Chapter 7.2: From Contract To Completion Flashcards
When setting up a T sheet, the buyer or purchaser should always be on the _______
Left
When setting up a T-sheet, the seller and vendor should always be on the ________
Right!
With a tee sheet, _________ appears on the left, __________ appears on the right
Debit
Credit
On the buyer / purchaser side, what value always appears at the end
Balance due for purchasers
Balance due is always for buyers
On the seller / vendor side, what value always appears at the bottom?
Cash proceeds for vendors
Cash proceeds always goes with the seller
__________________: this is the date in which the transaction is done (finished) … the money is transferred to the seller and the land title is transferred to the buyer
Completion date
When does the real estate agent get paid?
On the completion date - subject to any tenancy agreement
__________________: the day the purchaser GETS THE KEYS; where they get physical access to the property
Possession date
*usually 1 day after completion date
______________: the day the lawyers use to tally up the debits and credits to see who needs to pay what to whom to balance out the deal
Adjustment date
__________ is the cut-off day for taxes
July 1st
You are paying taxes from January 1st to December 31st of the ____________
Current year
How many days does July have?
31!!
How many days does May have?
31!
How many days does February have?
28 days!
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Who is responsible for the taxes?
The seller
As he was in the house on July 1st which is the tax cutoff
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Who owes money to who!
The buyer owes money to the seller
As the seller would have paid taxes given he was in the house for July 1st
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
The buyer portion of taxes he owes is what? (Time period)
October 23rd-December 31st
You gotta pay the difference
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Count the days of how many days the buyer will be in the house
October 23rd-December 31st = 70 day
Oct 31 - 23, +1 + Nov 30 + Dec 31 = 70
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Now we know there is 70 days, do the math for the buyers amount he owes
70 / 365 = 0.19178
0.19178 x 1200 = $230.14
Example 1: Taxes were previously paid by Vendor (Seller)
The vendor has paid the annual taxes for the property
In this example, they’re gonna pay $1200. The adjustment date is October 23rd
Now we know the buyer owes $230.14, complete the T-sheet
Buyers side
Debit: $230.14
Sellers side:
Credit: $230.14
Remember, when trying to figure out who owes who money, look at the _________ cutoff date. Whoever was in the house at that date, pays the bill (which day of the year?)
July 1st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Who is responsible for the taxes?
The seller!
As august 31st is past July 1st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Who owes money to whom?
The buyer owes the seller money
As the seller would have paid the taxes on July 1st cutoff date
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now, calculate what portion of the buyers taxes need to be accounted for
August 31st - December 31st
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s August 31st to December 31st, count the days
August 31st to December 31st = 123
Aug 31st - 31, +1, + sep 30 + Oct 31 + nov 30 + Dec 31 = 123
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s 123 days, calculate how much the buyer owes
123 / 365 = 0.33698
0.33698 x $1095 = $369
Buyer is not subject to the penalty as the seller was responsible to pay on time
Example #2: taxes due but not paid yet
The taxes in the amount of $1095 are due but not yet have been paid. A penalty of $105 is owing. The adjustment date is August 31st
Now that we know it’s $369 the buyer owes the seller, set up the T-sheet
Buyer
Debit: $369
Seller:
Credit: $369
Debit: $105 (late fee buyer doesn’t pay)
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Who is responsible for paying the taxes?
The buyer
As March 10th is before July 1st
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Who owes money to whom?
The seller owes money to the buyer
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Find the portion the seller will have to pay (just the dates)
January 1st - March 9th
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Now that we know it’s Jan 1st - Mar 9th, how many days is that?
Jan 31 + Feb 28 + Mar 9 = 68 days
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Now that we know it’s 68 days, do the math
68 / 365 = 0.18630
0.18630 x $1200 = $223.56
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Now that we know it’s $223.56, do the T-sheet
Buyer
Credit: $223.56
Seller
Debit: $223.56
Example #3: Taxes to be paid in the future by purchaser
The net taxes are not yet due, but last years taxes were $1,200. The adjustment date is March 10th
Where does the full $1200 show up?
The full $1200 never shows up on any one’s statements!’
It will also be proportional to what they owe
Property Transfer Tax Calculations have now many tiers?
3 tiers
Property Transfer Tax Calculations 3 Tiers
Tier 1: 200,000 @ 1% ($1-$200,000)
Tier 2: The next 1.8m @ 2% ($200,001-2,000,000)
Tier 3: Over 2m+ @ 3% (2,000,001 - unlimited
Property Transfer Tax Calculations Bonus Tier
For residential properties only!
Amounts over $3m get charged an additional 2%
Reminder, foreigners buyer tax for residential property is what?
PTT + 20% market value
Property Transfer Tax Calculations, only calculate this when the question explicitly tells you, and __________________
Debit the buyer
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Question: show the T sheet for the sales price
Buyer
Debit: 150,000
Seller
Credit: 150,000
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Question: show the t sheet for the deposit to the brokerage
Buyer
Credit 15,000
Seller
Nothing as it goes to the brokerage and not the seller
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Show the T-sheet for 1st mortgage of 71,000 to be assumed
Buyer
Credit: 71,000
Seller
Debit: 71,000
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Show the t sheet for the 2nd mortgage of 34,000 that has been arranged
Buyer
Credit: 34,000
Seller
Doesn’t show up! (Doesn’t affect them)
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Show the T sheet for the unpaid taxes of 1,095 + penalty of 105
Aug 31st-December 31 = 123 days
123 / 365 = 0.3369
0.3369 x 1095 = 369
Buyer
Debit: 369
Seller:
Credit 369
Debit: 1095 + 105
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Show t sheet for 6% commission of sale price
Sale price = 150,000
Commission = 6%
150,000 x 6% = 9000
Buyer
Doesn’t show up!
Seller:
Debit: 9000
Example Question:
Price: 150,000
Deposit to brokerage 15,000
Financing
-1st mortgage to be assumed 71,000
-2nd mortgage arranged 34,000
Taxes
-unpaid and overdue 1,095
-A overdue penalty 105
Commission 6% of sale price
Conveyancing Fee 600
Adjustment and completion date = August 31st
Assume it is not a leap year
Show the tee sheet for the conveyancing fees
*buyer only pays legal fees
Buyer:
Debit: 600
Seller
Doesn’t show up!
T Sheet Practice Time!
Sale price / house price
Buyer (Purchaser)
Debit: xxx
Credit:
Seller (Vendor)
Debit:
Credit: xxx
T Sheet practice time
Real estate commission
Buyer (Purchaser)
Debit:
Credit:
Seller (Vendor)
Debit: xxx
Credit:
*remember, the seller is the only one who pays the commission
T sheet practice time
Deposit paid to BROKERAGE
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit:
Credit:
*given the money is in the brokerages hand, the seller doesn’t see it!
T sheet practice time
Deposit paid directly to vendor
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit: xxx
Credit:
T sheet practice time
1st legal mortgage
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit:
Credit:
*mortgages don’t really effect the seller unless they are assumed, vendor take back mortgage, or agreement for sale
T sheet practice
Equitable mortgage (2nd beyond mortgage)
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit:
Credit:
- doesn’t affect the seller as they aren’t involved in the mortgage
T sheet practice
Mortgage to be assumed
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit: xxx
Credit:
The seller is involved in this now so they have to be debited
T sheet practice
Vendor take back mortgage
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit: xxx
Credit:
Seller is involved so he gotta be debited
T sheet practice
Agreement for sale
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit: xxx
Credit:
Seller is involved so they gotta be debited
T sheet practice
Legal / conveyance fees
Buyer (Purchaser)
Debit: xxx
Credit:
Seller (Vendor)
Debit:
Credit:
*this is the sole responsibility of the buyer
T sheet practice time
Legal fees to discharge a mortgage
Buyer (Purchaser)
Debit:
Credit:
Seller (Vendor)
Debit: xxx
Credit:
*the buyer has nothing to do with discharge
T sheet practice
Security deposit, rings, boats, items
Buyer (Purchaser)
Debit:
Credit: xxx
Seller (Vendor)
Debit: xxx
Credit:
T sheet practice
Property Transfer Tax
Buyer (Purchaser)
Debit: xxx
Credit:
Seller (Vendor)
Debit:
Credit:
PTT is only the buyers responsibility
T sheet practice
Share of taxes already paid by seller
Buyer (Purchaser)
Debit: xxx
Credit:
Seller (Vendor)
Debit:
Credit: xxx
T sheet practice
Penalty due on overdue taxes
Buyer (Purchaser)
Debit:
Credit:
Seller (Vendor)
Debit: xxx
Credit:
__________________: confirms the boundaries of the property and the location of any buildings in relation to its boundaries
Survey
What four items are included in a survey
1) parcels boundaries
2) Legal description
3) Location of all structures
4) Property interestS (such as easements, covenants, right of ways)
In case of _______________, the lender will likely refuse to advance the mortgage funds
Encroachment
What is encroachment
A fixture, such as a wall or fence, which illegally intrudes into or invades public or private property
____________________ May serve as a substitute for a survey, and the premium may be less than the cost of a survey
Title Insurance
Title insurance policy may resolve _________ revealed by a survey
defects
In case of __________________, title insurance may permit the lender to advance the mortgage funds, despite the _______________
Encroachment X2
Title insurance is a device to protect an _______________ or a ______________ against certain losses associated with title defects or related problems
Owner
Lender
Title insurance covers related problems such as
- charges, liens, easements, encumbrances
- lack of right of access to land
- forgery, fraud, duress
- 3rd party interest in title
- The owner being forced to remove an existing structure (not a boundary wall or fence) 
 what are the three closing procedures
1) preparation of documents
2) application for registration
3) payment
Preparation of documents involves
1) form A - freehold transfer
2) property transfer form
Application for registration involves
1) form B - new mortgage
2) pending applications
Conveyancers make closing payment based on ____________________. They do not have to await final registration of the conveyance before making closing payments
Pending applications
Payment
Balance due to complete
