A. What is Title Insurance?

B. Should I use a realtor?

"Selling a Home"

When selling your home there are several issues to consider including how to calculate the proceeds of your sale.

When selling your property you want to ensure that the purchase money ends up in your hands after the deal is complete. The determination of the amount of funds you will receive depends on the purchase price agreed to, less any adjustments. Adjustments include certain costs that will be deducted from your sale proceeds as of the possession date. These adjustments will include property taxes and may include prepaid rentals. Further deductions will be made for the payout of any charges against the property in your name (i.e. mortgages), real estate commissions and lawyer’s fees and disbursements

Property Taxes

In the City of Saskatoon, property taxes are assessed at the beginning of June and become due and payable June 30th. If you are selling your house before June, you will not have paid that year’s taxes yet and the purchaser will have to pay the entire year’s taxes. Therefore, you will be required to pay the purchaser for the portion of the year’s taxes that you were in the home. This will be deducted from the purchase price.

If, however, you sell your house after June, you will already have paid the entire year’s taxes, so the purchaser will have to pay you back for the portion of the year that the purchaser is in the house. This will be added to the purchase price.

Those registered with the City of Saskatoon’s TIPPS program pay a pro-rated monthly sum into a City of Saskatoon tax account. If you are registered in the TIPPS program when you sell your home, the money in the TIPPS account goes with the home. You cannot withdraw your money out of the account or transfer it to a new account. Therefore, the buyer will have to buy all the money in the TIPPS account from you. The lawyer deals with this by simply adding whatever is in the TIPPS account to the purchase price of the home.

Rentals

If you have a rented water softener, water heater or alarm system in the home you are selling, you will likely have made advance payments. Often, the seller and purchaser will agree to have the purchaser reimburse the seller for the rentals that cover the period the purchaser is in the house. This agreement should be made part of the sale contract, but it is often overlooked and subsequently agreed upon once the deal is in the lawyers’ hands.

If all or part of your property is occupied by tenants, there will be an adjustment for pre-paid rents and damage deposits. If tenants will be staying in the property after possession, any pre-paid rents and damage deposits will be credited to the purchaser reducing the purchase price of the property accordingly.

Real Estate Commissions

Real estate commissions are paid to the realtors that were involved in the sale of your home. If your realtor was acting for both you and the buyer, the realtor will receive the entire commission. If the buyer also has a realtor, then both realtors will receive an equal share of the sale commission. The commission does not go up if there is more than one realtor involved.

The commission is paid out of the proceeds of the sale of the home. The lawyer will ensure that the realtors are paid their commissions.

The buyer’s deposit is usually held by the seller’s realtor. When the sale is complete and the realtors receive the commission, the seller’s realtor keeps the deposit and receives the remainder of his or her commission from the sale of the house.

Possession Date

The possession date is the day you have to be out of your house.

If you are purchasing another house, then the possession date is important for two reasons.

First, it is important because you want to be able to move into your new home on or about the same day you leave your old home so that you can avoid the costs and trouble of storing your belongings. Second, the money from your home sale is paid on or about the possession date, so you will want to have the money coming from the sale of your old home ready to pay for your new home when you move into it. To be safe count on delays of 7-10 days in receiving your sale proceeds. If your sale closes after the closing date of your purchase you will not have the sale proceeds available to complete your purchase. To remedy this problem you can obtain interim financing. This is a short term loan offered by banks in order to bridge the gap between the closing date of your purchase and that of your sale.

Late Interest

Information Services Corporation (formerly Land Titles) can often be behind in its registrations by anywhere from 1 to 7 days, depending upon the time of year. If documentation difficulties prevent timely registration, possession still goes ahead as scheduled, but you will not receive your sale proceeds.

Until the bank's mortgage is registered on the title, the bank has no security for the mortgage money it is advancing to the purchaser. Therefore, the bank will not hand over the mortgage money until the mortgage is registered, and when the registration is late, that means the mortgage money will also be late and the purchaser will not have the funds to purchase the house. In order to avoid changing the possession date, a clause is built into every properly drawn real estate contract. This clause provides for late interest on any money the seller has not yet received on the possession date. This allows the purchaser into the home on the possession date and compensates the seller by adding interest to the money the seller has not yet received. This compensation should cover any interest that accrues on your mortgage to the property.

Deposit

The Purchaser will provide a deposit for the purchase which forms part of the purchase price of your property. Typically, the buyer’s deposit is held by the seller’s realtor, and when the sale is complete and the realtors receive the commission, the seller’s realtor keeps the deposit and receives the remainder of his or her commission from the sale of the house.

Fire Insurance

It is advisable to keep your fire insurance on your property in place until possession as set out in the sale agreement. Out of an abundance of caution you may want to leave the insurance in place for an extra day or two. The purchaser is required to commence their fire insurance effective at possession. This is to ensure that there are no insurance problems in the event that the house burns down and no insurance is in place. Your lawyer will ensure that the purchaser’s insurance is in place and you must make sure you do not cancel your insurance prior to possession in case of loss on possession day.

Costs

The costs associated with selling your house are significantly less than purchasing a property. Sellers will typically pay lawyer’s fees and disbursements of approximately $500.00 - $700.00 depending upon the sale price.

Being an educated seller will help you avoid many of the frustrations often associated with selling a home.