All Forum Posts by: Roy N.

You will normally receive an invoice from your attorney along with your closing package.   If there are funds remaining in escrow, you will also likely received a letter of direction to pay your legal fees from those funds.

If something arises during diligence which cannot be resolved and the deal falls apart, you still may have incurred some cost from your attorney's efforts.

An attorney would decline to represent both parties in the transaction - as it would violate the right to independent counsel.  

HST only applies in instances where you are a) purchasing a commercial property (i.e. strip mall, office building, etc) or b) where you are purchasing a new building (or one that has been renovated to such an extent that the CRA deems it essentially "new").    In general there is no HST on the purchase of residential rental properties - similarly, you do not collect HST on residential rent.

Lots of things could be altered, but it would be an act of fraud to do it. 

If a lender thought they had to buy-pass the borrower and consult directly with the CRA, there is a declaration that you could be asked to authorize it (similar to what your accountant will have you sign so they can interact with the CRA on your behalf).  That said, the lender would be more likely to refuse your application than undertake such measures.

@Jeffrey Seid

From experience, I can confirm, if you are self employed, lenders will still want your NOAs and possible T1s, but often for a longer period (I've been asked for 5yrs before).  If your business is incorporated and you are a controlling shareowner, they will want to see the corporate tax returns and Notice to Reader financials from your accountant.

HUB insurance does operate in NB (about 5-years now) through what appears to be an affiliation or acquisition of local brokerages (they weren't terribly competitive when we last shopped our insurance).   Park Insurance does not operate here, but they may underwrite nation wide.

@Lalit R.

In Canada, you will encounter public and private REITs, mortgage investment pools/funds and 'traditional' syndications.

For some of these paths, you will need to be an accredited investor, while others are open to investors of more modest means.

Ahmad:

It normally starts with the physical inspection of the building(s).  If specific concerns are raised (structural, moisture, electrical, etc) then the engineers or other specialists/trades are brought in for a more thorough examination.  However, on larger buildings one might order an engineering property condition assessment (PCA) from the get go.

For this reason, you need a diligence period which corresponds to the size of property - or the ability to extend your diligence period when a deeper investigation is warranted.  Naturally, if you are looking at a smaller building (residential or 5-10 unit) you will need less time than if you are examining a 50-unit building to cover both the physical building and, examine leases, gather estoppels, etc.

Environmental Assessments (EAs) are a fairly common ask of lenders and, at times, insurance providers when transacting commercial properties.  If you will not be using a lender, then you may still want an environmental assessment in certain situations: viz. if there are indications of current/past oil-fired heating plants and the possibility of underground storage tanks (USTs) - either active or abandoned.

@Ahmad D. and @Larry Morehouse

1) If you have a residential residential property, then you want a Landlord specific insurance policy.  I would recommend you contact Nicole Morgan at A.P. Reid Insurance as part of your search.

2) Real estate transactions in NB (and Canada in general) are Closed by attorneys.  A title search is part of the process.   Title companies as you find in the U.S.A. do not exist.

3) Inspection and financing contingencies are standard in residential real estate contracts.  In commercial transactions the diligence is both broader and deeper.  Inspections will include not just a physical inspection of the property, but also engineering assessments; environmental assessments; zoning and permit inspections; leases and service contracts and finances (3-5 years, preferable prepared by an accountant).   

You should also have a condition permitting you to collect estoppels from the tenants and use the information collected to verify the leases and financial information reported by the Vendor.

4) When it comes to Earnest Money (more commonly called simply a Deposit here), you should consider a minimum of 5% - 10%.   I know that $1K - $2K deposits seem to have become common on residential properties, but if you were to drop such a deposit on an apartment building, neither you nor your agent (who allowed you to do it) are going to be taken seriously.

5) Absolutely!  You need to be aware of the Residential Tenancies Act in the jurisdiction in which you are acquiring property.  The NB Residential Tenancies Act can be found here.  Just as important as the Act itself is learning how the Residential Tenancies Tribunal (RTT) {formerly the Office of the Rentalsman} applies the law and the regulations which accompany the law.   Good news for you, NB has a fairly balanced Landlord - Tenant regulatory environment; particularly in comparison to jurisdictions such as Nova Scotia, Québec or Ontario.

Your broker may have forgotten, but when the appraiser reports back to the lender that it is a rooming house, the lender will walk away or only underwrite an LTV of 50-65%.

Your best bet is either a private lender or finding a conventional lender which uses auto-approval software (TD is an example) and mortgage agent/broker who can steer you towards an application that qualifies for auto-approval (if at all possible).

When we were first in the same situation, we approached a family member with a proposal to have their name on title and live in the house (rent and utilities free) in exchange for their serving as the Den Mother to keep the house in order. We lost a rentable room as a consequence, but were able to finance as a primary residence (auto approval) to an LTV of 80%.

@Jacob G.

Slab construction for residential properties has become more prevalent in recent years around here, but it is still far more common with commercial construction.  In my experience, slab construction has different, but no more issues than a crawl space or basement. 

When you look at a house built on slab, you will want to ascertain whether the slab was insulated (and how much); whether there is a vapour barrier under the slab; what nature of footing was poured at the perimeter; and, if applicable in your area, if any measure to address radon have been implemented. 

When looking at the house pay particular attention to the location of plumbing fixtures and any other lines (gas, electrical, ducting, etc) as they will be more costly to move than they would be with a basement.

Additionally, if the building is older and has cast iron or copper DWV, you may want to have the lines scoped to ensure they are in good condition (as it can be a big, disruptive job to replace bad lines).