[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]
64
issues, verify the heating, ventilation, plumbing and electrical systems and the type and state of the roof, underground storage tanks, etc. and generally identify any issues which should be rectified, and which could influence the value of the property (and therefore potentially reduce the price). The buyer’s notary will conduct a formal title search on the property to establish the chain of title and to identify any hypothecs, prior claims, other encumbrances, servitudes (easements), concurrent or priority rights of ownership, and any other right or charge reducing the value of ownership of the property. The notary will also obtain and verify an up to date (not more than 10 years old) certificate of location (survey) to be provided by the seller (and which will be required by the buyer’s lender if the purchase is being financed). Finally, the notary will verify the zoning and any permits for renovations to the property, as well as payment of the property taxes (municipal, school, water, etc.), any right of tax authorities to claim arrears of property taxes, any prior claim in their favour, any registration of a notice of sale of the property for non-payment of the property taxes, any consequential sale of the property, and the registration of a notice of legal hypothec by the tax authorities or by any contractor who has worked on the property. The notary will, in preparing the deed of sale, also prepare any adjustment of taxes, charges, utilities, etc. and confirm that the buyer has insurance coverage for the property in place as of the date of transfer of ownership. Commercial In addition to the inspections performed by residential buyers, commercial buyers also generally obtain at least a Phase 1 environmental review (with a Phase 2 follow-up where the Phase 1 report raises concerns), and a use and zoning/permitting analysis, particularly if the buyer is planning any
renovations to, or a particular usage of, the property. If the property is leased, the buyer’s due diligence should include a thorough review of all leases and related documents, including the term, any options to renew, an assessment of the rentals stipulated compared to current market conditions, as well as all maintenance and other contracts relating to the operation of the property. Title Insurance In both residential and commercial sales, any title issues which cannot easily be resolved prior to the sale may be covered by the issuance of a title insurance policy, generally applied for by the buyer as beneficiary, but at the seller’s expense. IV. FORMS OF OWNERSHIP Residential property is commonly held in an individual’s personal name (or both spouses’ names in the case of a couple) but may also be held in a family trust or by a holding corporation. A family trust is created by signature of a notarial trust deed naming three trustees, at least one of whom must be independent ( i.e., neither the settlor nor a beneficiary), which identifies the beneficiaries and defines the trustees’ powers. Commercial property may be held in a variety of ways, including directly in the name of the owner, or through a corporation, partnership, limited partnership, unlimited liability company or trust. It may also be held in emphyteusis for up to 99 years, in which case the beneficial and legal (or “bare”) ownership, which would otherwise be united in a single owner, are divided among one or more individuals or entities.
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter