary, AB T3B 4Z1 | T: (403) 457-9577 | F: (403) 457-9578
LEGAL: The Thursday Tidbit provides general information and does not constitute legal advice. Circumstances may vary and no lawyer-client relationship is established from the use and reliance of this information. You are strongly advised to seek any legal advice by directly contacting Khemka Law or counsel of your choosing. Khemka Law does not warrant or guarantee the quality, accuracy or completeness of any information found within this Thursday Tidbit.