$5.00
BUYING AND SELLING
ARoUSE
IN TIlE YUKON
T:L~~~~-
FOCI
£ae
M. Lynn Gaudet, LL.B.
Yukon Public Legal Education Association
1992
Yukon Public Legal Education Association
Box 2799
Whitehorse, Yukon YIA SK4
667-4305 (call collectfrom outside Whitehorse)
Yukon Public Legal Education Association is a non-profit society dedicated to
providing Yukoners with infonnation about the law. We are funded by
Department of Justice, Canada and the Department of Justice, Government of
the Yukon.
French translation and financial assistance:
Bureau of French Language Services
Executive Council Office
Yukon Government
Copyright 1992
We are delighted if people want to reproduce this material for non-commercial
purposes, as long as YPLEA is acknowledged. A phone call or note to us could
assure you that the material is still current.
ISBN 0-921187-32-7
Typesetting and layout: Horizon Graphics, Whitehorse
BUYING AND SELLING
A HOUSE
IN THE YUKON
M. Lynn Gaudet, LL.B.
Yukon Public Legal Education Association
1992
CONTENTS
Chapter 1
THE REAL COST OF BUYING A HOUSE
1
Chapter 2
AN OVERVIEW OF THE WHOLE TRANSACTION
5
Chapter 3
MAKING AN OFFER
9
Chapter 4
FINANCING THE SALE
13
Chapter 5
THE REAL ESTATE AGENT1S ROLE
15
Chapter 6
THE LAND TITLES OFFICE
18
Chapter 7
DO YOU NEED A LAWYER?
24
Appenix A
VENDORIS AFFIDAVIT
32
Appendix B
GLOSSARY OF LEGAL TERMS
33
In this booklet. ..
The person buying a piece of property is called
"the purchaser" or the "buyer."
The person selling a piece of property is called
"the vendor" or the "seller."
Dear Reader:
If you're planning to buy or sell a house, this booklet is for you. It
describes what is involved in a typical sale. It does not apply to mobile
homes, unless you are also buying the land the trailer is on.
Our main goal is to make you a more informed consumer of the services
you may obtain from real estate agents or lawyers. Therefore, you won't
find here a step-by-step guide for buying a piece of property on your
own. Real estate deals can vary so much
with each transaction that it is
impossible for us to give specific
instructions on the documents involved,
and still make this a short and readable
booklet for everyone.
If you are considering doing the
paperwork on your own, first read this
booklet carefully and make sure you
understand all aspects of the transaction.
Prepare your documents in rough, and at least get a consultation with a
real estate lawyer to discuss the steps you plan to take and see what,
if any, risks you may be taking in the particular circumstances. This
booklet contains general legal information, and is not a substitute for
legal advice in the context of a specific transaction.
See the list of agencies mentioned on the inside back cover for further
information or assistance. All of the .legal terms used in this booklet are
defined in the glossary at the back for your convenience. If you still have
questions, you can call the Law Line at 668-5297. From rural Yukon,
call 1-403-668-5297.
Happy reading!
IChapter 1
THE REAL COST OF BUYING A HOUSE
For most people, a home is the single largest purchase they will make in their
lifetime. It is not a decision that should be made lightly. Besides the legal
obligations that you incur when you offer to buy a house, there are many
financial aspects of the transaction that may cost more than you had planned.
In considering whether you can afford to buy the house, you should be aware of
the charges that must be paid at the outset. In this chapter we describe the costs
that often arise in addition to the downpayment.
First, a word about the downpayment. If you intend to get a mortgage, you will
need to put at least 10% of the purchase price down unless you are a first time
homebuyer. The Canada Mortgage and Housing Corporation (CMHC) has a
program whereby first time homeowners need only put down 5% of the
purchase price. You cannot usually borrow money for the downpayment. Of
course, the more money you can put down, the smaller the mortgage you will
need, considerably reducing the total cost you will pay in interest over the years.
Besides the downpayment...
Besides the downpayment, here are some of the other expenses often involved in
purchasing a home:
Lawyer's fees
If a lawyer handles the legal aspects of the transaction (see Chapter 7) you will
be paying for the professional expertise involved. You can expect to pay 1% of
the purchase price for lawyer's fees in a standard transaction (including a
mortgage). Therefore, a house selling for $80,000
would result in legal fees of about $800 if you hire
I
a lawyer to do the transaction. Disbursements are
extra. GST is payable on lawyer's fees as well.
Disbursements
Disbursements are out-of-pocket expenses that a
lawyer incurs on your behalf to properly complete
the sale, e.g. to obtain a tax certificate or to
register the transfer at the Land Titles Office.
Disbursements on a typical sale amount to almost
$200 (not including a survey).
BUYING AND SELLING A HOUSE IN THE YUKON
THE REAL COST OF BUYING A HOUSE
Taxes
The buyer is responsible for taxes for that portion of the calendar year that they
actually own the property. If the sale occurs after July 2, it is likely the vendor
has paid the taxes. If so, the buyer must compensate the vendor for their share. If
the sale occurs before July 2, it is up to the buyer to ensure that the vendor pays
their share of taxes, as the buyer will be legally responsible for any taxes owing
on the property come June 30.
Mortgage approval fee
The bank may require a fee to process the mortgage and CMHC also charges for
their approval. These costs need to be ascertained from the bank.
Mortgage insurance
When the buyer makes less than a 25% downpayment, the mortgage is
considered high risk, and the buyer must pay the bank an additional amount
which is a percentage of the mortgage for insurance. This fee can be added to
the monthly payments.
Appraisal
The bank may require an appraisal of the property before approving your
mortgage insurance. This will cost $200-300, and will be required if you get a
Canada Mortgage and Housing Corporation (CMHC) mortgage.
Life insurance
You have the choice of buying life insurance on the mortgage if you wish, so
that the mortgage will be paid off if you, as the owner, die. However, this is not
mandatory.
Tax credit
If you are paying your taxes monthly through the bank along with your
mortgage, you may have to pay the bank a tax credit to ensure that there is
enough to pay the annual taxes when they are due.
Property insurance
The purchaser should insure the property from the date it changes hands. The
bank will require property insurance if there is a mortgage. This is purchased
directly from an insurance company, and will likely cost a few hundred dollars
per year.
Surveyor's certificate
If there is no current surveyor's certificate, the buyer may wish to have a survey
done, or have a previous survey updated, and the bank can require this if you are
2
BUYING AND SELLING A HOUSE IN THE YUKON
THE REAL COST OF BUYING A HOUSE
getting a mortgage. The survey sets out the exact boundaries of the property and
is the only way to ensure that any fence, shed, or the house itself, is on your own
property and that any structures on your neighbour's property are not
encroaching on your property. Expect to pay about $500 for this.
Repair work
The new buyer may be required to undertake work to bring the property up to
standards acceptable to the insurance company.
Appliances
Things like a fridge and stove are not included in the sale unless the interim
agreement specifically provides for them.
Fuel adjustment
Some compensation is usually paid for fuel left in the tank, although this is
negotiable between the parties. It is common for the vendor to fill up the tank,
and the purchaser to pay the vendor for a full tank of fuel.
Building file information
Anyone can get a computer printout from the City of Whitehorse (Building
Inspection Department) which gives all the building, plumbing or woodstove
permits issued on a certain property. This printout costs $25. For property
outside of Whitehorse, the Public Safety Branch of the Government of the
Yukon has the building file information. This is not available to the general
public but can be released to a lawyer or real estate agent acting on your behalf.
How much
insulation is in the
house? What kind?
Are there any
problems with the
water and sewer
systems?
OC) o
o
What are the
yearly heating
and utility costs?
0
o
0
c=>
0
o
What are
the taxes?
Is the house
worth the
price?
°0
0°
What zoning
restrictions apply?
C>~
Is the
foundation an
building
structure
sound?
o
BUYING AND SELLING A HOUSE IN THE YUKON
3
THE REAL COST OF BUYING A HOUSE
The above expenses are part of the purchase for most people. Often, there
are lTIoving expenses and costs involved in hooking up electricity and
telephone as well.
It is crucial to thoroughly inspect the property, and ask any questions you have
before putting in an offer. As you will see in Chapter 3, once your offer is
accepted by the vendor, you have a legally binding agreement. If you ask
specific questions, the real estate agent or the vendor is obligated to answer
honestly. If they misrepresent particular facts to you, it may be pos.:;ible to be
compensated by the vendor later. Otherwise it is "buyer beware."
4
BUYING AND SELLING A HOUSE IN THE YUKON
Chapter 2
AN OVERVIEW OF THE WHOLE TRANSACTION
When a house is sold, the legal transaction that occurs at the Land Titles Office
is the transfer of the land itself, or more correctly, the title to the land. The house
on the property is referred to as an "improvement" to the land. The
improvements included in the legal transfer are only those spelled out in the
agreement between the purchaser and vendor (the "interim agreement"). Unless
otherwise specified, only those things permanently attached to the l·and are
included. Moveable items are not included.
The original title to each piece of property in the Yukon is kept at the Land
Titles Office in Whitehorse. When the proper documentation and the required
fees are given to the Land Titles Office, they
will register the name of the new owner and the
details of any mortgage on the property. (For
more on the role of the Land Titles Office, see
Chapter 6.)
The person buying the property is usually
referred to in real estate transactions as the
"purchaser." The seller is called the "vendor."
In a typical real estate sale, there are three contracts involved:
1. The listing agreement, which is the contract between the vendor and the real
estate agent setting out their mutual rights and obligations concerning showing
the house, commissions, etc. Chapter 5 deals with the role of the real estate
agent.
2. The agreement between the vendor and purchaser specifying the terms of the
sale. This agreement has different names; it is most often called the "interim
agreement" or the "contract of purchase and sale." This contract is the crucial
document which sets out both the vendor's and purchaser's legal rights and
obligations. Chapter 3 explains the interim agreement in detail.
The interim agreement starts out as the offer when it is signed by the purchaser.
It is not binding until it is signed by the vendor. It then becomes the written
contract setting out the details both parties agree on for the sale of the property.
These agreements are often printed on standard forms. Real estate agents have
forms which they use, as do lawyers. However, there is no magic to these formsthey are simply a convenient way to write down what most purchasers and
vendors agree to. All terms in the form may still discussed and negotiated before
BUYING AND SELLING A HOUSE IN THE YUKON
5
AN OVERVIEW OF THE WHOLE TRANSACTION
the parties sign it, and any of the clauses in the standard fonn can be changed, or
new clauses added. The document only becomes an agreement once it is signed
by both parties. After that, no changes can be made unilaterally.
3. The third contract is the mortgage agreement between the purchaser and the
bank. (Although others can lend the money, such as a finance company or even
the vendor, the bank does the financing in the vast majority of cases, and
therefore we use the term "bank" to mean whomever is lending the money.) The
party providing the mortgage money is called the "mortgagee." The mortgagee
will have specific requirements to protect its security for the loan, such as
requiring the purchaser to obtain a surveyor's certificate and insurance. See
Chapter 4 for information on financing the deal.
Three contracts involved in a typical sale
Vendor
(seller)
IReal estate agent I
Bank
(mortgagee)
6
BUYING AND SELLING A HOUSE IN THE YUKON
AN OVERVIEW OF THE WHOLE TRANSAcnON
Closing the deal
The "closing date" (also called the completion date) is the day on which all the
legal and financial aspects of the transfer are completed, and all the documents
necessary to transfer the title are registered at the Land Titles Office. Usually
this is the day the buyer gets the keys.
Well before the closing date, the vendor must provide the purchaser with a
transfer document that is properly signed by the registered owner(s), witnessed,
and notarized. This is called the 'Transfer of Land" form. If there is no mortgage
and the owner's title is clear, the vendor ITIUst also produce the Duplicate
Certificate of Title (OCT).
The vendor must also clear the title of any encumbrances, such as an existing
mortgage, by the closing date. Practically speaking, the vendor usually needs the
cash from the purchaser to payout an existing mortgage, so lawyers have a
system of transferring documents and funds to each other on "trust conditions."
For example, the vendor's lawyer will forward the transfer dOCUlTIent to the
purchaser's lawyer on the trust condition that it will not be registered until the
purchaser' s lawyer has all the funds in her or his trust account from the
purchaser' s bank to complete the deal. Lawyers are obligated by the rules of the
legal profession to honour such trust condi tions.
In addition to the transfer form itself, the vendor rnay need to provide other
documentation depending on the nature of any encumbrances on the property
and the particular circumstances, e.g. if a tenant is renting the premises. If the
purchaser has a lawyer, the lawyer will require a sworn statement (affidavit)
from the vendor that she or he is not a "non-resident" under the Income Tax Act,
and that no GST is owing. This affidavit protects the purchaser from the effect
of federal laws that can make a purchaser liable if a non-resident vendor does
not pay the taxes to the federal government that may be owing on the sale under
the Income Tax Act, or the Excise Tax Act.
The purchaser's lawyer also obtains from the vendor an affidavit concerning the
marital status of the vendor to protect the purchaser from the effect of rules
under the Matrimonial Property and Family Support Act. For instance, a legally
married vendor does not have the right to sell the family home without their
spouse's consent. A sample vendor's affidavit containing provisions concerning
the vendor's residency, marital status and a declaration that no GST is owing is
found on page 32. This is a technical document that requires proper legal advice
from a real estate lawyer before signing. It is a criminal offence to swear a false
BUYING AND SELLING A HOUSE IN THE YUKON
7
AN OVERVIEW OF THE WHOLE TRANSACnON
affidavit, and the vendor must understand exactly what is being sworn, or bear
any future consequences, such as payments owing and penalties.
In general terms, the purchaser's lawyer ensures that all documentation from the
vendor is in order, prepares the financing agreement (usually a mortgage),
collects the mortgage funds from the bank, does the accounting, pays out the
proper amounts owing to all the parties, and registers the documents by handdelivering them to the Land Titles Office prior to the closing date. (A Inore
detailed description of the role of the purchaser's lawyer is given in Chapter 7.)
Therefore, the closing date involves the transfer of money and documents, but
the specific documents involved will depend on the circumstances of the
transfer.
Transfers of land not involving lawyers will require some form of agreement
between the vendor and purchaser as to when and where the physical transfer of
money and documents will be made on the closing date. This can be done at the
Land Titles Office itself so that the transfer document is physically given to the
Land Titles office and can be registered on that date. However, you should be
aware that the staff at the Land Titles Office may not be able to confirm the
transfer until the next day. Of course, if the documents are not filled in properly,
the staff may reject them. Since the vendor has the right to receive their money
on the closing date, but the buyer is unwise to pay until the land is actually
transferred into their name, this step should be orchestrated carefully with the
Land Titles office if lawyers are not involved.
8
BUYING AND SELLING A HOUSE IN THE YUKON
I Chapter 3
MAKING AN OFFER
It is up to the purchaser to present an offer to the vendor and this is usually done
on a standard form which contains all the usual terms and conditions of an offer
to purchase land. This form, once signed by the vendor indicating the vendor
accepts the offer, becomes the interim agreement, i.e., the main contract
between the purchaser and vendor for the sale. The document is first signed
by the purchaser, at which point it is an offer made to the vendor to purchase the
property on those terms set out in the document. If the vendor wishes to accept
the offer, the vendor signs the document, and
from that point on the
- _ _. _...
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other words, it becomes a
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purchaser to consult a
real estate lawyer before
submitting the offer. The
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lawyer can advise the
purchaser on the details of
the proposed offer the
purchaser wishes to make,
and specifically on the
wording of any "subject to"
clauses that will protect the
purchaser.
Terms of the offer
It is critical that the purchaser and vendor understand all of the tenns of the sale,
namely all of the clauses contained in the standard form. They may also
BUYING AND SELLING A HOUSE IN THE YUKON
9
MAKING AN OFFER
negotiate to change some of the standard clauses to better reflect their own
arrangement. Here are the basic terms included in most agreements:
The purchase price
This is the amount to be paid by the purchaser for the sale of the property. The
purchaser can make any offer, and the vendor is free to accept or reject it during
the time the offer is open.
Date for acceptance
The purchaser can stipulate exactly when (date and time) the offer will remain
open. If the offer is not accepted by that time, there is no contract and the
purchaser has no obligations. The vendor may wish to make a counter offer (see
page 12). It is common for the purchaser to give a relatively short period for
which the offer is open, e.g. 48 hours or 72 hours.
Fixtures
The offer should describe exactly what is included in the sale to avoid future
disagreements. Unless stated in the offer itself, the sale only includes those things
permanently attached to the land, such as the house, a fence or a driveway. There is
still a lot of room for disagreement over what else is permanently attached, such as
a shed, a greenhouse or any outbuildings, and such structures should be expressly
mentioned if they are intended to be included.
Also, the house includes only those things specifically affixed to it that cannot
be removed. So, unless there is a specific clause in the agreement to the
contrary, the sale does not include such things as appliances, curtains, storm
windows or electrical fixtures. As can be seen, it is important that both the
vendor and purchaser address their minds to exactly what they intend to be
included. If certain appliances are to be included, they should be mentioned by
serial number in the agreement or otherwise identified (e.g. "the dishwasher,
fridge and stove located on the premises on the date of inspection"). Otherwise,
the vendor is free to substitute other appliances.
Conditions
The offer will likely set out conditions applying to the sale. By attaching
conditions to the offer, the purchaser is trying to ensure that he or she is not
obligated to complete the sale unless certain things happen, e.g. financing from
the bank is obtained. The purchaser has an obligation to make reasonable efforts
to fulfill any such conditions. Either the purchaser or vendor can attach
conditions to their agreement. For example, the purchaser may make the offer
conditional on a satisfactory building or wiring inspection and the vendor may
wish to make the acceptance of the offer conditional on the approval of a third
party, such as a spouse or tenant.
10
BUYING AND SELLING A HOUSE IN THE YUKON
MAKING AN OFFER
Deposit
The purchaser usually puts down a deposit with the offer. This is given to the
real estate agent and held "in trust" by the real estate agent until the vendor
accepts the offer, in which case it will be applied towards the purchase price. If
the offer is not accepted, or if any of the conditions of the offer cannot be met,
the deposit will be returned to the purchaser. Once the purchaser' s conditions
are met, the agreement is binding, and the purchaser would likely lose the
deposit if the deal is not completed. The vendor has other legal remedies as well
if the purchaser does not follow through.
Closing date
This is the date on which the title will be transferred into the name of the
purchaser, the vendor will be paid, and the mortgage will be registered. It is also
called the "completion date." All adjustments, e.g. for fuel or taxes, are settled
as of this date, and all risks and responsibilities, e.g. for insurance, shift to the
buyer.
When making an offer, or accepting an offer, the parties should allow ample
time for the necessary paperwork to be done before the closing date. It generally
takes two weeks for the bank to approve financing, and a further three weeks for
the legal aspects of the transfer to be done.
Possession date
This is the date the purchaser will have possession of the premises, i.e., the keys
to the house and the right to occupy it. It usually coincides with the closing date,
but not always.
Time clause
An offer will sometimes specify that "time is of the essence." This means that
any dates mentioned in the contract are firm, such as the closing date. (If, later, it
turns out that the deal cannot be completed by the closing date, the party causing
the delay can be sued for breach of contract. Although there is a strict legal right
to have the other party adhere to time limits, it is more usual in the case of a
delay that both parties will extend the closing date, by mutual agreement, to a
later time.)
Time for acceptance
The purchaser's offer usually contains a clause stating how long the offer will be
open for acceptance. The offer lapses at that time if it is not accepted by the
vendor. The vendor has no obligation whatever to accept the first offer or any
offer, even one for the full asking price. If no date is given, the offer can be
withdrawn by the purchaser at any time. Otherwise, the purchaser is obliged to
BUYING AND SELLING A HOUSE IN THE YUKON
11
MAKING AN OFFER
keep the offer open for the time specified.
The document constituting the offer, once signed by the vendor, becomes a
binding agreement. Therefore, both the purchaser and vendor are well advised to
consult with a real estate lawyer before signing it to ensure they understand the
legal implications of every clause in the agreement. People can use the Lawyer
Referral Service for a half-hour consultation with a real estate lawyer for this
(see page 25).
Counter offers
Once an offer is delivered to the vendor, the vendor must decide whether to
accept it. If the vendor is unwilling to accept all of the terms, the vendor may
make a counter offer. The legal effect of a counter offer is that it nullifies the
purchaser's offer and becomes a new offer by the vendor open to the purchaser
to accept if the purchaser wishes. A counter offer can be made on a separate
document or by making changes on the original document. The counter offer
ends if the time goes by without the purchaser accepting it. Of course, the
purchaser is free to make another counter offer if the purchaser wishes.
12
BUYING AND SELLING A HOUSE IN THE YUKON
I
Chapter 4
FINANCING THE SALE
There are two common ways to finance the sale of a house. One is through a
mortgage. Mortgages are usually obtained from banks. The bank lends the funds
to the purchaser ("mortgagor") to buy the property, and the bank ("mortgagee")
registers the mortgage against the title at the Land Titles Office. The vendor gets
their money from the sale on the closing date.
It is not always the bank which lends the mortgage money. Any person, including the vendor, may act as the mortgagee by lending the funds to the purchaser
to buy the property. The title is still transferred to the buyer, and the lender
registers their mortgage at the Land Titles office.
A second way to finance the sale is for the purchaser to buy the property by
paying the vendor in instalments over a period of time. In this case, the title to
the property is not actually registered in the name of the new owner until all the
money is paid. There is a contract between the two parties setting out the terms
of their agreement. This contract is called an "agreement for sale" (not to be
confused with the interim agreement which is sometimes referred to as an
agreement of purchase and sale).
Agreements for sale are usually an option from the vendor's
point of view only when no prospective purchaser can obtain
a mortgage. The arrangement is riskier for the vendor
because the vendor will not get the purchase price up front,
as would happen if the purchaser got a mortgage. There are
many things that can go wrong with these long-term deals.
Therefore, the vendor as well as the purchaser should get
legal advice on the general problems that can arise with
agreements for sale, and include clauses in the agreement to
protect their respective interests. The agreement for sale
should be drafted by a lawyer.
Types of mortgages
There are two types of mortgages: conventional mortgages and high risk mortgages. Conventional mortgages can be obtained if the purchaser makes a
downpayment of at least 25% of the purchase price, or 25% of the appraised
market value, whichever is less.
High risk mortgages are those granted when you make a down payment of
between 10 and 25%. The minimum is 10% (unless you are a first time home
owner and take advantage of CMHC's program allowing a downpayment of
BUYING AND SELLING A HOUSE IN THE YUKON
13
FINANCING THE SALE
5%). The downpayment cannot be borrowed money. These mortgages are
insured by the Canada Mortgage and Housing Corporation or the Mortgage
Insurance Company of Canada (MICC) so that the lender will be paid if the
borrower stops paying. A mortgage insurance fee of up to 3% of the amount of
the mortgage will be charged.
Mortgages have a "term," which is the amount of time that the mortgage will be
in effect at the interest rate you obtained. After that, the bank is free to demand
full payment of the debt, but, practically speaking, the bank will usually enter
into a new arrangement with the borrower at the interest rate current at that time
The "amortization period" refers to the length of time it will take to fully repay
the mortgage money to the lender.
As a consumer of a bank's services, it is important to realize that not all mortgages are the same. Different banks offer different privileges regarding, for
example, pre-payrnent, assumability or portability of the mortgage. It is definitely worthwhile to inquire into the different types of mortgages offered by
various banks before choosing one that best suits your needs.
Assumption of a mortgage
To assume a mortgage means, in practical terms, that the new owner will take
over the previous owner's obligations to the bank. The new owner agrees to
assume all liability and to protect the original owner from all possible claims.
Usually, an assumable mortgage at a better interest rate is an advantage to the
vendor in selling the property.
However, in legal terms, this is a bit risky for the vendor. The mortgage agreement with the bank the vendor originally signed contains a "personal covenant"
allowing the bank to sue the borrower personally in the event of default. Therefore, if the new owner defaults on the mortgage payments, the original borrower
can still be held liable on their personal covenant to pay. If the new owner
cannot pay the bank, it is of little comfort that you can sue them for not doing so,
as they likely have no means to pay you either. Therefore, this risk must be
weighed against any advantage in selling the house more easily.
14
BUYING AND SELLING A HOUSE IN THE YUKON
IChapter 5
THE REAL ESTATE AGENT'S ROLE
Probably the most important fact to understand about real estate agents is that
the agent is an agent of the vendor, not the purchaser. Many purchasers assume
that, since they are buying the property, the agent is acting in their best interests
and on their behalf. This is not the case. Legally, it is the vendor who has hired
the agent, and is paying the agent to sell the property. Therefore, the real estate
agent has a legal duty to protect the interests of the vendor, including getting the
best price possible for the property, and not do anything that would conflict with
their duty to the vendor.
Of course, the agent can also assist the purchaser as long as this does not conflict
with the vendor's interests. This is not usually difficult, because the vendor and
the agent normally want to sell the property for the highest possible price so they
can both reap the benefits. However, it would not be appropriate for the agent
and the purchaser to make any private deals without the knowledge and consent
of the vendor. This is a breach of the agent's obligations to the vendor.
(Having said this, it is possible for a purchaser to hire a real estate agent, but this
is a rare occurrence and therefore not covered in this booklet.)
What the agent can do for a purchaser
The services of the real estate agent are free to the purchaser. If you are the
purchaser, some of the ways that an agent can assist you are as follows:
• tell you the current requirelnents for getting a mortgage so you can realistically look at houses within your price range;
• put together a list of homes that meet your needs;
• make arrangements to obtain keys and view homes when convenient for
you;
• advise you of the resale value of your
present home;
• put you in touch with properties available in other areas where you may wish to
move.
As indicated, the agent has no legal obligations to the purchaser, except that the agent
must answer your questions about the property truthfully. and cannot misrepresent
factual information about the property.
200'
H-8O I«..LCRE8T HOME wtIt1 ~. 3
bedroome - 2 up & 1 down. ~
renovated - .. oak h8rdWood 1Ioors. •1"1,
rda, IWW ~ , aorm wIndowe, exteriOr
painted. cemem IIoor & poured . . . down. 4
appliances - fnllime ofIer9d at
excellent
price -
BUYING AND SELLING A HOUSE IN THE YUKON
LIKE NEW -
ttl.
..
S48
tum key operatIOn
15
THE REAL ESTATE AGENT'S ROLE
However, if you neglect to ask pertinent questions, the agent is under no obligation to provide you with information. Generally, it is a "buyer beware" situation,
with the onus on the buyer to check out specific facts about the property before
submitting an offer.
What the agent can do for the vendor
Most people selling their homes hire an agent to assist them. Of course, there is
no legal requirement to do so; a vendor is free to sell privately, and many do. A
vendor selling privately is well advised to consult with a real estate lawyer
before accepting any offer, to ensure that the vendor understands the nature of
the transaction and accepts the terms being agreed upon.
If you are a vendor, the specific services that real estate agents can provide arc
to:
• screen serious purchasers from the merely curious;
• advise you on a realistic value to place on your home;
• gain access to more potential customers through the Multiple Listing
Service;
• put a prominent sign on your property;
advise you on showing your home in its most attractive light;
• negotiate with a prospective purchaser on your behalf and in accordance
with your instructions;
• get an offer from a prospective buyer in a written form that can be transformed into an interim agreement if the vendor accepts it.
Practically speaking, most people hire an agent because the agent can likely sell
the house more quickly. Purchasers tend to go to real estate agents when looking
for a house. Also, the agent can take over the job of showing the house, and
some will provide a 24-hour answering service to take enquiries about the home.
The agent is not a lawyer, and it is against the law for real estate agents to
provide legal advice concerning the transaction. Real estate agents should
strongly encourage, if not insist, that purchasers obtain legal services to carry
out the transaction and that vendors also obtain independent legal advice
concerning their need for a lawyer in the particular circumstances. If an agent
does not see the need for legal services, and indeed advises against it, the
purchaser and vendor should be warned that the agent does not have the training
to make this judgement, and that the agent's personal interest in their own
commission may be motivating such advice. For more information on whether
you need a lawyer, see Chapter 7.
16
BUYING AND SELLING A HOUSE IN THE YUKON
THE REAL ESTATE AGENT'S ROLE
Listing agreements
If you decide to hire an agent, you will be required to sign a contract called a
listing agreement. This is a legally binding agreement between you and the real
estate agent which sets out the terms on which the agent will sell your house and
will be entitled to their commission.
The listing agreement is usually for a certain period of time. The duration of
time is negotiable between the parties. During the period of the listing agreement, the agent will be paid a commission if the property is sold. The commission is a percentage of the purchase price, usually between 5% and 7%, plus
GST. The terms of most listing agreements require the vendor to pay the commission if the property is sold to anyone, including a person whom the vendor
meets privately during the term of the listing agreement. As well, most contracts
stipulate that the agent also gets the commission after the listing agreement
expires if the purchaser was introduced to the property during the term of the
listing agreement, or the sale was actually caused in some way by the agent's
efforts during the term of the listing agreement. Read the small print in your
listing agreement and make sure you understand your legal obligations, and get
advice from a lawyer if you have questions about your listing agreement.
There are two basic types of listing agreements: multiple listing and exclusive
listing agreements.
Multiple listing
This means that the vendor hires one real estate agency, but authorizes the
agency to use other agencies to sell the property. The advantage of multiple
listing is that the property can be brought to the attention of more buyers, but the
disadvantage is that it costs more.
Exclusive listing
This type of agreement gives only one agency the authority to sell the property.
It costs less, but the pool of buyers may be somewhat more limited. An advantage for the vendor is that you have fewer salespeople to deal with.
Realtors are not lawyers, and therefore cannot give legal advice to either the
vendor or the purchaser. They can provide forms for the interim agreement, but
cannot complete the legal transfer of the land, and cannot advise people on the
documents required and how they should be filled out. Also, although they can
give an informal appraisal of the likely worth of a property, the banks often
require a fonnal appraisal from a recognized appraiser before granting a mortgage.
BUYING AND SELLING A HOUSE IN THE YUKON
17
I
Chapter 6
THE LAND TITLES OFFICE
The Land Titles Office in
Whitehorse is the place where the
original titles for all properties in
the Yukon are kept. Their address
and phone number is:
Land Titles Office
Andrew Philipsen Law Centre
2134 Second Avenue
Whitehorse, Yukon Y1A 5H6
phone: 667-5612; outside
Whitehorse call toll free
1-800-661-0408
fax: 668-7758
Anyone can view the title to a piece of property free of charge by simply going
to the Land Titles Office and asking to see a particular title. However, you will
need the legal description for the property, not the street address. You can get
the legal description by phoning the city or town office where the property is
located. They will provide you with the legal description if you have the street
address. In Whitehorse, the number for City Hall is 667-6401. Ask for the
property tax department.
You can obtain some important information by looking at the title to the
property.
Front of the title
On the following page is an example of the front of a Certificate of Title.
o The registered owner(s)
If there is more than one registered owner, the names will be listed on the title.
In our sample title, the property is owned by two people as "joint tenants," a
form of co-ownership often seen on land titles. It means that if one co-owner
dies, the other automatically becomes the legal owner of the whole property as
long as a death certificate is filed at the Land Titles Office. If the words "as joint
tenants" do not appear on the title, then the property is presumed to be owned in
another form of co-ownership called "tenancy in common." This form of
ownership entitles one party to sell their interest in the property or bequeath it to
someone in their will. Their interest will be transferred to their heirs if they die
without a will.
18
BUYING AND SELLING A HOUSE IN THE YUKON
THE LAND nnES OFRCE
'1rrtificntr of mille
Canldl
¥ukonTrrrllory
o
Yukon Lind Rrrlltrllion Dtlltrlrt
II". i.
i!
• J
I
I."".l"'o.nuo(an~.l'l.ln(u.implt
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:
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her_, or.hlrhm"hm.llt'brm.d..
'OM""."
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of another is sufficient if it
specifically authorizes the
sale of that particular
property, or can be
tnterprete d as suc h .
When transferring land, care
needs to be taken to ensure
that the names of the
registered owner(s) arc
spelled exactly as they occur
on the title document. If
more than one person is
buying the land, care needs
•
; iI
!
In most cases, when you
buy a property, you want to
ensure that all registered
owners participate in the
transaction by signing the
required transfer documents
so that you acquire their
entire legal interest in the
property. A valid Power of
Attorney authorizing one
co-owner to sell on behalf
'....
1.. I
.lUll
l~:
.
~ ,f J ~~:;llh:~~St: 1~:\Ci~~
~;('"'~'~~~,::~:~
~.~
fit
C.r\In.~. 01
0)
HI. "'l'
~h~~:~~:ei~a~~ci:~~gbe
owned as joint tenants or as
tenants in common. A real
estate lawyer can advise you in more detail of the implications of each form of coownership.
iiI
Conold.nllon'
lin I! 40
@ The legal description
This is the complete description of the land for the purposes of the title
registration system in the Yukon. On a transfer document, it is essential that the
land to be transferred corresponds exactly to the legal description stated in the
title. Otherwise, the Land Titles Office will reject the transfer document.
@} Subject to the encumbrances..,
An "encumbrance" is an int~rest in the land held by someone besides the
registered owner. This interest could be a mortgage, a lien, an easement, or some
other type of legal claim or interest in the property. This statement on the title
means that the registered owner holds the title to the property subject to other
BUYING AND SELLING A HOUSE IN THE YUKON
19
THE LAND TITLES OFFICE
legal interests which are registered at the Land Titles office, and noted on the
back of the title.
o Date of title transfer
This is the date that the title was registered in the name of the current owner.
o
Consideration
This is the amount paid to the vendor by the purchaser for the property. This
gives the value of the property when it was last transferred. The buyer may be
curious to know how much the vendor paid for the property, and can see the date
of the last purchase and the amount paid. As a part of the transfer of any title, the
Land Titles office requires a sworn statement as to the value of the property
(which is usually the purchase price) because they collect a fee for the transfer
which reflects the increase in value of the property. This is held in an assurance
fund for the public's protection in the event of losses due to mistakes made by
the Land Titles office.
<D Certificate of Title number
This is the number assigned to that title by the Land Titles office for the purpose
of their registration system.
Back of the title
Q:rrtifiutt of 'Q:itll'
NAMl
NUUft1l
J', 10
,~
, 14 0'
"ortl'"
19 IIoT(I•• '
,
.. ~.~ .•, .. ~l",,~.J. VIlu.',on',.T..JL_ •. ,1. . 187':.
NIlry ~ a n C I JoI'I'1 _ _ r
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rol....,.l ..... of C.BA4. lor '60 •• '0.00.( 101 . . . .012' OctO!>.T
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The back of the title also contains very important information for any
prospective purchaser. The information on the back of the title will vary
depending on the number and type of encumbrances registered against the title.
20
BUYING AND SELLING A HOUSE IN THE YUKON
THE LAND nRES OFFICE
o Previous mortgages
The person who holds a mortgage (usually the bank) always registers it against
the title to protect their right to reclaim the property if the owner defaults in
payments. Basic information about any previous mortgage is given on the back
of the title, and upon request, the mortgage document itself can be viewed or
copied for a small fee. The mortgage is discharged once it is fully paid.
@ Current mortgage
The essentials of the current mortgage are indicated. Any purchaser who intends
to assume the current mortgage should go over all of the terms of the mortgage
with their own lawyer.
8) Caveat
A caveat is a notice to the public at large, and especially any potential
purchasers of the property, that a legal claim or interest in the property is being
asserted by someone other than the registered owner. For example, under the
matrimonial property laws in the Yukon, a separated spouse owns a half-interest
in the family home regardless of whose name it is registered in. Therefore, if the
title is registered in the name of the husband alone, the wife's lawyer will
usually register a caveat on the property indicating to any potential buyers that
she has a legal claim to one-half of the property. In our sample title, we can tell
that a caveat was registered, but the title does not set out the reason for the legal
claim being asserted. To ascertain this, it would be necessary to ask to see the
caveat itself. which can be shown to you at the counter.
o Party-wall easement
An easement is a right that another party has to use the property in a certain way.
For example, the city may have an easement to run a sewer line across your
yard. Easements will continue to apply to the property even if there is a change
of ownership. A new buyer cannot likely do anything about an easement, but
should be aware of any easements which are registered on the property. In our
sample, it appears there is some kind of a right given to another party due to the
fact that the property is a duplex, and therefore there is a common wall
separating the premises. To find out exactly what rights the other party has, it
would be necessary to look at the easement itself. This document (as with all
documents registered against a title) will be available upon request at the Land
Titles office for viewing or for copying for a small fee.
There are other types of encumbrances which can be registered against a title,
the most common of which are:
BUYING AND SELLING A HOUSE IN THE YUKON
21
THE lAND nnES OFFICE
Liens
A lien entails a right to receive money through the sale of the property. For
example, a mechanic's lien can be registered against the property by a person
who has not been paid for renovations done to the property, and the person is
entitled to be paid out of the proceeds of any sale, unless their lien is challenged
successfully in court by the owner.
Lis pendens
A lis pendens is a document indicating that a lawsuit has been filed concerning
ownership of the land or some legal interest in the land. Again, the details are
available upon request from the Land Titles office.
One final note about checking the title. It is also possible that there are "writs of
execution" registered against the owner of the property. A writ of execution is a
court order which allows a person who has a judgment against the owner of the
property, i.e., a court order for the payment of money, to get their money from
the sale of the land. These writs are not mentioned on the title itself. Rather, the
Land Titles office has a book, called the General Register, in which documents
are kept relating to outstanding judgments against property owners. A thorough
search of the title to the property should include looking at the General Register
under the name of the registered owner to see who else may be entitled to funds
from any sale of the property. This book is available for public viewing free of
charge at the Land Titles office.
Survey plans showing legal dimensions of the property are also available for
viewing at the Land Titles office.
What is clear title?
When a person buys a house, they usually want a piece of property that is "free
and clear" of all encumbrances. In other words, the title should not contain any
notations on the back (unless the new purchaser has a mortgage). Any other
interests in the land, such as an easement, should be understood and agreed to at
the time of the sale by the purchaser. A purchaser always buys the property
subject to the interests of others who have registered their claims previously
against the title. Anyone unwise enough not to ensure that they are getting free
and clear title must share their new home with other claim-holders, and will only
have legal recourse against the vendor who agreed to give them clear title. The
vendor who promises to give clear title must be able to do so on the completion
date, or else the purchaser is not obliged to complete the deal.
22
BUYING AND SELLING A HOUSE IN THE YUKON
THE LAND MLES OFFICE
What the Land Titles Office will do for the public
The Land Titles office is able to provide some assistance to the public in land
transactions. Here is a summary of what they will do:
• show you any title, or any document registered against the title, such as a
caveat, over the counter without charge;
• allow you to photocopy any document for a fee of 75¢ per page;
·allow you to look at any survey plans or lot dimensions free of charge;
• provide a copy of a survey plan for a $4 fee;
• provide you with a certified true copy of any title for a $2 fee;
• notarize relevant documents free of charge (but not the "Transfer of Land"
form itself);
• register a document, provided it is properly filled out and you pay the
necessary fee. The registration fee varies for different documents;
• provide forms needed by the Land Titles office for different types of
transactions, such as the main document needed to transfer land which is
called the Transfer of Land. They will also provide other forms having to do
with caveats, mechanics liens and discharging mortgages. All forms are free;
• provide limited assistance in filling out forms, but not legal advice;
• store your Duplicate Certificate of Title free of charge (you will only have a
Duplicate Certificate of Title if you own the property outright and there is no
mortgage or other encumbrances on it.)
What the Land Titles Office will not do
There are also some things that the Land Titles office does not do for the public
that you should know in advance. The staff at the Land Titles office will not:
• fill out documents for you;
• be a witness, or a notary public, for the Transfer of Land form;
• interpret the contents of documents for you so as to tell you where you stand
legally (they are not lawyers, and you need legal advice for this);
• give you the legal description of property if you only have the street address
(you must get the legal description from the city or town office);
• give information about particular titles over the phone, including lot
dimensions. (However, they will provide this information over the phone for
out-of-town callers. The phone number for rural residents is
1-800-661-0408.)
BUYING AND SELLING A HOUSE IN THE YUKON
23
I Chapter 7
DO YOU NEED A LAWYER?
There is no legal requirement to have a lawyer handle the transaction for you
and complete the necessary paperwork. However, because there is so much
money at stake, and complications often arise, most people hire a lawyer to
ensure that their interests are protected. It is most important that you make this
decision for yourself on an informed basis. In other words, if you are
contemplating carrying out all aspects of the transfer yourself, as either the
vendor or the purchaser, you should understand all aspects of the transaction,
and know exactly what is required of you to complete the sale.
Those individuals who intend to act on their own behalf without hiring a lawyer
should at least consult with a real estate lawyer to ensure that they understand
the process, the documents required, and the problems
that may come up in their particular transaction. We
cannot emphasize enough that each deal may have its
own risks and peculiarities. It is therefore worthwhile to
have a lawyer confirm for you that yours is a simple deal,
and you can do it on your own. If a lawyer, or the staff at
the Land Titles Office, tel1s you that you need a lawyer,
you are unwise to ignore their advice. You can obtain a
half-hour consultation with a real estate lawyer for $25
(plus GST) though the Lawyer Referral Service which is described below. This
wil1 enable you to make a better decision about whether you are able to do the
transaction on your own.
There are three main advantages to hiring a lawyer. First, you can be assured
that the paperwork will be done properly, and that any obligations you have to
the other side will be met, and any obligations owed to you will be enforced.
Second, if something does go wrong and you lose the deal or your investment
you may have a legal remedy against the law firm to recover your loss if the loss
was due to fault on their part. (Lawyers must carry insurance for this.) Third,
unforeseen problems often come up in the period just before the closing date. If
you do not have a lawyer retained, you may have difficulty getting legal advice
quickly and this could complicate the problen1.
The main risk in doing the transaction on your own, then, is that you may incur
liability to the other party or may end up losing your investment without any
recourse. These things happen in real estate deals, and, as indicated, the most
important thing is that you make the decision not to hire a lawyer on an
informed basis after assessing all of the relevant information in consultation with
a professional.
24
BUYING AND SELLING A HOUSE IN THE YUKON
DO YOU NEED A LAWYER?
In addition to the general reasons above, vendors should be aware of what
special liability they might incur if they are not sufficiently aware of their legal
obligations. It is true that the purchaser generally has the greater risk, and
usually has a lawyer. The vendor also needs legal advice about the vendor's
legal position regarding the effect of marital status, GST, and the Income Tar
Act on the sale; otherwise, they are leaving themselves open to future liability.
Failure to understand the effect of certain laws in the context of the particular
deal can mean the vendor may owe monies to some government body or
individual in the future. This is a risk the vendor takes in not understanding the
nature of the vendor's affidavit (page 32). The purchaser's lawyer has no
interest or obligation in assuring that the vendor's interests are protected, but
merely requires the vendor to swear that certain facts are true.
Lawyer Referral Service
If you wish to consult with a lawyer, and do not know any, the Law Society of
Yukon will give you the names of lawyers who do real estate work (called
"conveyancing") and who participate in the Lawyer Referral Servicc. This is a
service to the public whereby a lawyer will meet with the person for a one
halfhour consultation for a set fee of $25. A lawyer will not do the paperwork or
complete the deal for you during this time, but will simply talk to you about the
transaction. You are under no obligation to hire the lawyer, but may do so if you
wish.
To take advantage of this service, if you live in Whitehorse, you must:
1. Go to the Law Society office locatcd in Suite 201, 302 Steele Street (upstairs
in the T.C. Richards building) or call them at 6684231.
2. Ask for the list of real estate lawyers, which will be given to you along with
their phone numbers. Also, ask for a Lawyer Referral Certificate, which entitles
you to a one-half hour appointment with any lawyer on the list for a fee of $25
(plus GST).
3. Call any of the lawyers on the list and make an appointment through the
lawyer's secretary.
4. Bring the certificate with you to the appointment, and you will be charged the
flat fee of $25 (plus GST) for the first half-hour consultation.
Yukon residents living outside Whitehorse can also use this service.
You can phone 668-4231 collect and explain your situation. The
secretary at the Law Society office will tell you how you can use this
service if you live in a rural area.
BUYING AND SELLING A HOUSE IN THE YUKON
25
DO YOU NEED A LAWYER?
You can obtain a second certificate, or a third, if you wish to get further
opinions before hiring a lawyer. You cannot, however, use this service to get a
second opinion if you already have a lawyer.
For more information about dealing with lawyers, you may wish to get a copy of
You and Your lawyer which is a free publication produced by the Yukon Public
Legal Education Association. Simply call the Law Line and ask to have one sent
to you. The number is 668-LAWS (5297). Those outside Whitehorse can call 1668-5297 free of charge.
When should you hire the lawyer?
To best protect your interests, you should hire the lawyer before you sign an
offer (or the "Contract of Purchase and Sale" form) if you are the purchaser. If
you are the vendor, you should hire a lawyer before you accept the offer. This is
because the terms of the offer are binding once they are accepted by the vendor,
and both parties should get legal advice about what they mean. As well, possible
problems may arise with the way the offer is worded that a lawyer can identify,
and prevent from becoming bigger problems later on.
Can one lawyer represent both the purchaser and the vendor?
~rhe
same lawyer will not usually complete the transaction on behalf of both the
purchaser and vendor due to the fact that there is often a conflict of interest
between the parties. If there is not an actual conflict at the outset, it is
foreseeable that a problem could arise during the transaction, and a conflict
between the vendor and purchaser arise. Therefore, lawyers prefer to act for
only one of the parties.
However, a lawyer can act for both parties if certain conditions are met. If no
conflict exists or appears likely to arise, and both parties agree in writing that
they consent to the lawyer handling the transaction for both of them, the lawyer
may do so. The lawyer is then obliged to disclose all communications about the
transaction to the other party, and cannot advise one party without the
knowledge of the other. As well, if a conflict actually develops between the
vendor and the purchaser, the lawyer must cease representing both of them, and
each party must then hire their own lawyer.
Generally speaking, a lawyer can be of great assistance in interpreting the legal
and financial documents that are involved in the sale of land. The lawyer will
help make the transfer a smooth and easy one for you, and will ensure that
encumbrances are removed from the title, and that the mortgage money is
advanced in a timely manner and the proceeds are available to the vendor.
26
BUYING AND SELLING A HOUSE IN THE YUKON
DO YOU NEED A LAWYER?
The vendor's lawyer and the purchaser's lawyer each carry out specific tasks, a
summary of which is provided below.
What the vendor's lawyer does
The vendor's lawyer first gets involved in the transaction when hired by the
vendor, or when requested by the real estate agent on behalf of the vendor.
Preferably, the lawyer's advice is sought before the vendor signs the offer
accepting the purchaser's terms. If so, the lawyer can advise the vendor on the
implications of various temlS in the offer, and particularly on the wording of
"subject to" clauses which the vendor may wish to clarify. Basically, the lawyer
looks at the offer from the point of view of the best interests of the vendor and
can make recommendations on whether the offer should be accepted or whether
a counter offer should he made.
The vendor's lawyer will then do the following:
• search the title at the Land Titles Office;
• communicate with the purchaser (or the purchaser's lawyer) about the
various documents that must be exchanged, the timing, the arrangements for
the transfer of monies, clearing the title, and all relevant aspects of the
transaction;
• advise the vendor about any obligations the vendor may have, based on the
clauses in the interim agreement;
• hold the deposit in a trust account until the transaction is completed
(sometimes this is kept in trust by the real estate agent);
• correspond with the City or territorial authorities about existing permits,
zoning requirements and taxes;
• prepare the Transfer of Land form for the vendor, and ensure that it is
properly signed by the vendor and witnessed, and that the "Affidavit of
Attestation" on the back of the form is properly notarized;
• if there is more than one vendor, ensure that all vendors participate in the
transaction, or that a proper Power of Attorney is signed where appropriate,
so that one vendor has the legal authority to transfer the land on behalf of
another;
• prepare an affidavit and have it signed and notarized by the vendor
concerning three matters:
( 1 ) marital status for the purposes of the Family Property and Support Act of
the Yukon (this Act gives special rights to a spouse not to have the family home
sold without their participation or consent; therefore, if the vendor has a spouse,
the spouse must consent to the sale);
(2) residency in Canada, i.e., whether the vendor is a non-resident for the
BUYING AND SELLING A HOUSE IN THE YUKON
27
DO YOU NEED A LAWYER?
purposes of the Income Tax Act (non-residents must pay a tax on the sale of
property in Canada);
(3) the effect of the Excise Tax Act concerning GST on the sale. (GST must be
paid in some cases on the sale of the home, but knowing when GST is and is not
payable requires an interpretation of tax rules);
• take whatever legal steps are necessary to ensure that clear title can be
given on the closing date. These steps vary with the types of enculnbrances
on the title at the time. All mortgages, liens or tax arrears must be paid in
order to provide clear title. Since the money to pay these out will usually
come from the proceeds of the sale, the vendor's lawyer must make
arrangements with the purchaser's lawyer about how the money and
documents will be traded so that the vendor is able to both provide clear
title, and use the proceeds from the sale to do so. Lawyers exchange money
and documents to each other on trust conditions which are formal, binding
promises made on the basis of their professional obligations as members of
the legal profession;
• receive the purchase monies from the purchaser "in trust" for the vendor;
• calculate what the vendor is owed after the commission, legal fees and
other adjustments (e.g. for taxes or fuel) are paid, and pay the vendor the
monies owing;
• provide the vendor with a written report of the transaction and a legal
opinion of the concluded transaction, which includes a financial accounting
for monies received and expended on behalf of the vendor.
The above are the vendor's lawyer's duties in a simple transaction. Often, there
are one or more con1plications necessitating the preparation of further legal
documents to deal with specific problems. For instance, if there is a tenant in the
house, arrangements may need to be made to transfer any security deposit to the
new ownerllandlord.
What the purchaser's lawyer does
The purchaser's lawyer becomes involved when hired directly by the purchaser
(preferably before the purchaser submits an offer) or when requested by another
party to act on behalf of the purchaser. Sometimes, for example, the real estate
agent will ask the law firm to complete the transfer on behalf of the purchaser,
assuming the purchaser has asked the agent to do this. The law firm can
generally tell exactly what documentation needs to be done from the papers on
the file and will proceed to collect the necessary information (such as tax
information from the City) and prepare the required documents before seeing the
purchaser in person.
28
BUYING AND SELLING A HOUSE IN THE YUKON
DO YOU NEED A LAWYER?
Generally, the lawyer carries out all aspects of the transaction on behalf of the
purchaser and prepares the mortgage on behalf of the bank.
In more detail, the specific tasks the purchaser's lawyer carries out in a standard
transaction are as follows:
• search the title at the Land Titles Office and advise the purchaser about any
aspects of the title which affect ownership of the property;
• correspond wi th the vendor or the vendor' s lawyer about all aspects of the
transaction, and particularly about the arrangements for removal of any
encumbrances so that clear title is provided to the purchaser. (It is the
vendor's obligation to ensure that the clear title is provided, but it is the
purchaser's lawyer's obligation to ensure that the vendor does so);
• review the interim agreement and advise the purchaser on their obligations,
e.g., for complying with any "subject to" clauses or other terms of the interim
agreement;
• find out the current state of the taxes on the property, zoning restrictions or
other government limitations on the property, and get some documentary
proof of these, e.g. proof from the City that the taxes have been paid;
• ascertain the status of water, sewer and garbage charges from the City, and
ensure these are paid;
• ascertain the exact nature of any encumbrances on the property, and advise
the purchaser of the legal implications of these, especially any easements that
will remain on the title;
• make sure that the purchaser takes out insurance on the property effective
on the closing date, and obtain proof of this for the bank if there is a
mortgage;
• if asked by the bank, and the purchaser agrees, prepare the mortgage
documents as required by the purchaser's bank in a manner satisfactory to the
bank;
• ensure that the bank pays the mortgage funds into the lawyer's trust account
in sufficient time to close the deal;
• prepare a "Statement of Adjustments" showing an accounting from both the
vendor's point of view and the purchaser's point of view for all funds
involved in the transaction, including the mortgage monies, adjustments for
taxes or fuel, the lawyer's fees and disbursements, etc. This sets out the exact
balance due by the purchaser on the closing date, and how that figure was
arrived at;
• ensure that all documents provided by the vendor to ensure clear title are
properly completed and able to be registered at the Land Titles Office;
• prepare an "Affidavit of Value" and have the purchaser sign it indicating
the true value of the property at the time of purchase (this document is
BUYING AND SELLING A HOUSE IN THE YUKON
29
DO YOU NEED A LAWYER?
required by the Land Titles Offl ce and will determine the transfer fees
payable to the Land Titles office to register the transfer);
• receive the mortgage funds from the bank and the remainder of monies
owing by the purchaser to complete the sale, and payout funds to any parties
entitled. For example, the vendor gets paid the rest of the purchase price on
the closing date, plus or minus any adjustments that were made in the
particular circumstances. Other parties, such as the Land Titles Office and
sometimes the real estate agent, also receive their fees or commission, as the
case may be. The purchaser's lawyer then pays the purchaser back any excess
monies still in the lawyer's account. In making payments, the purchaser's
lawyer will usually act in the capacity of agent for both the purchaser and
vendor so that one lawyer rather than two is handling all the funds;
• register all documents at the Land Titles Office by hand-delivering them
before the closing date to ensure the transfer is confirmed by the closing date;
• provide a final opinion on the state of the title, any encroachment onto or off
of the property and other relevant factors concerning the transaction.
Generally, the lawyer for the purchaser will not perform the services listed
below, unless specific arrangements with the purchaser have been made. The
purchaser's lawyer:
• does not obtain a surveyor survey certificate, unless required by your bank;
• does not guarantee that a house or other structure is located on the lot;
• does not guarantee that the house or other structures meet zoning by-laws,
building by-laws or other municipal requirements;
• does not guarantee that any rental accommodation provided in the premises
is legal;
• does not warrant any level of quality of the lands, premises or house, or
make enquiries to this end;
• does not arrange for insurance coverage;
• does not arrange for new hydro, telephone or water accounts;
• does not make arrangements for the acquisition of keys;
• does not give advice on income tax consequences of the sale, except as
specifically discussed between the lawyer and client.
30
BUYING AND SELLING A HOUSE IN THE YUKON
DO YOU NEED A LAWYER?
The cost of a lawyer
A purchaser can expect to pay I % of the purchase price in lawyer's fees for a
standard transaction or about $1,000 for a $100,000 house. You may, if you
wish, phone the local law firms and speak to the conveyancing secretary about
the typical fees lawyers in that firm charge for a standard transaction. Each
lawyer's fees may be different, but, for the amount of time and professional
expertise the finn is expending on your behalf, lawyer's fees for real estate
transactions tend to be very reasonable.
Disbursements are the out-of-pocket expenses a lawyer incurs on your behalf to
properly complete the sale, e.g. to obtain a tax certificate, to register the transfer
at the Land Titles office, etc. Disbursements on a typical sale amount to about
$200. Of course, these are costs you would incur yourself even without a lawyer.
If the vendor hires a lawyer, the vendor can expect to pay about one-half of the
fees that a purchaser pays. On a sale of a home for $100,000, the vendor can
expect to pay about $500 in lawyers' fees.
BUYING AND SELLING A HOUSE IN THE YUKON
31
APPENDIX A
CANADA
YUKON TERRITORY
VENDOR'S AFFIDAVIT
I, Sarah Lynn Homeowner of Whitehorse, in the Yukon Territory,
MAKE OATH AND SAY AS FOLLOWS:
1. The word "property" as used herein means the property
described in the attached instrument or writing:
2. The words "spouse" and 'Family home" as used herein are
defined in Section 1 and Section 21 respectively of the Family
Property and Support Act (the "Act"):
3. When I executed the attached instrument I was not a spouse, and the
property was not a family home within the meaning of
the Act;
4. I am a resident of Canada and as at the completion of the within
transaction I will not be a non-resident of Canada as defined in the Income
Tax Act of Canada (as amended from time to time);
5. The words "supply' and "exempt supply/' as used herein have the
meanings assigned thereto under the Excise Tax Act;
6. The supply of the property contemplated by this transaction is an
exempt supply under Section 2, 3, 4, 5, 8 or 9 of Part 1 of
Schedule V of the Excise Tax Act;
7. Without limiting the generality of the foregoing:
(a) prior to transfer of ownership of the Property to the Purchaser,
the Property has not and will not be capital property used
primarily in a business carried on by me; and
(b) I am not in the business of selling and nor does my sale of the
Property constitute an adventure or concern in the nature of
trade.
SWORN BEFORE ME at
Whitehorse in the Yukon Territory,
this 14th day of April, 1992.
tl p tfaio"
S'~f.lh, Ljl(l( lIo/f(etJ«II(~
SARAH LYNN HOMEOWNER
A NOTARY PUBLIC IN AND FOR
THE YUKON TERRITORY
32
BUYING AND SELLING A HOUSE IN THE YUKON
APPENDIX B
I
GLOSSARY OF LEGAL TERMS
acceptance
Occurs when the vendor signs the offer agreeing to sell the property on the tenns
indicated; or, if the seller makes a counter offer, when the purchaser signs the
offer agreeing to buy on those terms.
adjustments
Payments to reflect who is responsible for things already paid for, e.g. taxes
prepaid or fuel left in the tank.
affidavit
A written sworn statement.
affidavit of residency
An affidavit by the vendor sweating to whether the vendor is or is not a resident
of Canada for the purposes of the income tax laws. Property sold by a
nonresident is subject to a 15% tax which the buyer may be liable for if the
seller does not pay, if the buyer did nothing to ascertain whether the vendor was
a non-resident. Further, a purchaser is obligated to make a substantial hold-back
under the Income Tax Act in some circumstances.
affidavit of spousal status
An affidavit as to the vendor's marital status. If the purchaser buys land from a
married person, the transaction may be set aside if the vendor was married and
the spouse did not participate in the transfer or consent to it. This affidavit
allows the purchaser to be confident that the vendor is unmarried, or
alternatively, to ensure that the spouse consents by obtaining the spouse's
written consent to the sale.
affidavit of value
Affidavit as to the true value of the property at the time of transfer (usually the
purchase price). This affidavit is found on the back of the Transfer of Land
form, and can be completed by anyone who has the information.
agreement of purchase and sale
The contract signed by the vendor and purchaser setting out the tenns of the sale
(also called the interim agreement or the contract of purchase and sale).
agreement for sale
A contract whereby the vendor keeps the title to the property for a period of time
(usually years) until the purchaser makes all payments to the vendor.
BUYING AND SELLING A HOUSE IN THE YUKON
33
APPENDIIS
caveat
A warning or a notice registered on the title that someone other than the
registered owner also has a legal claim to the property.
Certificate of Title
A document, always kept in the Land Titles Office, which describes the
property, states who owns it and gives information about other claims and
liabilities against the property.
closing date
The date by which all aspects of the transfer will be completed and the property
will be in the name of the purchaser (usually coincides with the possession date,
but not necessarily). It is also called the completion date.
commission
The percentage of the purchase price paid by the vendor to the real estate agent
under the terms of the listing agreement.
conventional mortgage
A loan available from a bank when the purchaser makes a minimum down
payment of 25% of the purchase price of the property.
discharge of the mortgage
Removal of the mortgage from the title after it has been fully repaid (this does
not happen automatically, but requires filing the proper form at the Land Titles
Office).
Duplicate Certificate of Title
An official copy (not just any photocopy) of the title issued by the Land Titles
office which is evidence to the public that the registered owner owns the
property outright without any claims or mortgages on it.
easement
A right which a person other than the registered owner has to use the property in
a certain way, e.g. to run a power line across the property.
encumbrance
A general term referring to any claim or legal interest in the property held by
someone other than the registered owner, such as a caveat, lien, mortgage, etc.
Encumbrances must be stated on the back of the title to be enforceable.
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BUYING AND SELLING A HOUSE IN THE YUKON
APPENDIX B
equity
The owner's interest in the property, usually the difference between the rnarket
value of the property and the amount still owing under the mortgage.
foreclosure
A legal action taken by the lender to collect the money owing under the
mortgage or to get title to the mortgaged property if the borrower defaults in
payment.
General Register
A book kept at the Land Titles Office containing the names of individuals who
have been ordered by the courts to pay another individual money. Practically
speaking, when the land is sold, that creditor must be paid first.
interim agreement
A contract signed by the purchaser and vendor setting out the terms of the sale
(also called a contract of purchase and sale).
joint tenancy
A form of co-ownership of property in which one co-owner automatically
becomes the sole owner upon the death of the other and upon producing the
death certificate to the Land Titles office. Therefore, property 0, wned as joint
tenants cannot be bequeathed in a will, and does not go to the heirs upon
intestacy. (The title must specifically say that the property is owned "as joint
tenants" in order for this to apply.).
Land Titles Office
The office where all original documents regarding the titles to land or other
interests in land are kept. Located in the Andrew Philipsen Law Centre, 2134
Second Avenue, Whitehorse YIA SH6, phone 667-5612 or toll free
1-800-661-0408, fax: 668-7758.
lien
A claim registered against property for money owing.
lis pendens
A notice registered against the property indicating that the property is currently
the subject of a lawsuit.
listing agreement
A legally binding contract between a vendor and a real estate agent which
authorizes the agent to sell the property on certain terms.
BUYING AND SELLING A HOUSE IN THE YUKON
35
APPENDIX I
mechanic's lien
A notice registered against the property by a person who put work or materials
into the property but has not been paid in accordance with the contract.
mortgage
A loan to finance the purchase of land which gives the lender various rights to
the property if the borrower defaults. The term of the mortgage is the length of
time it runs at a particular interest rate before it must be renewed. The
amortization period is the length of time it will take to fully repay the loan. To
assume a mortgage means that another person (usually the purchaser) takes over
the seller' s obligations under the existing mortgage.
mortgagee
The party lending the mortgage money (usually the bank).
mortgagor
The party borrowing the mortgage money (usually the purchaser).
notarize
To have a document notarized means that you must sign the document in front
of a notary public and swear that its contents are true. With the Transfer of Land
form, the transfer itself does not have to be notarized. It need only be witnessed,
which means that any adult can witness your signature. However, the witness
must then appear before a notary public and swear that the witness did indeed
see you sign the transfer document. (This is very common with legal documents
and is called an "affidavit of attestation" or "affidavit of execution." This can be
found on the back of the Transfer of Land form, under the words Affidavit of
Attestation).
offer
In land transactions, an offer is made when the purchaser signs the contract of
purchase and sale offering to buy the property on the terms and conditions set
out in the document. If the vendor accepts those terms by signing the document,
they have a legally binding agreement.
possession date
The date on which the buyer can enter the property and occupy it, and if there is
a mortgage, the date on which the property must be insured in the name of the
new owner
private sale
The sale of property conducted by the seller without the services of a real estate
agent.
36
BUYING AND SELLING A HOUSE IN THE YUKON
APPENDIX I
real property
Land, including any improvements to the land such as a building.
surveyor's certificate
An official survey of the property which indicates the exact boundaries of the
property and the location of all structures on the property.
tenancy in common
A form of co-ownership which allows each co-owner to dispose of their share of
the property separately. If qne owner dies, his or her share will be transferred to
the heirs. If the title simply sets out the names of the co-owners, and does not
say how the property is held, the law presumes it to be held by tenants in
common.
tender
The offer of the monies owing, or the legal documents required.
vendor
The party selling the property.
writ of execution
A court order which can be registered against a property owner requiring
payment of an outstanding judgment.
BUYING AND SELLING A HOUSE IN THE YUKON
37
Agencies to contact for more information
• Lawyer Referral Service - This service will provide you with the
names of lawyers who do real estate work. Call 668-4231; if outside
Whitehorse, call collect.
• Law Line - A free public telephone line which gives information
about the law to Yukoners. Call 668-5297; outside Whitehorse call 1668-5297.
• Real estate agents - See the yellow pages in the telephone book.
• Land Titles office - This office maintains all official documents
relating to titled property in the Yukon. Call 667-5612; outside
Whitehorse call 1-800-661-0408.
• Superintendent of Real Estate - This person oversees the
enforcement of the Real Estate Agents Act. Call 667-5212; outside
Whitehorse call 1-800-661-0408.
• City of Whitehorse - Provides information on taxes, zoning, bylaws, building inspections, etc. Call 667-6401.
• Canada Mortgage and Housing Corporation - Has programs
available for home-buyers. Call 667-4236; Zenith 2360.
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BUYING AND SELLING A HOUSE IN THE YUKON