Buying property

How to buy property in Canada

Buying property in Canada is a simple and straightforward process. However, you must put everything in writing.

Once you have found your dream property, you make a purchase offer which must be made in writing. It is not necessary to ask a lawyer to prepare the Offer of Purchase, as real estate agents can help you with this process.

The offer should have a proposed deadline by which the buyer would like the purchasing process to be completed. It should also include a list of any items you would like to remain in the property (under the category “chattels included”). Add safety clauses in your offer: make the offer conditional until the building has been inspected and you have secured a mortgage. You are required to sign the offer before presenting it to the seller, thus making it both legal and legally binding.

If you are not a resident of Canada but are looking to purchase property in Canada, it is important to do all the necessary research to see just what exactly you are getting into. When traveling to Canada to make the initial purchase, make sure you bring physical and/or scanned copies of recent bank statements, tax returns and other personal documentation. If you are a Apple/Mac user, we recommend considering Intuit's Mac tax software  as you may be required to file Canadian income taxes for the first year and this is a great help when getting started. Before you know it, you will be a proud Canadian landowner.

You must also include a 10% deposit of the proposed price with your offer, which should be paid into a trusted account (escrow). If you retract your offer at this point, you will lose your deposit and may be sued.

The seller can then choose to accept your offer, reject it or make a counteroffer. In a counteroffer, changes can be made to the entire content (chattels, price, date, etc.). All modifications are to be written on paper and signed by the seller before being returned to you.

If you reach an agreement, this needs to be put in the form of an Offer of Purchase and Sale, stating the price, the deposit, the date of completion and all details mentioned. Once this document is signed by both parties, it must be sent to a lawyer.

The lawyer will then approve the document and release the deposit to the seller. It is also the lawyer's duty to conduct a property evaluation and check that the owner has settled all property taxes and utility bills.

The lawyer will then prepare a Statement of Adjustment, confirming the selling price and the amount remaining to be paid. This statement will also register any additional and previously unforeseen costs. The outstanding payments should be made to the lawyer in the form of a certified cheque. The lawyer will then transfer the money to the seller, register the sale in your name and provide the deed and new keys to the house.

Additional costs

When buying property, a land transfer tax is applied. This varies between 0.5% and 2% of the property value depending on the province. Some provinces do not apply any land transfer tax at all (Alberta, Nova Scotia and rural Saskatchewan).

Legal fees are negotiable, but can reach up to 10% of the property value depending on the province, property and the complexity of the sale. The minimum is $500 and each party must pay for their own lawyer. Your lawyer will also charge you for any costs made on your behalf, such as registration costs.

Real estate fees are negotiable between 3% and 7% of the property value. Generally, the seller pays the realtor fees, but many transactions include two agents – one for the seller and one for the buyer. This is because any agent can act on any property, even if it was not listed in their office. Agents will then divide the fee between them. If there is only one agent for the two, he must make it clear beforehand to both the seller and the buyer.

Both real estate fees and new buildings are subjected to a Goods and Services Tax (6% of the purchase price).

Further reading

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