SELLING A HOME WITHOUT A REAL ESTATE BROKER – PART 2

As a follow-up to my article published last month, I would like to elaborate on a few aspects of selling a home without a realtor since I may given some the impression that I was discouraging the use of such an intermediary.

The main message of my previous article was that should one make the informed decision of buying a home or doing any real estate transaction without the assistance of a realtor, then this person should consider consulting a notary at the beginning of the process of the offer to purchase, not only when comes time to sign the hypothec and deed of sale.

Real estate transactions involve several considerations which are usually beyond the general scope of public’s qualifications.  Taking on a sale or a purchase on your own can result in major inconvenients and/or consequences.  Realtors, with their experience and expertise, can help their clients avoid those potential pitfalls.

It is of course entirely possible to conclude a real estate transaction without a professional realtor.  However, as mentioned in my previous article, there are potential complications in private sales which are easily avoidable.  We can also add to the list published last month for example: never ending discussions on the date of remittance of the keys when the parties forgot to complete this section of the offer to purchase, vendors hiding important facts related to the property like in this case where the buyers learned after the fact that a suicide pact took place therein, etc.

Taking into account all of the resources available before deciding to sell on your own is important.  The sale should be carefully planned and prepared.  For example, the vendor shall make sure that all the proper documentation is in order, including an up to date certificate of location.  Without the guidance and advice of a professional, who will inform the vendor that his certificate of location is not up to date ?  Will he even know that he needs to provide a certificate of location ?

The recourse to a notary being mandatory for any real estate transaction involving a mortgage, why wait until the offer is finalized and firm to consult your notary ?  This is your guarantee of a complication-free private real estate transaction.

chronique parue dans Rendez Vous (TC Média) juillet 2016

Un certificat de localisation comporte-t-il une date d’expiration ?

Nombreux sont ceux qui me demandent quelle est la durée de vie d’un certificat de localisation.  Est-il bon pour 5 ans ? 10 ans ?

La réponse par le passé ne s’établissait pas nécessairement en nombre d’années et on ne pouvait pas dire qu’il y avait une date d’expiration sur un certificat de localisation.

En effet, le seul critère qui déterminait si un certificat de localisation était encore valide ou non était celui de l’état actuel de la propriété.  Si le certificat de localisation démontrait toujours la propriété dans son état actuel, qu’il n’y avait pas eu de changements depuis sa confection, alors il pouvait toujours être valide.  Et ce, même s’il datait de 10 ou 15 ans.  Il fallait donc simplement vérifier si certains changements avaient eu lieu pour déterminer si le certificat de localisation pouvait encore être utilisé ou si un nouveau était requis pour une transaction.  Les changements les plus fréquents ayant une incidence sur la validité du certificat de localisation sont les suivants :

– rénovation cadastrale (changement du numéro de lot par le gouvernement)

– changement de réglementation (par exemple, inclusion de la propriété dans une nouvelle zone d’inondation ou à risques de glissement de terrain)

– agrandissement de la bâtisse ou de l’une de ses composantes tel que balcon

– perçage d’une nouvelle fenêtre ou porte dans un mur situé à moins de 1,5 mètre de la limite du terrain

– installation, enlèvement ou déplacement d’une piscine ou d’un cabanon

– installation d’une nouvelle clôture

– dans le cas d’un condominium, modification d’une partie commune ou de la déclaration de copropriété.

À noter toutefois que les rénovations intérieures n’ont aucune incidence sur le certificat de localisation, à moins que la propriété soit un condo.  Les réparations extérieures telles que changements des fenêtres et remplacement du toit auront parfois une incidence par contre puisque de telles modifications peuvent créer des vues illégales ou empiétements chez les voisins (exemple:  remplacer une fenêtre régulière par un « bay window »).

De même, il est possible que les changements affectant une propriété n’aient pas été effectués par son propriétaire mais plutôt par un voisin.  Pensons par exemple au voisin qui a installé son cabanon en partie hors de son terrain, soit sur votre terrain.

Il faut de plus prendre considération deux éléments supplémentaires avant d’utiliser un certificat de localisation pour une nouvelle transaction :

  • sa conformité aux instructions du créancier hypothécaire. Certains créanciers hypothécaires exigeront que le certificat de localisation date d’au plus 5 ans. Pour d’autres, un certificat de localisation de 20 ans est toujours acceptable à la condition toutefois qu’il démontre toujours l’état actuel de la propriété. Dans le cas où un nouveau certificat de localisation doit être confectionné à la demande du créancier hypothécaire dans le cadre d’une transaction immobilière mais ne démontre aucun changement par rapport au précédent, il sera à la charge de l’acheteur et non pas du vendeur.
  • son usage permis par la réglementation des arpenteurs-géomètres. Le Règlement sur la norme de pratique relative au certificat de localisation prévoit en effet que le certificat de localisation « le certificat ne peut être utilisé ou invoqué à une autre fin sans une autorisation écrite de » l’arpenteur-géomètre qui l’a préparé. Ce qui fait en sorte que l’usage du certificat de localisation est la plupart du temps limité au cadre de la confection d’un acte de vente ou d’hypothèque. Même toujours valide, donc démontrant la propriété dans son état actuel, le certificat de localisation ne pourrait pas servir par exemple à établir les limites du terrain.

En conséquence, il était impossible par le passé d’affirmer qu’un certificat de localisation avait une durée de vie en termes de mois ou d’années.  Le critère étant jusqu’à tout récemment uniquement l’état actuel de la propriété, un certificat de localisation datant d’un mois pouvait ne plus être valide alors qu’un certificat de localisation datant de 15 ans l’était encore.

Un jugement important a été rendu en avril 2017 par la Cour suprême, faisant en sorte qu’il est maintenant requis d’obtenir un nouveau certificat de localisation après 10 ans.  Pourquoi ?  Parce que le Code civil du Québec permet d’acquérir le droit de propriété d’une parcelle de terrain que l’on a occupée pendant plus de 10 ans sans opposition.  Si votre voisin a placé son cabanon en partie sur votre terrain, il pourrait demander au tribunal de reconnaître son droit de propriété de cette partie de terrain.  Même chose pour une entrée d’auto ou un stationnement qui ne respecterait pas les limites officielles du terrain de son propriétaire ou qu’on a laissé d’autres personnes utiliser sans opposition trop longtemps.

THE RISKS OF NOT DIVORCING WHEN A SEPARATION HAPPENS

Several clients passing by my office have been separated for a long time but never obtained a divorce. Without judging the reasons which could motivate someone to stay simply separated without having a divorce judgment, even when there is a new relationship, here are a few good reasons to divorce without too much delay when the separation is final, courtesy of a notary who has seen several complications caused by the absence of a divorce judgment :

Because you might not be able the buy your dream property with your new lover

You are separated since a couple of years. You are now living with a new person. You have finally found your dream condo or house, which you want to purchase together with this new person in your life. But: your have never divorced from your ex , whom you have married when you were both domiciled in a foreign country where the default matrimonial regime is a community as to property. You did not sign either a marriage contract (“prenup”). Your ex still lives in that country or maybe he lives in the province of Québec but you have absolutely no contact with him anymore. You might even ignore where your ex lives.

Bad news : you will not be able to buy this dream condo or house with your new lover. The house / condo will probably be registered only under the name of your new lover. Why? Because your ex would automatically own a part of the condo / house if your name is registered on title. If you have to take a mortgage in order to finance the purchase of the condo / house (as the vast majority), your ex will have to sign the deed of hypothec with Bank. His signature will also be required for any subsequent transaction on the house / condo : renewal of the mortgage, sale, etc.

Because you don’t want your ex to automatically own half of your assets

So, you are still married with your ex under a regime of community as to property under the old rules of the Code civil du Bas Canada or under the laws of a foreign country. Several countries still have legal rules having for consequence that the spouse, simply because they are married together, share the ownership of their assets. Sometimes, it will be a universal community as to property, in which case all the assets of the spouses are shared, without any exception. For example, without any contrary choice by the spouses, people married in Rwanda are under a regime of universal community as to property. Sometimes, i twill be a reduced community as to property, in which case some assets will not be shared (the assets acquired from the estate of a parent or those given by a parent for example). Reduced community as to property can be found in some countries from East Europe such as Romania and Bulgaria.

Consequences? Your ex automatically becomes the owner of 50% of the assets you own, unless exceptions apply. If you finally decide to divorce, you should not forget to ask for your ex to cede you all of his rights in the assets you acquired after the separation. You should also ask in the process of the divorce that any partition be made at the date of separation (not at the date of the divorce). And if you pass without having obtained your divorced, half of your assets might go to your ex even if you have left everything to someone else in your will.

Because you don’t want to share with your ex the value of your assets acquired after the separation

You still are married with your ex but you are not married under such a community as to property. You may be married under the laws of the Province of Québec (partnership of acquests) or you have executed a marriage contract (prenup) establishing that your ex and yourself are separated as to property (each one keep his/her own assets).

You are lucky! The value of only some of your assets will be shared with your ex.

In both cases (partnership of acquests and separation as to property), the family patrimony will is applicable. Which means that the value of the family residences, vehicles and RRSPs will be shared with your ex. Your ex is entitled to half the value of such assets you may own if you pass or if you finally decide to ask for a divorce, subject to certain deductions. As the time pass by, the value of those assets will increase and the amount payable to your ex may be important. Once again, it may be important to ask for the partition in the divorce proceedings to be calculated as of the date of the separation instead of the date of the divorce. Let’s just hope that there will not be a conflict with regards to the separation date! See for example http://citoyens.soquij.qc.ca/php/decision.php?ID=49EC1C5D3ADEBFD4C91823B53311A8BC&page=1 (in french) where Madame obtained the partition of the value of the country house acquired by her ex-husband bought it after the separation.

In the case of the partnership of acquests, a partition of the value of all the assets acquired during the marriage with the proceeds of your work shall also be done.  The money in your bank account might be shared !

In all those cases, your ex will have the possibility to renounce to the partition if you pass or when you’ll divorce. Will he ?

Because you don’t want your ex to inherit from you

You pass without misfortunately obtained your divorce. There are strong possibilities that your ex will inherit from your assets or a part of them, even if your last wishes were to a contrary effect!

If you have made a last will and testament by which you were leaving all your assets to your ex and had never modified it before your death, your ex will get your assets as mentioned in the last will and testament. The separation in itself does not cancel the last will and testament.  The divorce judgment does. Once the divorce is final, all the legacies and bequests made in favour of your ex in your last will and testament are automatically cancelled, as well as his appointment as liquidator (executor) of your estate.

If you did not signed a last will and testament, your ex will inherit from only a part of your assets. He’ll get a third of your assets if he inherits with your children, or two thirds if he inherits with your parents and siblings. Obviously, your new lover (common law partner) will get nothing.

Once again, your ex will be presented with the possibility to renounce to your estate. Will he?

Because you don’t want your new lover to settle your estate with your ex

You have the misfortune to pass without having divorced and you have minor children, either from your marriage or from your new relationship. Moreover, you were the co-owner of your house with your new relationship.

You did not take the precaution of making your last will and testament. Accordinlgy, your ex will get a third of your share of the house and your minor children will get the two thirds of your share of the house. Your new spouse will then be forced to settle your estate together with your ex. They will have to appoint together a liquidator (executor) of your estate or, if they can’t agree, ask the court to appoint one. Your new spouse will probably have to buy from your ex his share of the house, which house you had however bought with your new spouse with the possible intention to raise your children there, or at least with the intention to let him stay there to raise your children if something would happen to you.

You were cautious and made a last will and testament by which you left everything to your new spouse and to your minor children. You also appointed your new spouse as the liquidator of your estate. However, he will still have to settle the family patrimony and the partnership of acquests with your ex. Your new spouse may be forced to pay important amounts to your ex before inheriting himself and before your children could inherit from you. Moreover, if one of your minor children is born from your marriage with your ex, it’s him who will represent him in your estate.

Because you don’t want to have to pay the debts of your ex after his/her decease

You have been separated for several years from your ex when he pass without having made a last will and testament or without having changed his last will and testament by which he left you all his assets. To make things worse, your ex had financial or health difficulties or a gambling problem which put him in a very difficult position. He has more debts than assets. Maybe he cashed all his RRSPs in order to satisfy his basic needs.

On your end, you have no intention to assume the debts of your ex. You wish to renounce to his estate and get rid of those problems. You may indeed renounce to the estate of your ex and remit the file to Revenu Québec, direction of the unclaim property. One of the first verificationns Revenu Québec will make after receiving the file will be to make sure the partition of the family patrimony and of the partnership of acquests (or other matrimonial regime) is done. Revenu Québec will force you to disclose all of the assets you own which are part of the family patrimony and the matrimonial regime (family residences, vehicles, RRSPs, etc.). You should make sure BEFORE renouncing to the estate of your ex that you do not owe him / his estate any amount for the partition of the family patrimony and matrimonial regime. If so, then you might prefer to settle the estate of your ex yourself and pay his debts after all.

Conclusion

The fact of not divorcing presents several disadvantages on a legal and a financial point of view, which may complicate your life or the life of those you leave behind.

If you decide after all not to divorce after your separation, your notary can help your to minimize the consequences of your choice by drafting your last will and testament or by preparing a marriage contract to establish a separation as to property between your ex and yourself. It is question of a minimization of the disadvantages, not a total cancellation of them.

Final reminder : a divorce judgment is final or valid only after the expiration of a 30 days delay. Don’t wait to be too old. Imagine if your ex passes only a few days after the divorce judgment… Yes, this happens in real life !

An alternative to divided co-ownership: undivided co-ownership

Since several years, the conversion of existing properties into divided co-ownership is strictly legalized. Accordingly, a property which had at least 1 apartment rented in the last 10 years can’t be converted without the authorization of the Régie du Logement. If this property is situated in the City of Montréal, the owner will first have to obtain a derogation from the borough since all conversion into divided co-ownership is in principle forbiden in Montréal. For example, in the borough Le Sud-Ouest, the derogation will not be issued if the property is inoccupied and the vacancy rate of the residential apartments in the area is less than 3%. Moreover, several boroughs of the City of Montréal have adopted a new by-law with regards to the creation, maintenance and improvment of the parks, playgrounds and natural spaces (see of example http://ville.montreal.qc.ca/portal/page?_pageid=5798,42657625&_dad=portal&_schema=PORTAL&id=23828 ). As a result of this new by-law, the owner of an existing property who proceed with its conversion into divided co-ownership will be imposed a tax of 10% of the value of the land on which the building is situated.

In practical terms, here are the steps to be respected by the owner of an existing property who desires to convert it into divided co-ownership :

  • Request a permit for the conversion into divided co-ownership from the borough and obtain the required derogation (variable costs depending on the boroughs. Between 300$ and 2600$ in the borough Le Sud-Ouest – see http://www1.ville.montreal.qc.ca/banque311/content/le-sud-ouest-%E2%80%93-d%C3%A9rogation-%C3%A0-linterdiction-de-convertir-un-immeuble-en-copropri%C3%A9t%C3%A9-divise )
  • Request the authorization to convert the property from the Régie du logement if one or more apartments have been rented in the last 10 years. The owner will generally be assisted at this stage by a notary or a lawyer (variable fees).
  • Subdivide the property in order for each apartment to be a separate entity at the Registre foncier. this step will be done by a land surveyor (variable fees).
  • Prepare and publiesh the declaration of co-ownership, which has to be done by notarial deed (variable fees). If the authorization of the Régie du logement has been obtained, it is mandatory for the declaration of co-ownership to be published in the year following the authorization unless an extension of delaiy is obtained.
  • Have a new survey prepared by a land surveror showing the property after the conversion into condos (variable fees).
  • Pay the tax for the creation, maintenance and improvment of the parks, playgrounds and natural spaces in the boroughs where this tax is applicable. For example, in the case of a duplex situated in the borough Le Sud-Oues having a municipal evaluation of  472 900$ of which 155 500$ is for the land, the taxe will cost 15 550$.

The total cost of the conversion in this case will be amounting to approximately 25 000$. Is there any way of avoid all those costs and delays ? The answer is yes!

Indeed, for the moment, there is no regulation concerncing the conversion of existing properties into undivided co-ownership. In this type of ownership, the buyer of an apartment is purchasing a percentage of the whole building with the exclusivel right to use his apartment. No permit request at the borough necessary, no authorization of the Régie du logement required, no subdivision to be done by the land surveyor and no tax for the creation, maintenance and improvment of the parks, playgrounds and natural spaces  to pay !  Regardless to the type of conversion chosen (divided or undivided cop-ownership), the result will be the same : each apartment can be sold separately.

The steps to convert an existing property into undivided co-ownership are limited to :

  • Have a new survey prepared by a land surveror showing the property with a plan of each apartment
  • Prepare and publish a notarial indivision agreement which will establish the rules governing the relations between the co-owners.

In undivided co-ownership, the co-owners will share the accounts of municipal and school taxes in proportion to the percentages fixed by the indivision agreement. The conversion into undivided co-ownership does not lead to an increase of the property taxes, contrary to the conversion into condos.

However, it may be noted that undivided co-ownership involbes particularities which will eventually be the subject of an article in this blog (see http://www.lapresse.ca/maison/immobilier/201311/11/01-4709318-que-savoir-avant-dacheter-une-copropriete-indivise.php ).

The main goal of all these regulations from the City of Montréal with regards to the conversion of existing properties into condos, being the protection of the rental housing, is certainly a laudable goal. However, I am of the opinion that it will cause the contrary effect. By discouraging the conversion into condos, the City of Montréal is encouraging undivided co-ownership, which will in addition will deprive the City from vast revenues.

LA COPROPRIÉTÉ INDIVISE : ALTERNATIVE À LA CONVERSION D’IMMEUBLES EN CONDOS

Depuis de nombreuses années, la conversion d’immeubles existant en copropriété divise est largement encadrée au niveau légal. Ainsi, un immeuble ayant comporté au moins 1 logement loué dans les derniers 10 ans ne pourra être converti sans l’autorisation de la Régie du Logement. Si cet immeuble est situé dans la Ville de Montréal, il faudra d’abord obtenir une dérogation de l’arrondissement puisque toute conversion en copropriété divise est en principe interdite à Montréal. Dans l’arrondissement Sud-Ouest par exemple, la dérogation ne pourra pas être obtenue si la bâtisse est inoccupée et que le taux d’inoccupation des logements résidentiels dans le secteur est de moins que 3%. De plus, de nombreux arrondissements de la Ville de Montréal ont adopté une nouvelle réglementation pour la création, le maintien et l’amélioration des parcs, des terrains de jeux et des espaces naturels (voir par exemple http://ville.montreal.qc.ca/portal/page?_pageid=5798,42657625&_dad=portal&_schema=PORTAL&id=23828 ). Ainsi, le propriétaire d’un immeuble existant qui le convertit en copropriété divise devra acquitter une taxe de 10% de la valeur du terrain sur lequel est située sa bâtisse.

Au niveau pratique, les étapes suivantes devront être respectées par le propriétaire d’un immeuble existant qui désire le convertir en condos :

  • Demander un permis de conversion en copropriété divise à l’arrondissement et obtenir la dérogation requise (coût variable selon les arrondissements. Entre 300$ et 2600$ dans l’arrondissement Sud-Ouest – voir http://www1.ville.montreal.qc.ca/banque311/content/le-sud-ouest-%E2%80%93-d%C3%A9rogation-%C3%A0-linterdiction-de-convertir-un-immeuble-en-copropri%C3%A9t%C3%A9-divise )
  • Demander l’autorisation de convertir l’immeuble à la Régie du logement s’il y a eu un ou des logements loués dans les derniers 10 ans. Le propriétaire sera généralement assisté par un notaire ou un avocat à cette étape (honoraires variables).
  • Subdiviser l’immeuble pour que chaque appartement soit une entité distincte au Registre foncier. Cette étape sera effectuée par un arpenteur-géomètre (honoraires variables).
  • Préparer et publier la déclaration de copropriété, laquelle est nécessairement un acte notarié (honoraires variables). Si l’autorisation de la Régie du logement a été obtenue, la déclaration de copropriété devra obligatoirement être publiée dans l’année suivant la décision à moins qu’une prolongation de délai ne soit obtenue.
  • Obtenir d’un arpenteur-géomètre un certificat de localisation démontrant l’immeuble une fois converti en condos (honoraires variables).
  • Acquitter la taxe pour la création, le maintien et l’amélioration des parcs, des terrains de jeux et des espaces naturels dans les arrondissements où cette taxe est applicable. Par exemple, pour un duplex situé dans l’arrondissement Sud-Ouest évalué à 472 900$ dont le terrain vaut 155 500$, cette taxe s’élèvera à 15 550$.

Le coût de la conversion dans ce cas tournera donc autour de 25 000$. Existe-t-il une manière d’éviter tous ces frais et les délais ? La réponse est oui.

En effet, pour l’instant, aucune réglementation n’encadre la conversion d’immeubles existants en copropriété indivise. Ainsi, le propriétaire d’un appartement se portera acquéreur d’un pourcentage de l’immeuble total avec le droit exclusif d’occuper son appartement. Pas de demande de permis à l’arrondissement, pas de demande à la Régie du logement, pas de subdivision par l’arpenteur et pas de taxe pour la création, le maintien et l’amélioration des parcs, des terrains de jeux et des espaces naturels dans les arrondissements!  Et peu importe le type de conversion choisi (copropriété divise ou copropriété indivise), le résultat sera le même: chaque appartement pourra être vendu séparément.

Les étapes de la conversion en copropriété indivise se limitent à ce qui suit :

  • Obtenir d’un arpenteur-géomètre un certificat de localisation démontrant l’immeuble avec un plan de chaque appartement et étage.
  • Préparer et publier une convention d’indivision par acte notarié. Cette convention établira les règles qui gouverneront les relations entre les copropriétaires.

En copropriété indivise, les propriétaires se partageront les comptes de taxes municipales et scolaires selon les pourcentages établis à la convention d’indivision. La conversion en copropriété indivise n’entraîne donc pas une augmentation des taxes foncières contrairement à la conversion en condos.

À noter toutefois que la copropriété indivise comporte ses particularités qui feront éventuellement l’objet d’un article sur ce blog (voir http://www.lapresse.ca/maison/immobilier/201311/11/01-4709318-que-savoir-avant-dacheter-une-copropriete-indivise.php ).

Le but de toute cette réglementation de la Ville de Montréal en matière de conversion en condos, soit la protection du parc locatif, est certes louable. Cependant, je suis d’avis qu’elle aura l’effet contraire. En décourageant la conversion en condos, la Ville de Montréal encourage la copropriété indivise qui en plus la privera de revenus importants.

Much more than 19 things you might not know your notary does !

English version of my latest article…

If you replace Ontario by Québec and lawyer by notary, here is the link to an interesting summary of the notary’s work for real estate transaction published on the Desjardins website de Desjardins :

http://blogues.desjardins.com/co-opme/2014/04/19-things-you-might-not-know-your-lawyer-does.php

This article well summarize the various steps of a file of purchase with a mortgage. However, it seems incomplete to me. The uninitiated might not realize the importance of the notary and of the tasks he(she) does for the benefit of his(her) clients.

Accordingly, let me clarify each of those 19 things by underlining what I accomplish as a notary in addition to what is specified in the article for such a file:

1.   I do much more than reviewing the vendor’s documents. I also make sure the vendor provides to the purchaser all of the documents he undertook to deliver: title deed, certificate of location, declaration of co-ownership, indivision agreement, etc., and that those documents are certified copies when required. Moreover, I verify that those documents are complete. It could be for example a modification to the offer to purchase for anything the vendor and the purchaser may have agreed upon after the initial offer to purchase. Moreover, I make sure that the documents are accurate and I obtain revised documents as the case may be. For example, do the instructions received from the mortgage creditor contain any mistake with regards to the interest rate, the amortization, amount borrowed, etc.?  If the documents provided show any irregularities, I will obtain the appropriate correction prior to the transaction. For the certificate of location, it might be necessary to get a servitude for example. For the statements of municipal and school taxes, I will ensure to pay out of the proceeds of the sale (vendor’s funds) any arrears and interests.

2 and 3.   If the title examination shows any irregularities, I will make sure the appropriate correction is done prior to the transaction at the vendor’s costs. If such correction is not possible, I’ll inform the purchaser, who will then have the opportunity to negotiate with my help another settlement (ex : reduction of the sale price, obtaining of a title insurance) or simply get out of the deal if the severity of the irregularity justifies it.

4, 5 and 6.     If the parties to the transaction are individuals, I’ll obtain copies of their IDs. If the parties are companies instead, I’ll verify in particular their registration with the Registraire des entreprises and I’ll obtain the appropriate resolutions of their board of directors. As for the capacity of the parties to the transaction, I’ll get any pertinent proof of their matrimonial status (marriage contract, divorce judgment, etc.) as well as the signature of any spouse if required. When a party to the transaction is represented under the terms of a power of attorney or a mandate in case of incapacity, I’ll obtain a confirmation of the validity of the said power of attorney or mandate in case of incapacity together with a copy of the judgment homologating the mandate in case of incapacity.

7.         In the case of a condo or an apartment held in joint ownership (indivision), I’ll obtain 2 confirmations of insurance: one under the name of the Syndicate of co-ownership or the names of all the undivided co-owners for the building as well as one under the name of the buyer for his personal belongings, the improvement and the civil liability. I will make sure that any insurance confirmation is complete and does not contain any mistake. It often happens that I have to get corrections to the insurance confirmation received: name or address of the mortgage creditor missing or incorrect, name of the insured incorrect, effective date not corresponding to the date of the closing, etc.

8 and 9.   At the time of the interview for the signature of the mortgage by the purchaser, all documents are read and explained to him les documents. I usually take advantage of this meeting to show the certificate of location to the purchaser and discuss with any particularity of the file. It could be for example explaining to him which additional insurance he should take if the property he is buying benefits from acquired rights for the non-respect of the municipal by-laws.

10 and 11.   I’ll have the Registry Office correct any mistake it may have made in publishing the deed of hypothec (mortgage). I must verify that the deed of hypothec has been published on the right property, that the name of the parties are spelled correctly on the index of immovables, that the amount published is the same as the one in the deed of hypothec and that the notice of address of the mortgage creditor has been duly indicated on index of immovables.  This step is repeated at the publication of the deed of sale.

12.  I also have to verify that the mortgage creditor has sent on the requested date the proceeds of the mortgage and that the amount is accurate.

13.  There are 3 documents to prepare with regards to the financial side of the transaction: the adjustments, the statement of disbursements of the purchaser and the statement of disbursements of the vendor.

14.  The purchaser has to provide the adjustments in addition to his cash down by bank draft or an electronic transfer of funds when available. No personal or certified cheque personnel accepted ! I oblige the adjustments not to be paid to the vendor by regular cheque as a security measure for him (just imagine if the personal cheque of the purchaser for the adjustments would be NSF !). I will ensure that the purchaser’s funds are provided in a timely way to respect the rules of banking clearance and that the amount is sufficient to cover the transaction.  All funds must be avaiIable in my trust account at the time of execution of the deed of sale.

15.  Once again, at the meeting for signature of the deed of sale, the said deed will be read to the parties and all necessary explanations and advices will be given to the parties. This meeting does not consists in only having the parties sign a sheet of paper. As a notary, I must make sure that each party understands the documents signed and that each consent has been given in a free and informed manner as required by law. I withhold the funds of the vendor until such time as the deed of sale is published without adverse entries. In case of an adverse entry (ex : a mortgage under the name of the vendor published between the time of the execution of the deed of sale and its publication), all appropriate measures will be taken to avoid any consequence on the purchaser and his mortgage creditor. Which means for example that I would pay out of the funds of the vendor this new mortgage and that I would obtain the discharge at the costs of the vendor. If the funds are not sufficient, the vendor would have to provide additional funds without delay to solve the situation.

16.  Once the mortgage of the vendor is duly cancelled, I will confirm with a final report to the mortgage creditor of the purchaser that its mortgage is the sole registered against the property.

17.  The specific aspects of the file may also be related to the parties instead of the property itself. I may have to do additional researches for example on the matrimonial status of the vendor if he married in another country in order to determine if the consent of his spouse is necessary or not for him to sell the property. It is sometimes necessary to obtain a judgment from the court to force the execution of a deed of sale by a party to the transaction or by his spouse or to settle the disbursement of the funds.

18.  I must also keep in my file a copy of all the documentation for a minimal period of 10 years as well as the originals of the deed of sale and the deed of hypothec (mortgage) until such time I ceased to practice as a (retirement, resignation or death).  Moreover, I’ll keep in my file the copies of documents on behalf of certain mortgage creditors and remit the same to them upon request.

19.  This is probably the most important aspect of my profession of notary, together with ensuring the security of the transaction!

Additional verifications made by the notary for a condo purchase

Version anglaise du texte paru plus tôt cette semaine

When one of my clients is purchasing a condo, there are numerous additional verifications I do in order to make sure he is not also purchasing bad surprises :

  1. Is the Syndicate of co-ownership duly registered with the Registraire des entreprises ? If not, such a registration has to be done prior to the transaction, which may postpone the signing the deed of sale. Why proceed with this verification ? Firstly, because the Syndicate of co-ownership is obligated by law to register itself, failing which the Registraire des entreprises may dissolve the Syndicate of co-ownership (have its existence terminated). Secondly, because the main insurance policy in the case of a condominium must be issued under the name of the Syndicate of co-ownership, which is a separate entity in itself in the same way a company is. In case of a claim, the insurance company may refuse to indemnify the Syndicate of co-ownership if it can prove its legal existence.
  2. Is the registration of the Syndicate of co-ownership with the Registraire des entreprises up to date? The Syndicate of co-ownership has the obligation to produce an annual declaration to ensure that the information contained in its registration are always accurate. Otherwise, penalties and interests will be charged by the Registraire des entreprises. The purchaser of a condo could then have to pay a couple tenths or hundredths dollars in additional fees following the transaction.
  3. Is the registration of the Syndicate of co-ownership with the Registraire des entreprises made under the right name? Since 1994, the official name of the Syndicate of co-ownership is indicated in the Declaration of co-ownership. In the event where the name as registered would not match the name in the Declaration of co-ownership, the transaction should not be finalized before a correction is made, either by correcting the registration with the Registraire des entreprises to indicate the same name as the Declaration of co-ownership, or by proceeding with an amendment to the Declaration of co-ownership. Such an amendment requires the consent of a majority of the co-owners and has to be made by a notarial deed which will then have to be duly registered at the Land Registry.
  4. Does the Declaration of co-ownership contain unusual clauses which may affect the buyer or cause him inconvenience? One may think for example of a buyer who would exercise his profession in his condo. Since the modifications of the by-laws contained in the Declaration of co-ownership are not published at the Land Registry, I also verify with the Syndicate of co-ownership if such modifications have been made.
  5. Is the certificate of location showing the actual state and condition of the condo and does it reveal irregularities? You can consult previous article with regards to this matter.
  6. Will the buyer have to pay additional amounts to the Syndicate of co-ownership ? To prevent this, I always request from the Syndicate of co-ownership a written confirmation prior to the transaction, including inter alia the following items :
  • Condo fees paid by the vendor
  • Contingency fund
  • Annual budget (surplus or deficit)
  • Court cases by or against the Syndicate of co-ownership
  • Modifications to the by-laws subsequent to the Declaration of co-ownership
  • Special assessments
  • Insurance benefits
  • Factors which may diminish the value of the co-ownership or increase the condo fees

Just imagine that you receive a bill from the Syndicate of co-ownership of a couple of hundredths or even thousandths of dollars just a few weeks after purchasing a condo for a special assessment voted around the same time. I always make sure by my verifications that such a situation won’t happen to my clients.

  1. Is the appropriate insurance coverage in place? I have to obtain prior to the transaction 2 insurance binders : one under the name of the Syndicate of co-ownership and one under the name of the buyer. As a notary, I must me advise every buyer that the insurance held by the Syndicate of co-ownership is not sufficient even if it covers the building in which the condo is situated. Most of the improvments contained in the condo, even those attached to the building, are not covered by the insurance of the Syndicate of co-ownership. It would be the kitchen cabinets for example. Accordingly, the insurance of the buyer must to include 3 items : his personal belongings, his civil liability and the improvments.

When the certificate of location is made before the declaration of co-ownership

certiloca

Here is a common problem at the time of the resale of a condo, either it’s the first sale after the initial one from the builder or not. Indeed, numerous sellers are remitting to me for their transaction a certificate of location made before the signature of the declaration of co-ownership.

The seller of an immovable in Québec must provide the purchaser with the certificate of location in their possession as per section 1709 of the Code civil du Québec. Condo builders generally don’t undertake to provide more than what they are obligated to by law. However, for a resale, the vendor must provide the purchaser with a certificate of location « showing the property in its actual state » in accordance with the offers to purchase in use (OACIQ, Duproprio, etc.). It also forms part of my duty to advise as a notary to inform the purchaser to this effect. Moreover, a certificate of location which is not up-to-date will not be acceptable for the mortgage lender of the purchaser, who may then refuse to proceed with the loan necessary for the purchase.

In the particular case of a condo, does the certificate of location show the actual state of the immovable is made before the declaration of co-ownership ? The answer is negative.

Indeed, as per section 1038 of the Code civil du Québec, the divided co-ownership (the condos) doesn’t exist until the declaration of co-ownership is signed. The certificate of location is accordingly made on a regular building, not on condos. Even if the land surveyor may have qualified parts of the building as common and private in his certificate of location, it’s only the declaration of co-ownership which can determine the qualification of each lot forming the co-ownership (common or private). The official deposit of the cadastral plans is not sufficient, the declaration of co-ownership must be signed and published for the certificate of location to relate it and to represent the actual state of the immovable.

The logic is the same if there are any modification to the declaration of co-ownership after the confection of the certificate of location : a new one will be required for the sale. Moreover, there is no distinction to make between a new condo (built by a builder) and a conversion (existing immovable converted into condos).

What would be the advantages of a new certificate of location for the purchaser ? It would inter alia permit to make sure the condo corresponds to the cadastral plans. The certificate of location dating before the declaration of co-ownership being generally made on the complete building instead of the apartment only as the new, the land surveyor often did not measured every apartments to verify the concordance of the measurements with the official plans. I thus discovered in a few files that the condo was bigger than the plans (ex : an empty space in a common area which the builder integrated as a locker in an apartment, ceilings higher than on the construction plans, missing beams, etc.).

Accordingly, I always make sure that the purchaser of a condo receives an up-to-date certificate of location showing no irregularities and this before the signature of the deed of sale. Because nobody wants to buy problems, it will then be possible to solve them in time !

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