There are certain steps that need to be taken to ensure that the purchaser receives clear title to the property. Once these steps have been taken the title can be transferred. There are different types of ownership and before title is transferred decisions must be made about how title will be held.
A lawyer can ensure that a buyer is receiving clear title to the property and is protected from any other claims against the seller.
Information about real property is recorded on the title to the property. It is very important that the title be searched when buying real estate. In Saskatchewan, titles to land are registered with Information Services Corporation of Saskatchewan (ISC). If a lawyer is acting for the buyer the lawyer will search the title. Individuals can also do their own search online through ISC. A search of the title reveals the name of the current owner of the property, the legal description of the property and whether there are certain claims against the property.
Other interests such as maintenance orders or writs of execution are not necessarily registered on the title, but may nevertheless affect the property. The lawyer or the buyer should also check the municipal tax records to determine the amount of property taxes and whether the seller's payments are up-to-date.
Below are some things to look for when searching the title.
Any mortgages registered against the property should be paid out when property is transferred to a new owner, unless the new owner is going to take over that mortgage.
An interest registered on a title is a warning that someone has a claim against the property. Someone may have an interest in the property because of they have a lease, an option to purchase or an agreement for sale. As a buyer you will want to make sure that other people do not already have a claim on property you buying. A lawyer often can arrange to have interests removed from the title before title is transferred.
A lien can be registered against property. This happens when the property owner owes someone money. A common type of lien is a builder’s lien. The Builders' Lien Act gives trades people who have worked on a property the right to register a lien against the property until they are paid for their material, labour or other services. A lawyer may be able to arrange to have liens against the property paid out by the seller and removed from the title. It is important that appropriate steps be taken to avoid the buyer being "stuck" with the seller's obligations.
A court order requiring a person to pay a judgment may be registered against a property they own. If, for example, the seller has been successfully sued for $10,000 and has not paid that money, the judgment may be registered against property the seller owns. The seller needs to pay out these debts before the property is transferred to the new owner.
An easement is a right that someone other than the owner of the property has to use the property in a particular way. An easement continues even when property is transferred to a new owner. There is often little that can be done to remove an easement from the title. It is important for buyers to know about any easements. Easements are common, and can range from the right of a neighbour whose land has no street-front access to use a strip of your property to reach the street, to the right of the city to run a sewer line across your land.
Most buyers want clear title to the property they are purchasing. Clear title means that no one else has any rights to the property. To get clear title it is necessary to have all other interests removed before title is transferred to the new owner. If the buyer has a mortgage, it will be registered against the title as soon as the title is transferred to their name. If the seller finances the purchase of the property through an agreement for sale, the seller retains title to the property and the buyer should register the agreement for sale on the title by way of an interest.
A buyer may have to decide whether to have title in one name or to share ownership. There are two types of shared ownership: joint tenancy and tenancy in common. As the choice can have a significant impact on each owner's rights and obligations, as well as that of their estate, legal advice should be considered.
Joint tenancy means that the whole property is owned together by more than one person. All the joint owners of the property must consent to any sale or mortgage of the property. Unless otherwise stated, joint tenants have a right of survivorship. This means that the survivors become the sole owners of the property when one of the joint tenants dies. For example, if a husband and wife were joint tenants of a house, and the wife died, the husband would automatically become entitled to sole ownership of the property. After filing the necessary forms with ISC, the property would be registered in the husband’s name alone. The property would not become part of the wife's estate.
Tenancy in common means that there is more than one owner and that each owns an individual share of the property. Each owner has access to and use of the entire property but owns only a portion of it. The shares can be equal or unequal. For example, if two university students decided to buy a house, but could not contribute equal amounts to the purchase price of the house, they could purchase as tenants in common. One could own 70% of the property and the other 30%. If the property were sold, the net proceeds would be divided accordingly between the two owners.
A tenancy in common has no right of survivorship, so owners can leave their share of the property upon their death to a person of their choice set out in their Will.
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