Steve makes an offer on a large property with J. Quaglia Law Office…then the next steps
Steve is a longtime client of mine. Steve has hired me a number of times in the past when he has bought or sold farms and when he has refinanced mortgages on his property. Steve has decided to work with me again to buy another farm in Chatham-Kent. Steve comes in for an appointment bringing the 911 address of the property he wants to buy, the dollar amount he has agreed to pay, and his cheque book, and the name of the Seller’s lawyer.
The process starts with my real estate assistant logging into the registry office data base to pull the parcel register. The parcel register is a document that shows us the name of the owner and the mortgages and some of (but not all of) the liens registered on the property.
Next, I pull up an Ontario Real Estate Association (OREA) commercial real estate form. I have purchased access to the OREA forms, because we draft a lot of offers at our office. Steve and I complete the form together. After having confirmed that Steve has talked to his accountant we show Steve’s name as Buyer. We show the name that appears on the parcel register as Seller. We put in the purchase price and an amount for a deposit and that it will be made payable to the Sellers lawyer in trust. We insert a reasonable closing date. I confirm that Steve has an HST number in his name in order to defer the payment of HST on the purchase of the property. We choose a date by which I am to have my search done.
We turn to schedule A of the agreement and Steve confirms he will be paying 50% of the purchase price on the close of the transaction and the Seller is going to hold a 2nd mortgage for the balance. Steve says his financial institution requires 15 days from signing the Agreement to confirm in writing that he qualifies for the mortgage. As a result, I draft wording that the agreement is conditional on Steve being satisfied with the terms of a first mortgage and that the Seller will take back a 2nd mortgage for 50% of the sale price. As there is a standing crop, I draft wording that Steve will be entitled to harvest and sell the crop and the Seller will obtain a release of any security instruments on the crop on the closing of the transaction. From the parcel register it is clear there are some expired oil and gas leases affecting the property and a current mortgage registered on the property by the Seller’s financial institution. I add wording to the agreement that the Seller has to remove these liens on or before closing.
After Steve and I review the agreement, he signs, I witnesses and he prepares a cheque for the amount of the deposit payable to the Seller’s lawyer in trust. Steve leaves the office as a happy client. My staff deliver the agreements and the deposit cheque to the Seller’s lawyer. Signing the Agreement is only the first step in the process of buying a farm but the details of what happens next will have to be the subject matter of a further post.
Thanks for reading. Talk soon,