Lopatka Law Blog

The Seller's Lawyer can prepare conveyancing documents efficiently and quickly once the Buyer’s Lawyer has the information and documentation necessary to do so, however the timeframe for the  “Conveyancing Stage” can vary because there are numerous role-players, however however, a seller is in a good position to inquire with the various role-players and determine the timeframe each role-player requires to determine what their individual home buying transaction requires.

The Buyer’s Lawyer can prepare conveyancing documents efficiently and quickly once the Buyer’s Lawyer has the information and documentation necessary to do so, however the timeframe for the  “Conveyancing Stage” can vary because there are numerous role-players, however however, a buyer is in a good position to inquire with the various role-players and determine the timeframe each role-player requires to determine what their individual home buying transaction requires.

Similar to the philosophical dilemma what comes first the chicken or the egg, when “closing” or completing a home buying and selling transaction there is a legal dilemma of what comes first, the buyer paying or the seller giving title to the property free and clear of a mortgage where the seller's lender likely requires the mortgage to be paid off first but the seller requires the purchase price to be paid by the buyer to do so.

The payout and discharge of mortgages is one of the many important reasons that lawyers are involved in buying and selling a home, and this post will address why lawyers are involved in the payout and discharge of mortgages in home buying and selling transactions, and some important considerations involved in doing so.

If you are getting a mortgage to purchase a home,  or re-financing the mortgage on your home, then you may be aware that your lender may require mortgage loan insurance, and in addition to the cost of the mortgage loan insurance [the insurance premiums are commonly added onto the mortgage principal], you should be aware of the the potential unlimited personal liability that may arise from the mortgage loan insurance.  These considerations continue and apply to those refinancing or renewing the mortgage in their homes, and those considering assuming a mortgage.

This can arise in numerous instances including:

1. A buyer of a home cannot afford or requires assistance in paying the down payment, so they rely upon the financial contributions and assistance of someone else for the down payment;
2. In order to share the risk of ownership, share the costs of ownership,  afford the down payment as the case may be, it is also common for a buyer of an investment property to rely upon a third party in a “joint venture” investment scheme for financial and other contributions,

And unless there is a written agreement between the parties it can be very difficult to determine what the intent is [joint ownership, joint venture, loan, debt settlement, or gift], and the rights and obligations of the parties vary substantially between whether a financial contribution is considered a gift, debt repayment, loan, or investment.

The Alberta Court of Appeal decision in Singh v. Kaler, 2017 ABCA 275 considers the legal characterization of the financial contributions to the purchase of property, and for anyone considering joint ownership or financial assistance is an importance case because:

1. It outlines how Courts attempt to bring certainty including the considerations involved in and application of legal principles such as the rebuttable presumption of purchase money resulting trust; and
2. Highlights the importance of having a written contract [ie. gift letter, loan agreement, loan repayment agreement, joint ownership agreement, joint venture agreement etc.] and having certainty about the rights and obligations particularly where investments and financial contributions are being made by each or any of the parties.

This is a concern for sellers [whom may be obligated to provide a Real Property Report and Evidence of Compliance] and deal with any issues that are related to it.

This is also a concern for buyers as it will be important for them to be aware at the contract stage as a part of their due diligence, but also in the conveyancing stage as it may be a requirement of their bank that has to be satisfied.