Chapter 19: Closing the Transaction Flashcards
How much should a borrower have set aside for closing costs?
Between 1.5% and 3% of the purchase price
Under what circumstances is PST included in the closing costs?
When there is a mortgage default insurance premium
Under what circumstances is HST charged in the purchase of a property?
On a new home, HST is charged; however, the builder may include it in the purchase price. If it is not included, it must be paid on closing. In addition, there is a HST rebate applicable to new homes, substantially renovated homes, and modular and mobile homes for which an application must be completed.
What tax is charged on the mortgage default insurance premium?
PST
Explain the significance of the Acknowledgement and Direction in the closing process.
This document allows the Lawyer to close the transaction electronically.
What purpose does the DRA serve?
This document allows the Lawyers to handle the client’s documents and funds and by signing this document, both Lawyers agree to undertake their professional obligations as to the handling of these documents and funds.
In a title-insured transaction, who remits the insurance premium to the title insurer?
The lawyer
Explain the IAD.
The IAD is the interest adjustment date, which is the date that the interest adjustment payment is due.
What is a subsearch?
A subsearch is an update of a previously completed full search, commonly performed on behalf of a purchaser by his or her lawyer immediately prior to registration of a transfer, and on behalf of mortgagees immediately prior to the registration of a mortgage.
What is the first step in the closing process?
The purchaser’s lender is satisfied that all conditions have been met
Who chooses which lawyer to use to close the transaction?
Either the borrower or the lender
What documents are included in the lender’s Instructions to Solicitor package?
(8)
This package commonly contains:
A copy of the lender’s mortgage approval
The lender’s disclosure statement
Solicitor’s Final Report and Certificate of Title document for the lawyer to fill in
Solicitor’s Interim Report and Requisition for Funds document for the lawyer to fill in
Pre-authorized Debit Form
Acknowledgement and Direction
Instructions on the requirements for title-insured mortgages and non-title-insured mortgages
Requirements regarding property insurance, surveys, condominium units, proof of identity, etc.
If a lender prohibits a vendor take-back, what must a lawyer do if they become aware that one exists?
the lawyer is required to inform the lender if they become aware of any secondary financing. This may cause the transaction to be cancelled.
Does the purchaser’s lawyer or the vendor’s lawyer register the discharge/cessation of mortgage?
The purchaser’s lawyer registers the discharge/cessation of mortgage, transfer/deed, charge/mortgage and advises the vendor’s lawyer of registration
