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Art
THE OF CLOSING A DEAL
INTERVIEWED BY ALAN SERRECCHIA / ANSWERED BY GAETANO BARRILA
As our real estate market continues to move ahead at a dizzying pace , one aspect of the buy and sell process that often goes overlooked is the closing process involved in all deals . Sure it is not the heated market search or tense negotiation process , but there is no transaction without the closing – and not all closings are equal !
We sat down with Gaetano Barrila of Barrila Law , recipient of the York Region Small Business of the Year Award for 2015 to talk about the Art of Closing a Real Estate deal – the to do ’ s and the not to do ’ s as told by an experienced lawyer whose practice is dedicated to wills , estates , business and real estate law .
QUESTION . What is the most common error ( s ) you see sellers making ?
ANSWER . Given the current market conditions , I often see buyers make two very fatal mistakes when buying a property : First , they waive their inspection condition or don ’ t insert an inspection condition at all into the purchase agreement . Often the buyers are told that they will lose the “ bidding-war ” if they want to conduct an inspection . My advice , do not fall into this trap . Second , make sure that you can afford your home . We can fix a lot of problems at Barrila Law – but we can ’ t fix one important one – money ! If you just won the bidding war , but can ’ t afford to close the transaction , or you are stretching yourself beyond your means , you haven ’ t won anything , you have opened yourself up to some potentially serious financial stress .
QUESTION . What is an important thing to know going into a real estate closing ?
ANSWER . People often mistake a real estate closing for something that ends on the closing date . An agreement of purchase and sale to buy or sell a home is nothing more than a contract , and your contractual obligations to the other party do not end , just because the transaction closes . For example , the buyer still has recourse after the closing date against the deceptive seller who tried to cover up a defect in the home . Just as well , the seller has recourse against a buyer if the seller has overpaid a tax or utility bill – the buyer has to pay back the seller the overpayment ; the buyer can ’ t just take a windfall .
QUESTION . What is the biggest difference between closing a deal on a home / condo and a commercial property ?
ANSWER . In general , no two real estate transactions are ever the same . Each one comes with its own twist and turn . That is especially exaggerated in commercial closings . Commercial closings are much more intricate and have many more “ moving-parts ” than the closing of a traditional home / condo . Some of those moving parts include more stringent financing requirements ; due diligence with municipalities ; Ministry of the Environment issues ; Health and Safety issues and the like , depending on the nature of the commercial property being acquired .
QUESTION . Is there a difference between closing a deal on a resale home versus a home that has not yet been built ?
ANSWER . While new homes have the security of a turnkey solution without the worry of additional costs required for updates / repairs , resale homes do carry with them two very big “ certainties ” as I like to call them . First , the purchase price on a resale purchase is the set purchase price that the buyer pays on closing . Whereas in the purchase of a new home , the purchase price on the agreement is often subject to other adjustments or increases like development levies , charges for installation of utility meters , the cost for the Tarion warranty , and so forth . Second , the closing date on a resale purchase is contractual and is fixed . That means you known when you are going to close . Whereas with a new home purchase the closing date from the builder tends to be a “ moving target ,” and the complexities of the construction world can lead to delays and often extensions of the closing date .
QUESTION . What is the best advice you can provide for the completely uninitiated buyer / seller ?
ANSWER . Do your homework ! This is likely the most important transaction that you are going to make in your life . It ’ s not a time to cut corners . Everyone who you work with has an impact on the transaction , and so it ’ s important to pick the right lawyer , realtor , inspector , and lender to complete the transaction . Ask around , get references and recommendations from people you trust to help guide you in the selection process . You do not want to find out that you have the wrong person representing you in the middle of this critical transaction .
QUESTION . What is the primary role of a good lawyer in the closing process ?
ANSWER . I like to think of my role in the real estate transaction as the “ quarter-back .” The lawyers in a real estate transaction are the main individuals who coordinate deliverables from the real estate agents , your lender , and the buyer and seller . When you are a buyer , the lawyer ’ s primary goal is to get you good and valid title . This gives you the legal right to occupy your home and sell it in the future . When you are a buyer , the seller ’ s primary goal is to ensure that it can convey clear title to the buyer so that you can sell your home and obtain the sale surplus funds .
QUESTION . It has become increasingly common to see people attempt to act as their own real estate agent – can people close their own deals without the aid of a lawyer ?
ANSWER . Currently , in Ontario each of the buyer and the seller must retain a lawyer to complete a real estate transaction . It ’ s important to choose the right lawyer . When searching for a lawyer you should be looking for a real estate lawyer who has sufficient experience , regularly practices in the area of real estate , has familiarity with the local / geographic area , and the level of service they provide . Be wary of real estate lawyers who offer rock bottom prices or quirky gimmicks – remember just like anything else you buy – you get what you pay for .
Gaetano Barrila is the Principal of Barrila Law , a client-centred , service-oriented law firm with offices in three locations .
37 Jacob Keffer Parkway , Suite 301 Vaughan , ON L4K 5N8
CONTACT : 905 326 2767 or gaetano @ barrilalaw . com
62 • fredi winter 2016 HOUSE & HOME //