What are the elements that should not be overlooked in a real estate transaction?
The real estate market is currently booming. There are many buyers for the same property and there is growing pressure to close transactions quickly.
Should you find your dream home, you must take the time to do things right. Waiving or neglecting some important elements, such as building inspection, legal warranty, or certificate of location to speed up the process can have serious consequences, especially financially. Do not forget! Once accepted by the seller, an offer to purchase can no longer be cancelled, with very few exceptions.
The OACIQ implemented an awareness plan to ensure the protection of the public in this special context. This plan included a mandatory training course for all residential real estate brokers, which dealt with their ethical obligations regarding the overheated housing market issues.
Building inspection: an essential step
Whether a property is new or used, inspection is a must.
Of course, all the information contained in the form Declarations by the seller of the immovable, which the seller must provide, is very useful as it reflects what he knows about the condition and history of his property. However, a proper inspection will supplement this information by going more in-depth.
In accordance with the Real Estate Brokerage Act and the regulations thereunder, and to ensure that you are properly protected, your broker must recommend that you have the property thoroughly inspected by a professional or a recognized building inspector, who must meet certain requirements. To address the overheated housing market issues, the OACIQ, in collaboration with the Ministry of Finance, has updated the promise to purchase forms, which have been available since June 22, 2021. These forms now include a clause to reinforce the messages pertaining to the risks of waiving a pre-purchase inspection.
Legal warranty: do not waive this protection
When selling a property, the seller must warrant that the property is free from any defect in title and any latent defects, except those declared before the sale. That is what is generally known as the ''legal warranty'', which has two components - the warranty of ownership and the warranty of quality. These warranties exist by operation of law, i.e., they do not have to be specified in the contract. Except in rare cases, it is never advisable to exclude the legal warranty from a brokerage contract or offer to purchase.
The real estate broker must inform the seller and buyer of the consequences of waiving the legal warranty.
Certificate of location: an essential document
As required by the real estate brokerage forms, the seller must provide his broker with a certificate of location describing the current state of the building. This includes not only the physical condition of the premises (adding a swimming pool, shed, fence), but also the changes in regulations that may affect the findings made in the certificate of location.
The real estate broker must ensure that his buying client obtains a recent certificate of location and inform him of the consequences of waiving it.