Trust Account, Inspections, and Appraisals
Inspections and Appraisals
In Canada, most buyers will have the property inspected by a licensed home inspector within the time frame specified in the purchase agreement. Some buyers may choose to have multiple inspections carried out by specialists, such as those who focus on roofing, HVAC systems, or structural integrity.
If the offer is conditional upon financing, a licensed appraiser will assess the property’s value to ensure that the lending institution is making an informed investment. The lender requires this to verify the property’s value and suitability as collateral. For commercial properties, buyers may also need to conduct an environmental audit or soil testing as required by their lender.
The Closing.
In Canada, a real estate lawyer typically acts as the closing agent. Their responsibility is to ensure that the property has clear title, free from any encumbrances, such as mortgages, liens, or easements. They will conduct a title search, ensure that any existing debts are settled, and verify that all necessary documents are in place to transfer ownership. A clear title guarantees the buyer that no legal issues will arise after the closing.
Contingencies.
A contingency is a condition that must be met for the purchase agreement to be legally binding. Common contingencies include financing approval, a satisfactory home inspection, or an appraisal. If a buyer includes a home inspection contingency, their contract is binding only once a licensed inspector has provided a satisfactory report.
Before completing the purchase, the buyer will conduct due diligence, including:
- Securing financing and insurance;
- Reviewing legal documents like the preliminary title report and any disclosures;
- Conducting property inspections, which may include evaluations for roofing, termites, boundary surveys, wells, septic systems, mould, lead-based paint, and more.
Based on the results of these inspections, the buyer may either:
- Move forward, having removed contingencies and progressing towards closing or
- Request a renegotiation of terms (often the price) based on the inspection findings.
At this stage, it’s crucial to respond objectively and fairly. A professional real estate agent plays a vital role here, guiding you through negotiations while keeping your best interests in mind. With our experience in property sales, we are committed to achieving the best outcome for you.
Loan Approval and Appraisal.
It’s advisable to accept buyer offers with pre-approval or a written loan commitment from a lender. This is more reliable than a pre-qualification. Expect the lender to send an appraiser to assess your property to ensure the sale price aligns with the property’s value.
These processes are standard in Canadian real estate transactions and ensure that buyers and sellers proceed confidently.