Buying property can be very confusing, especially if you are a first-time home buyer. This confusion is often compounded by the fact that purchasing or selling a home is often the largest single financial decision a person makes in their lives. You need a diligent and meticulous attorney who understands the complex regulatory framework, governmental agencies, process, and associated costs. Property transactions are perceived as routine but this is completely deceiving; significant amounts of money and risk are involved.
We have put this page together to help you understand the process and costs involved. This page is meant as a brief summary for your benefit; if you are buying or selling a home you will need more specific advice catered to your particular situation. Don’t hesitate, call the offices of Lecky Law right now.
PEI property law is based on a complex ‘registry system’. Many provinces such as Ontario and New Brunswick have moved to a ‘land titles’ system which simplifies the determination and verification of title to real property. In PEI, title to real property needs to be traced back a minimum of 40 years to ensure no potential adverse claims exist. This means that purchasing property in PEI requires more diligence by the attorney representing the purchaser.
To further complicate matters, on PEI foreign land ownership is restricted by the Lands Protection Act. An individual residing outside of PEI cannot purchase more than 5 acres of land or 165 feet of shore frontage without complying with complex regulations and without special approval of the government. Call Lecky Law today for a telephone consultation.
The agreement of purchase and sale is executed. Be cautious before signing these as they are binding agreements. In particular, you must ensure that any necessary conditions have been inserted, such as a home inspection, financing, non-resident approval, etc. (see next point).
Often the agreement is conditional on the obtainment of financing within a certain period of time. The purchase may also be conditional on Lands Protection Act approval for non-residents in some circumstances (ie, over 5 acres or 165 ft. shore frontage), zoning approval, subdivision approval, a home inspection, the sale of another property, etc. It is important that these are inserted before signing the agreement. A home inspection clause is important as the caveat emptor (buyer beware) principle means that buyers must be proactive and check for problems.
There is a period of time in the agreement when the purchaser’s lawyer reviews the legal title of the property. If a problem is found, an objection is made and the lawyer for the sellers (vendors) works to resolve the problem. As a general but not absolute rule, all objections must be raised prior to or on the date set in the agreement.
Various adjustments are generally performed to the final price. These include adjustments for the real property tax, oil, and propane. Generally a full tank of oil and propane is “bought” with the property by the buyer. There are also adjustments to utilities like water. Closing is when executed documents, funds and keys are exchanged to complete the transaction. Most importantly, the closing day is the day when the buyer takes title and possession of the property!
