An Agreement of Purchase and Sale (APS) is a binding contract. When an offer that is put forward? on a property is accepted, the APS becomes an executed contract. You cannot walk away from a binding contract without legal and economic consequences. It is not just your deposit that is in jeopardy, but all losses of the other party. You should review your APS carefully and ensure that any conditions you require are included in the APS, as well as any other aspects of the deal such as fixtures and appliances that are included or excluded. You should also ensure you are prepared to act in good faith to attempt to complete any conditions that you are required to fulfil under the APS. If possible, contact your lawyer to review your APS with you prior to the APS becoming final.
You Will Need To Account for Land Transfer Tax
When purchasing a home you need to ensure that you account for land transfer tax and inquire about any exemptions (such as first-time homebuyer) that may reduce or eliminate the land transfer tax on your purchase.
Ontario Land Transfer Tax is calculated on the basis of the purchase price as follows:
- Amounts up to and including $55,000.00 are taxed at a rate of 0.5%
- Amounts exceeding $55,000.00, up to and including $250,000.00 are taxed at a rate of 1.0%
- Amounts exceeding $250,000.00, up to and including $400,000.00 are taxed at a rate of 1.5%.
- Amounts exceeding $400,000.00 are taxed at a rate of 2.0%
- Amounts exceeding $2,000,000, where the land contains one or two single family residences are taxed at a rate of 2.5%
You should also note that Toronto has a municipal land transfer tax that is applicable in addition to the provincial land transfer tax.
You Should Have Legal Assistance throughout Your Purchase
Ontario has a unique land registry system that is operated using Teraview. Teraview requires users to complete their authorization process before being able to register electronic documents in the Electronic Land Registration System. Lawyers that have a real estate practice must be authorized to use Teraview to complete your transaction.
In addition to being able to assist you with the completion of your deal, your real estate lawyer may assist you with reviewing your APS prior to the contract being executed or final, dealing with any issues that arise with respect to a party attempting to alter or breach the APS, and assisting with issues that may arise after your deal closes.