Practical Guide for Buyers
2 Practical Guide for Buyers
Practical Guide for Buyers
What you should know
about buying a home
Buying a house is a complex and sometimes stressful operation. This is why
the Nova Scotia Real Estate Commission has prepared this booklet, which con-
tains the main steps you need to follow before, during and after the purchase
of your home. In it, you will nd many useful tips to guide you and help you
complete your real estate transaction in a satisfactory manner.
Compliments of:
Practical Guide for Buyers 3
Role of real estate professionals........................................................................... 5
Why use a real estate professional? ....................................................................................................5
Distinction between classes of real estate licenses .....................................................................5
Compulsory licensing .............................................................................................................................6
Duties and obligations of real estate brokers and salespeople ...............................................6
Loyalty to the client .................................................................................................................................6
Obligation to disclose .............................................................................................................................6
Advising and informing objectively and accurately ....................................................................6
Consumer protection mechanisms ................................................................... 8
Professional development ....................................................................................................................8
Entrance exam ............................................................................................................................................8
Brokerage audits .......................................................................................................................................8
Complaints and investigations .............................................................................................................8
Professional liability insurance ............................................................................................................8
Recovery Fund ...........................................................................................................................................8
Agency relationships ............................................................................................... 9
What is an agency relationship? ..........................................................................................................9
About common law agency ..................................................................................................................9
About designated agency ......................................................................................................................9
Seller or buyer agency with you as a client .....................................................................................9
Transaction brokerage with both the buyer and seller ........................................................... 10
When transaction brokerage is not appropriate......................................................................... 11
Customer status ...................................................................................................................................... 12
How much can I aord to invest? ......................................................................13
Analyzing your nancial capacity ..................................................................................................... 13
Estimating your maximum mortgage ........................................................................................... 13
Calculating your monthly housing budget .................................................................................. 13
How much nancing do I need? .......................................................................14
Cash expenses ......................................................................................................................................... 14
Deposit ....................................................................................................................................................... 14
Down payment ....................................................................................................................................... 14
Related expenses .................................................................................................................................... 14
Summary of calculations ..................................................................................................................... 14
Calculating related expenses ............................................................................................................. 15
Calculating nancing required .......................................................................................................... 15
Home Buyers’ Plan .................................................................................................................................. 16
Buyer brokerage agreements .............................................................................17
Before you sign ........................................................................................................................................ 17
Table of Contents
4 Practical Guide for Buyers
Don’t sign anything you don’t understand ................................................................................... 17
Holdover clause ...................................................................................................................................... 17
Shop smart: what you need to know and ask ...............................................19
Zoning ........................................................................................................................................................ 19
Easements ................................................................................................................................................. 19
Restrictive covenants ............................................................................................................................ 19
Stigmas ..................................................................................................................................................... 20
Patent defects and latent defects ..................................................................................................... 20
Rural property considerations ........................................................................................................... 21
Title insurance ......................................................................................................................................... 21
Finding the right property for you ...................................................................23
Type of property .................................................................................................................................... 23
Neighbourhood ..................................................................................................................................... 23
Need for renovations ........................................................................................................................... 23
Choosing well ..........................................................................................................24
Organizing your search ....................................................................................................................... 24
Choosing the area ................................................................................................................................. 24
Facts sheet ................................................................................................................................................ 25
Elements to verify .................................................................................................................................. 27
Researching the fair market value of a property ....................................................................... 27
The Agreement of Purchase and Sale .................................................................29
Identication of the parties ............................................................................................................... 29
Time for acceptance ............................................................................................................................. 29
Description of the real estate ............................................................................................................ 29
Ownership documents ........................................................................................................................ 29
Important considerations about the APS ...................................................................................... 30
The counter oer ................................................................................................................................... 35
Conditions of acceptance ................................................................................................................... 35
Using specialized services ....................................................................................36
Home inspector ..................................................................................................................................... 36
Land surveyor ......................................................................................................................................... 36
Mortgage broker ................................................................................................................................... 36
Lawyer ....................................................................................................................................................... 36
The mortgage ...........................................................................................................37
Types of mortgages .............................................................................................................................. 37
Mortgage insurance .............................................................................................................................. 37
The property transfer ........................................................................................................................... 38
Title search ............................................................................................................................................... 38
The closing ............................................................................................................................................... 38
Registration of rights of ownership ................................................................................................ 38
The Nova Scotia Real Estate Commission .......................................................39
Do you have a problem? ..................................................................................................................... 39
Glossary ......................................................................................................................40
Practical Guide for Buyers 5
Role of real estate
professionals
Why use a real estate professional?
Buying real estate requires extensive technical knowledge. This is why we rec-
ommend that you use the services of a licensed real estate brokerage to make
sure that all the steps involved in buying and selling real estate are completed
in accordance with good trade pracces.
The main funcon of real estate industry members (brokers and salespeople) is
to act on behalf of sellers and buyers in the purchase or sale of real estate. In-
dustry members play a prospecng role by nding real estate for the buyer and
a buyer for the seller’s property; they play a negoang role by facilitang com-
municaons between the pares involved and, mainly, they play an advisory
role to complete their real estate transacons in a sasfactory manner.
Distinction between classes of real estate licenses
A broker is responsible for the supervision of a brokerage, its unlicensed sta,
and its industry members. A broker ensures the business is run competently
and in accordance with the Real Estate Trading Act, the Commission Bylaw, and
the Policies and Procedures. A broker may also choose to trade in real estate,
represenng buyers and sellers.
A managing associate broker is authorized to operate or manage a brokerage
under the supervision of a broker. An example of a managing associate broker
role is a franchise branch manager. Brokers and managing associate brokers are
the only industry members authorized to make management decisions and give
management direcves within a brokerage.
An associate broker is licensed to trade in real estate under the supervision of a
licensed broker. This licence permits salespeople to achieve and be recognized
for possessing a higher level of educaon. An associate broker has the same
responsibilies as a salesperson.
A salesperson performs all the funcons of a real estate professional while
working under the supervision and direcon of a broker.
6 Practical Guide for Buyers
Compulsory licensing
All industry members in Nova Scoa must hold a licence issued by the Nova
Scoa Real Estate Commission. A consumer who carries out a real estate trans-
acon through an unlicensed person is not protected under the Real Estate
Trading Act, because the protecon mechanisms apply only when the consum-
er deals with a professional recognized under the law. Before you do anything,
check with the Commission to make sure the person you are dealing with is
licensed by the Commission.
Duties and obligations of real estate brokers and salespeople
Real estate brokerage is a profession that is regulated and controlled to protect
the public in real estate transacons. The Real Estate Trading Act, the Commis
sion Bylaw and the Policies and Procedures dene how the profession is to be
pracced and hold brokerages and its industry members accountable, so that
consumers are served fairly and competently.
Loyalty to the client
Industry members are bound by a strict obligaon of loyalty to their clients,
whose rights they are bound to promote and protect. They must act equitably
toward each party to a real estate transacon.
Obligation to disclose
If your industry member has a personal relaonship with the other party or if
they are acng on their own behalf, they must inform you, in wring, before
you sign the Agreement of Purchase and Sale.
Examples of personal relaonships are:
• Family and self
• Business associates
• Ongoing client relaonships
Similarly, if your industry member is to receive compensaon from a nancial
instuon or a professional recommended by them, they must also inform you
in wring and request your approval.
Advising and informing objectively and accurately
As your representave, your industry member must advise and inform you
objecvely and must provide you with all the explanaons you need to fully un-
derstand and appreciate the services they are providing. They must also inform
you of any factors that could negavely impact the transacon.
Industry members are responsible for verifying the accuracy of all informaon they
supply to clients and customers. Your industry member must be able to demon-
strate the accuracy of the informaon they provide using relevant documentaon.
Practical Guide for Buyers 7
8 Practical Guide for Buyers
Consumer protection
mechanisms
Professional development
All industry members are required to complete connuing professional educa-
on annually. Courses are based on subjects that provide industry members
with a higher level of skills and knowledge to help them perform their dues.
Entrance exam
The profession’s entrance exam ensures that industry members possess the
knowledge and competence required to provide professional services.
Brokerage audits
The Commission ensures that the work methods of real estate industry mem-
bers are in accordance with the rules of the profession. To ensure brokerages
are operang within the rules, the Commission’s compliance auditors conduct
yearly audits of trust accounng records and brokerage transacon les.
Complaints and investigations
As the regulatory body for real estate in Nova Scoa, the Commission handles
all public complaints about the conduct and acons of industry members.
Complaints must be submied in wring, which are then invesgated by the
Commission’s compliance department. If an invesgaon supports that the
industry member’s acons violate the Act or the Bylaw, charges may be laid. If
an industry member is in violaon of the Act or the Bylaw, penales may range
from leers of reprimand, to nes, to permanent licence cancellaon. It is im-
portant to note that the Commission does not award damages to complainants.
Professional liability insurance
All industry members are required to carry errors and omissions insurance.
Recovery Fund
The Recovery Fund exists to compensate consumers where an industry member
has caused a customer or client a nancial loss through fraud or breach of trust.
Practical Guide for Buyers 9
Agency relationships
What is an agency relationship?
An industry member may or may not have an agency relaonship with you. If
you are a client, you are in an agency relaonship; if you are a customer, you
are not in an agency relaonship. As a client, the industry member and broker-
age have a much higher level of responsibility to you than if you are a customer.
The following secons explain agency and the obligaons industry members
have to both clients and customers.
About common-law agency
In common-law agency, the agency relaonship is between the client and the
brokerage. Under common law, all industry members at the brokerage are
deemed to know all relevant transacon informaon about principals (buyers
and sellers with whom the brokerage has an agency relaonship). When any
industry member employed by a common-law brokerage represents a buyer or
a seller, every industry member at the brokerage is immediately considered to
be a representave of that buyer/seller and therefore owes that buyer/seller
undivided loyalty, advice and advocacy.
About designated agency
In a designated-agency brokerage, the contract is between the client and the
brokerage, but representaon is by the industry member(s) specied in the Bro
kerage Agreement (the designated agent), not all industry members employed
by the brokerage. In a designated-agency situaon, a seller and a buyer can
receive the full benet of agency representaon, complete with the undivided
loyalty, advice, and advocacy of their respecve industry members, while the
brokerage remains imparal. The brokerage’s responsibility is to ensure that
each industry members acts in accordance with their respecve agency respon-
sibilies, and that condenal informaon of the seller and the buyer remains
condenal.
Designated agency represents a fundamental shi from common law and as
such it is necessary for buyers who choose to be represented by a designated
agency brokerage to sign a Buyer Designated Brokerage Agreement, which con-
tracts them out of common law and into designated agency.
Seller or buyer agency with you as a client
Most sellers and buyers have an agency relaonship with the industry member
they are using. When you are in an agency relaonship, the industry member
has the authority to represent you in real estate dealings with others.
10 Practical Guide for Buyers
Brokerages and their representaves are legally
obligated to protect and promote the interests
of their principals (clients). Specically, the
industry member has the following dues:
1. Undivided loyalty. The industry member
must protect the principal’s negoang
posion at all mes, and disclose all known
facts which may aect or inuence the
principal’s decision.
2. To obey all lawful instrucons of the principal.
3. An obligaon to keep the condences of the
principal.
4. The exercise of reasonable care and skill in
performing all assigned dues.
5. The duty to account for all money and prop-
erty placed in an industry member’s hands
while acng for the principal.
You can expect competent service from your
industry member, knowing that the brokerage is
bound by professional standards and the law to
be honest and thorough in represenng a buyer
or represenng a property listed for sale.
Transaction brokerage with both the
buyer and seller
Transacon brokerage occurs when one industry
member (designated agency) or one broker-
age (common law) is represenng both a buyer
and seller in the same transacon. Because the
industry member has promised a duty of con-
denality, loyalty and full disclosure to both par-
es simultaneously, it is necessary to limit these
dues in this situaon, if both pares consent.
Under designated agency, two designated
agents may fully represent both pares and
transacon brokerage is not necessary.
If you nd yourself involved in a transacon bro-
kerage situaon, before making or receiving an
oer, both you and the other party will be asked
to consent in wring to this new relaonship.
Practical Guide for Buyers 11
This relaonship involves the following limita-
ons:
1. The industry member deals with the seller
and the buyer imparally;
2. The industry member has a duty of disclo-
sure to both the seller and the buyer
except that,
• the industry member cannot disclose
that the buyer is willing to pay a price
or agree to terms other than those con-
tained in the oer, or that the seller is
willing to accept a price or terms other
than those contained in the lisng;
• the industry member cannot disclose
the movaon of the buyer to buy or
the seller to sell unless authorized by
the buyer or seller;
• the industry member cannot disclose
personal informaon about either the
buyer or the seller unless authorized in
wring;
3. The industry member discloses to the buyer
defects about the physical condion of the
property known to the industry member;
4. The industry member may disclose all com-
parable property informaon to the buyer
and the seller at any me;
5. The industry member cannot disclose to the
buyer or to the seller condenal informa-
on obtained through any other exisng or
former agency relaonship.
When transaction brokerage is not
appropriate
Transacon brokerage is not always appropriate
and consumers are never obligated to enter into
a transacon brokerage relaonship. The Com-
mission has outlined the following situaons
where transacon brokerage should be avoided:
12 Practical Guide for Buyers
1. When the industry member is represenng family, associates, or them-
selves;
2. When the industry member has an ongoing agency relaonship with one of
the pares, like a builder or a developer;
3. When the industry member is represenng a novice seller or buyer.
In the rst two situaons, regardless of how the transacon is handled, pre-
exisng relaonships may result in the industry member’s imparality being
called into queson. In the case of a novice buyer or seller, their lack of knowl-
edge means they need an industry member’s advice and support, services that
cannot be provided under transacon brokerage.
Customer status
In a no-agency relaonship, the industry member represents either the buyer
or the seller in a single-agency relaonship. The party that is not represented is
the customer, for whom the industry member performs customer services.
If you choose customer status, the brokerage does not represent you. The
brokerage is not your agent and does not owe you duciary dues. The broker-
age does not provide you with any services that require exercising discreon or
judgment, giving condenal advice or advocang on your behalf.
The services an industry member can provide to you as a customer include:
• exercising reasonable skill and care
• not negligently providing false or misleading informaon
• complying with the Act and the Bylaw
Industry members must ensure any person who is considering customer status
is fully aware of their opon to choose another brokerage to represent them
rather than agreeing to customer status.
An industry member who is not in an agency relaonship cannot:
• recommend or suggest a price
• negoate on your behalf
• Inform you of their principal’s top/boom line
• disclose any condenal informaon about their principal unless other wise
authorized
You should not provide an industry member who is not in an agency relaonship
with you with any informaon you would not provide directly to their client.
All buyers and sellers, whether in an agency relaonship with an industry mem-
ber, will be given an agency brochure and asked to sign an acknowledgement
that they have been provided this agency informaon and had an opportunity
to review it.
Practical Guide for Buyers 13
How much can I
aord to invest?
Analyzing your nancial capacity
Before you start looking for a new home, you should analyze your needs and
evaluate your nancial capacity. You must establish a realisc budget that ac-
counts for your lifestyle and your goals. The purpose of this exercise is to set
a reasonable purchase price. This way, you can narrow down your search and
avoid being tempted by real estate that is above your means. The key element
in this exercise is accuracy. Remember that a budget is only useful if it accounts
for your overall needs and personal or family situaon.
Estimating your maximum mortgage
A simple way to esmate the maximum mortgage you can get is to mulply
your gross annual salary by two. Note that most mortgage lenders calculate this
by mulplying the gross annual income by 2.5. However, it is more reasonable
to mulply it by two to avoid overextending yourself on mortgage payments.
You should consult your banker or nancial planner to get more accurate infor-
maon as to what you can aord. This process is called mortgage pre-approval.
Calculating your monthly housing budget
Your monthly housing budget is the amount you have to live, nance and heat
your future home, aer you have fullled all your other normal obligaons. To
do this, use current data that will not change when you are a new homeowner:
your net household income, your debts (student loan, car loan, and so on) and
your current living expenses (food, clothing, insurance, miscellaneous expenses,
and so on).
The dierence between your net household income and your total monthly ex-
penses is your monthly housing budget. This amount must cover your mortgage
payment (principal plus interest), taxes, heang costs and condominium fees,
if applicable. Remember that a budget is only useful if it reects reality. Your
budget, more than the methods used to calculate your monthly payments, will
help you determine your maximum mortgage loan.
Note:Most Canadian nancial instuons use the Gross Debt Service (GDS) ra-
o to calculate their clients’ maximum monthly payment. This method has the
advantage of being easy to calculate, but the result is approximate. To calculate
your GDS, determine your gross monthly household income (family’s total sala-
ries before tax) and mulply by 0.32.
14 Practical Guide for Buyers
One of the main concerns of real estate buyers is mortgage nancing. To deter-
mine the amount you will need to borrow, you have to know the purchase price
of the property and the total expenses you will need to pay in cash. The sum-
mary of these calculaons enables you to determine the nancing you need to
purchase your home (see Table 2).
Cash expenses
You have to plan for several cash expenses when buying a home. These costs
must be esmated to determine the amount you need to borrow to nance the
purchase of your new home.
Deposit
When presenng an oer to purchase, you need to make a deposit to prove
your legimacy as a buyer. For that, you have to plan on a cash outlay.
Down payment
The down payment is without a doubt your main expense when buying a home.
A higher down payment means lower monthly mortgage payments. If your
down payment is less than 20 per cent of the purchase price, your mortgage
must be insured by high-rao mortgage insurance, such as that provided by
CMHC (see “Mortgage Insurance” on page 37). There are administraon fees
involved for the applicaon.
Related expenses
Several related expenses must be taken into consideraon when buying a
home, such as building inspecon, property appraisal, loan applicaon, legal
fees and disbursements, property taxes, deed transfer tax, fuel adjustment,
insurance, and so on (see Table 1). Record all applicable expenses in Table 1.
Summary of calculations
Now that you have an overview of the expenses involved in buying a home, you
need to make your nal calculaons (see Table 2). First, record the purchase
price of the property. Add the total amount of related expenses that you calcu-
lated in Table 1. You will get the acquision cost of your new home.
From this amount subtract the deposit, down payment and the proceeds from
the sale of your current home if you already own one (use an approximate
amount if the house has not yet been sold). The total determines the nancing
you need to acquire your new home.
How much nancing
do I need?
Practical Guide for Buyers 15
Table1
Calculating related expenses
Building inspecon $
Appraisal $
Legal fees and disbursements $
HST (new construcon or vacant land) $
Deed transfer tax $
Adjustments and tax distribuon: $
— mortgage interest $
— property taxes $
— ulies (oil or propane) $
Condominium fees (if applicable) $
Leased equipment buy-out (if applicable) $
Water quanty and quality cercate $
Loan insurance fees $
Loan insurance premium $
Moving expenses $
Renovaons and repairs $
Furniture, appliances, window coverings, carpets,
paint, etc.
$
Ulity hookup $
Home insurance $
Other $
Total $
Table2
Calculating nancing required
Purchase price $
+ Related expenses $ +
= Acquision costs $
– Deposit $ –
– Down payment $ –
– Other funds (net value of previous property) $ –
=Financingrequired $
16 Practical Guide for Buyers
You are now in a posion to determine if the loan you need to purchase your
home ts your budget. Do not hesitate to make any necessary adjustment and
to redene your goals if necessary.
Home Buyers’ Plan
The Home Buyers’ Plan (HBP) may help when you want to use funds in your
Registered Rerement Savings Plan (RRSP) to purchase a home. Each buyer may
withdraw up to $20,000 from their RRSP without having to pay taxes at the me
of withdrawal. The funds must be in the RRSP for at least 90 days prior to the
withdrawal.
The amount withdrawn must be paid back into the RRSP over a period of
een years at a rate of 1/15 of the amount per year. As an example, if you
use $15,000 from your RRSP to purchase a home, you must pay $1,000 back
into the RRSP each year (or one eenth of $15,000) for 15 consecuve years.
Should the program user be unable to pay the money back, the amount that
isn’t paid back is added to the user’s gross annual income.
Note: This program is available to rst-me home buyers only. The buyer can-
not have owned a principal residence in the last ve years. For more informa-
on, contact your industry member or mortgage professional.
Practical Guide for Buyers 17
Buyer Brokerage Agreements
When you are buying your home, an industry member may ask you to sign a
Buyer Brokerage Agreement. The brokerage agreement denes the nature of the
relaonship between you and the brokerage, including the industry member.
If you are working with a common-law brokerage, you may or may not be asked
to sign a brokerage agreement. If you are working with a designated-agency
brokerage, you must sign a brokerage agreement. See “About Designated
Agency” on page 9.
Before you sign
Your industry member wants to provide you with the best service he or she can.
To make the most of this relaonship, it’s important to clarify your needs and
expectaons. To avoid misunderstandings later on, it’s important not to make
any assumpons. You should also take me to ask what the broker or salesper-
son expects from you and what your obligaons are.
Discuss all of the services that will be provided. The following contract items are
always negoable:
• duraon
• commission fees
• terms for consideraon
• specic services
Take the me to clarify the fees and costs related to these services and make sure
the wrien agreement is clear.
Don’t sign anything you don’t understand
Never sign any agreement unless you know what it means, how long it will be
in eect, and what the dierent clauses mean. It’s one of the most important
steps you can take to protect yourself. Take the me to read it thoroughly and
ask quesons. Your industry member can’t provide legal advice, but they are
familiar with these agreements and should be able to answer your quesons
and explain what the clauses mean and what eect they have. Feel free to seek
legal advice or call the Commission at any me.
Buyer Brokerage
Agreements
Holdover clause
The holdover clause in the Buyer Brokerage Agreement is designed to pro-
tect the brokerage for the work it did during the duraon of the contract. The
holdover clause requires you, the buyer, to pay the commission to the broker-
age should you purchase a property that was shown to you by the brokerage
when the agreement was in eect, and that you purchased aer the agreement
expired. This is to prevent buyers and sellers working with brokerages from
waing ll the brokerage contracts expire so no commission has to be paid. The
standard holdover clause is 180 days; however, agreements are negoable.
Practical Guide for Buyers 19
Zoning
Municipalies dene specic areas of land for specic development, i.e. single
family dwellings, mul-family dwellings, commercial, industrial, agricultural,
and so on. When purchasing a property, you need to ensure the zoning permits
the land use you intend to purchase it for. For example, if you are looking for
a rural property to start a horse farm, you need to ensure the zoning permits
horse farms. Likewise, if you want to purchase a duplex and rent out half of it,
you need to ensure the zoning permits you to operate a rental property.
Easements
An easement is the right to use the property of another without possessing it.
The most common type of easement is a ulity easement, which grant ulity
companies the right to access privately owned land to service and maintain ul-
ity equipment. For example, Nova Scoa Power easements permit the servicing
of power poles and lines on private property. Municipalies that provide water
and sepc services have easements on private property to permit servicing and
repairs.
Properes may also have easements that are not related to ulity companies.
For example, in a community on a lake, an easement may have been granted
that permits residents the right to cross private property to access a swimming
hole. In a rural area, an easement may grant the neighbouring farmer the right
to drive his cale across a eld he doesn’t own to reach one he does.
It is important to ask your industry member and your lawyer if there are any
easements on a property you are considering purchasing.
Restrictive covenants
Restricve covenants are most commonly found in newer subdivisions. When
a subdivision is in the planning stages, the developer may want to ensure that
the character of the subdivision is preserved. Restricve covenants may dictate
what colour you paint your house, what type of fence you may erect, whether a
lot may be further subdivided, or whether outdoor clotheslines are allowed. It
is important to ask if the property deed contains any restricve covenants, and
if there are, to decide whether you are willing to abide by them or to connue
your property search.
Shop smart: what you
need to know and ask
20 Practical Guide for Buyers
Stigmas
Certain events may cause a property to be described as a “sgmazed prop-
erty.” This term is applied to a property that has had some circumstance occur
in or near it, like a drive-by shoong, a suicide, a robbery, or a rumoured ghost,
but does not specically aect the appearance or funcon of the property itself.
Nova Scoa legislaon does not dene sgmazed properes. It also does not
require industry members to disclose events that some may consider as sg-
mas, unless asked.
If there is something that occurred either in a house, or nearby a house, that
you feel would make the house unlivable, you need to ensure your industry
member is aware of it so that they can make the proper inquiries. In some
cases, the seller does not live in the property, or has not lived in the property
for long and may not know of any potenal sgmas. If your concerns are crime-
related, you need to make inquiries with the local police department.
Patent defects and latent defects
Property defects are divided into two types: patent defects and latent defects.
A patent defect is a fault in the property that is readily observable to the un-
trained eye of a potenal buyer (for example, a broken pane of glass, old roof
shingles or peeling paint). A latent defect is a fault in the property that would
not be discovered by a reasonably thorough building inspecon (for example,
a serious crack in the foundaon that has been covered over with paneling or
improper wiring covered by drywall). Material latent defects can have a serious
impact on the value of the property or involve health and/or safety issues. Sell-
ers are required to disclose any known material latent defects; otherwise they
may be liable to the buyer for the cost of repairs.
Practical Guide for Buyers 21
Rural property considerations
In rural areas, homes are typically not serviced by municipal water and sewer
lines. Instead, homeowners rely upon privately owned or shared wells as their
drinking water source, and individual sepc systems to treat and discharge their
wastewater. When purchasing a home with a well and a sepc system, the buy-
er must ensure that the well water is safe to drink and that there is sucient
quanty of water to service the household. Likewise, buyers must ensure that
the sepc system is funconing properly. A malfunconing well or sepc system
can pose a health risk to your family and neighbours, and can be expensive to
repair or replace. It is therefore important to conduct a detailed inspecon of
both the well and sepc systems prior to purchasing a home.
When purchasing a home with a well and sepc system, the Commission
strongly recommends having both water quanty and water quality tested, as
well has having the sepc system inspected. These tests can be wrien as con-
dions of the oer. If the inspecon results are unsasfactory, you can termi-
nate the transacon, or propose an amendment to the Agreement of Purchase
and Sale requiring the seller x the issues.
Title insurance
When a home buyer purchases tle insurance, they are protecng themselves
against loss resulng from tle and survey defects that would otherwise have
been revealed by an up-to-date survey, property report or building locaon cer-
cate. Title insurance also protects the insured against losses associated with
fraud and forgery as it relates to the tle.
There are two types of tle insurance for property owners and lenders. Title
insurance for owners protects the owner against loss and tle insurance for
lenders makes sure that the mortgage is valid and enforceable against the
property. When tle insurance is purchased, the policy stays in eect for as long
as the owner retains an interest in the property and is typically transferable in
case of the owner’s death. Title insurance is available for both residenal and
commercial properes.
While most properes qualify for tle insurance, your lawyer will advise you if
the property is eligible and if it is appropriate.
22 Practical Guide for Buyers
Practical Guide for Buyers 23
Finding the right
property for you
Type of property
Are you looking for a single-family dwelling, a semi-detached or a townhouse?
Do you prefer a new or older house? Do you want to own the house and the
land or would you prefer a condominium in which only one unit is yours?
Neighbourhood
Are you looking for a home downtown, in the suburbs or in a rural area? Do you
prefer a new area? What is your tolerance to noise and polluon? Are you look-
ing to avoid high-trac areas? Is the state of development of the area where
you will be living important to you?
Proximity of services
What are your needs in terms of public transit and public or commercial ser-
vices? Is being close to work or to schools important to you? Will you feel safer
living close to a hospital or a police or re staon?
Indoor considerations
What are your needs in terms of space? How many bedrooms and bathrooms
are necessary? What type of heang do you prefer? How much storage room
do you need? Do you need a laundry room or a workshop?
Outdoor considerations
What are your needs in terms of parking? Do you like gardening? If so, is the
exposure of the house favourable? Do you want a pao, a balcony, a pool…?
Need for renovations
Are you looking for a house that needs no improvements? If you are thinking
of doing the work yourself, do you have the necessary skills? If not, have you
evaluated the cost of repairs?
24 Practical Guide for Buyers
Organizing your search
Organizing the search for your home is not the simplest step, but it is the most
important and oen the longest. It is recommended to take all the me you
need before buying a home.
The key to choosing the right home is to really know your needs. Talk to your
industry member about your priories and try to idenfy the features you are
looking for but that could be subject to compromises. This way, you will avoid
wasng me viewing houses that are too expensive, too big or that are simply
not what you are looking for.
Choosing the area
Visit the areas that seem to t your needs. Your industry member can help you
make a list of houses that meet your expectaons. They have access to detailed
informaon on the properes being oered for sale in the areas that are arac-
ve to you, and can save you valuable me.
Choosing well
When you have found the home you are looking for, make sure you see it at
least twice, once during the day and once at night both during the week and
on the weekend. This way, you can see for yourself the acvity level in the
neighbour hood at those hours when you will likely be at home. You can also
assess the amount of trac, ambient noise, street lighng, and so on. Check
everything: carpets, drapes, light xtures, and so on.
On the next page you will nd a sample Facts Sheet that you can make copies of
and use to take notes. Please note that the lisng cuts provided by the seller’s
broker can also help you evaluate a property in which you are interested. This
document contains a detailed descripon of the property in its current state
and allows you to learn all the details which can help you form an educated
opinion before you make a decision.
Review your list of priories and take me to think without rushing. Losing a
house to a quicker buyer carries far fewer consequences than buying a house
that is not suited to your needs or which has a major aw.
If you are looking for a home, you may view several properes on the same day.
When taking stock of viewings, you should compare features of various pro-
specve homes that caught your aenon. Then you start wondering if the rst
house had the proper exposure, if the second was the one with the replace,
if the one with the dormer windows had hardwood oors or if the small white
one had a heat pump…
The Facts Sheet was designed to allow you to note the features of a property or
any other comment. It can be used as a reminder as well as a useful comparison
tool when deciding between two properes.
Practical Guide for Buyers 25
Facts Sheet
Address
Real estate brokerage
– listing salesperson’s name
– phone number
Asking price
Occupancy date
Construction type
Rooms Inside
– total rooms – walls
– number of bedrooms – floors
– number of bathrooms – lights
– number of entrances – windows
Square footage – cupboards
– lot – baths
– house – showers
Outside – storage spaces
– siding
Environment
– roof – noise
– windows – safety
– doors – air and water quality
– garage – traffic
– parking – businesses
– driveway – railroads
– parking – agriculture
– eavestroughs – playgrounds
– flooding risks
Notes
26 Practical Guide for Buyers
Facts Sheet
Annual fees Inside layout
– property taxes – entrance
– condo fees – kitchen
– private road fees – living room
Fixtures* – family room
– heating – bedrooms
– electrical – bathrooms
– plumbing – basement
– air exchanger
Distance
Inclusions (Y/N)* – work
– floor coverings – shops
– drapes and rods – schools
– appliances – police station
– shed – hospital
– central vacuum system – medical clinic
– alarm system – dentist
– other – public transit
Outside layout Condominiums
– landscaping – parking
– fence – storage space
– patio/balcony – recreational areas
– pool
– fence
– waterfront
Comments/likes/dislikes
* Ask about leased/rented equipment
Practical Guide for Buyers 27
Elements to verify
Check the general state of the house: roof, guers, siding, paint, and so on.
Is the house energy-ecient? Is it well insulated? Are heang costs high?
How is the air quality and circulaon?
Is the house damp? Are there traces of mildew? If so, check for cracks or water
inltraon.
Do you have any reason to believe there are structural problems? Stuck win-
dows or uneven oors point to this sort of problem.
Flush the toilets and check faucets to make sure there is sucient pressure.
Be sure to include a provision for a home inspecon by a qualied home inspec-
tor when you make an oer.
Researching the fair market value of a property
If you are interested in a property, it is important to get an idea of its actual
value on the market. With the help of your industry member, compare the
house you like to other properes in the neighbourhood and try to idenfy the
elements which could have a posive or a negave impact on the asking price:
locaon, size, year of construcon and state of preservaon of the property,
number and layout of rooms, materials used, landscaping, features specic to
the area, and so on. This informaon will help you determine the price you will
oer the seller.
28 Practical Guide for Buyers
Practical Guide for Buyers 29
The Agreement of
Purchase and Sale
The Agreement of Purchase and Sale (APS) is a contract through which a person
undertakes to purchase real estate. In return, the document also indicates that
the seller undertakes to sell the real estate once the APS is accepted. A seller is
under no obligaon to accept an APS and a buyer can withdraw an APS at any
me before the APS is accepted. However, once the seller accepts and signs an
APS, it is a binding contract.
Identication of the parties
The APS must idenfy the pares bound by contract, (the buyer and the seller).
Time for acceptance
The me for acceptance sets a deadline aer which the APS becomes null and
void.
Description of the real estate
The APS contains a detailed descripon of the real estate, including street ad-
dress and items to be included (xtures vs. chaels) as well as condions to be
met.
If the real estate is a condominium, the contract must specify the number of
parking and storage spaces and their idencaon numbers.
Ownership documents
The APS states the obligaons of the seller regarding the tles of ownership.
Thus, the seller must supply the buyer with a valid tle of ownership, free of
any debt, charge or other restricon of private or public law other than the
usual easements. The seller must, therefore, supply authenc copies of the
deed. These documents are provided to your lawyer.
30 Practical Guide for Buyers
Important considerations about APSs
The APS contains ve standard conngency clauses:
Deposit clause
Typically, the buyer gives the deposit to the seller’s brokerage to be held in trust
as a show of good faith to complete the transacon. The deposit is credited
towards the purchase price at the me of closing. The deposit can be as much
both pares agree. In all cases, the deposit belongs to the transacon and can
only be released if one of three things happens:
• The deal closes;
• The buyer and seller sign a release agreeing where the deposit is to be
paid; or
• A court decides what to do with the deposit.
In most terminated transacons, the buyer and seller agree to end the transac-
on and sign a mutual release. However, when the pares are unable to reach
an agreement deposit must remain in the brokerage trust account unl a court
order is obtained.
The nancing clause
The nancing clause ensures you can obtain sasfactory nancing (amount and
interest rate) to purchase the home. If you are unable to obtain nancing that
falls within the terms specied in the agreement, you can choose to terminate
the transacon.
The lawyer review clause
The primary purpose of having a lawyer review the APS is to
• conrm whether or not the purchase contract is a binding agreement and
whether there are any errors contained within the agreement;
• conrm that any representaons upon which you are relying are in the APS
or in an amendment or an addendum;
• discuss the subject clauses with you and conrm the ming of their re-
moval; and
• advise you as to relevant dates and the importance of observing the strict
metable imposed upon the pares when there is a “me is of the es-
sence” clause in the purchase agreement.
It is important to have your lawyer review and discuss the APS with you.
The insurance clause
You cannot mortgage a property without house insurance. If you need a mort-
gage to nance the purchase, it is crical to ensure the property is insurable
and at a rate you can aord. While most properes are insurable, homes built
on ood plains or homes built too close to water may not be. The type of home
also impacts insurance. Older homes are typically more costly to insure than
Practical Guide for Buyers 31
32 Practical Guide for Buyers
newer homes and log homes may be costlier sll. As with any type of insurance,
it pays to shop around.
The Inspection/ PCDS Clause
The Inspecon / PCDS Clause contains two secons:
PCDS—The Property Condion Disclosure Statement (PCDS) is designed to pro-
tect all pares involved in real estate transacons. The objecve is to encour-
age full communicaon so that buyers have as much informaon as possible
concerning the property. Lawsuits are expensive and frequently result from a
misunderstanding, a communicaon problem, or a lack of informaon.
Without a PCDS, sellers may have diculty establishing that a problem was
disclosed to buyers, and buyers may be unable to establish that a statement
was made or that informaon was withheld unless important informaon is
conrmed in wring on the PCDS.
Sellers are not required to provide a PCDS, but most do. There are however, sev-
eral situaons where disclosure statements are not available and typically relate
to a situaon where the seller did not live in the house. Some examples are:
• Foreclosures—the property is owned by a bank
• Relocaon—a property is being sold by a relocaon company
• Estate—the property owner died and an executor is selling the property
• Rental— the property owner rented out the property to others
Practical Guide for Buyers 33
HomeInspecons—The inspecon secon entles you to have the property
inspected at your expense by a professional building inspector. If the building
inspecon report is unsasfactory, you can request the seller perform repairs
or reduce the sale price, or you can terminate the transacon. This is one of the
most common condions in an oer. When real estate markets are extremely
acve and you really want a parcular home, skipping the home inspecon and
not placing this kind of condion in an oer can be tempng. Before you make
the decision, consider the benets of a home inspecon.
If there is a PCDS, you may receive a copy and have a general sense of comfort
about the history of the property. However, you should keep in mind that the
seller may not be aware of latent property defects and that the informaon
provided in the PCDS is based only on their personal knowledge.
A qualied and experienced home inspector examines the major systems in the
home, such as:
• Electrical
• Roong
• Plumbing
• Heang/air condioning
• Foundaon
• Sepc systems
Aer you have reviewed the property inspecon report, you can make an
informed decision about the house. You may wish to amend the Agreement of
Purchase and Sale to require the seller to correct issues idened in the inspec-
on, or a price reducon. Just remember that amending an agreement gives
either party the ability to terminate. The seller may choose to terminate the
agreement, rather than perform repairs or reduce the price. If the inspecon
reveals issues you feel are unacceptable, you have the opon of terminang the
agreement.
The building inspecon is also a demonstraon of your due diligence as a buyer.
If a serious defect is discovered aer you take possession of the property, that
you had a building inspecon performed shows that you took reasonable steps
to safeguard your investment should the maer end up in court.
If you wish to negoate with the seller, keep in mind that noce of an unsas-
factory inspecon or an unsasfactory PCDS also permits the seller to terminate
the contract. If the repairs are minor and you really want the property, you may
be beer o nofying the seller that the building inspecon report is sasfac-
tory rather than risk the seller terminang the transacon. This is especially
true in a hot market.
34 Practical Guide for Buyers
Time is of the essence!
The APS contains a series of dates and mes
that are of crical importance. Know the
dates and mes and make sure you com-
plete the acons specied on or before the
date and me in the APS. Remember, in the
case of nancing, inspecon/ PCDS, insur-
ance, and lawyer review, silence is assumed
as consent.
Addendums and schedules
The APS may contain a reference to addendums and schedules. These adden-
dums and schedules are other documents that form part of the APS. These
documents typically contains clauses that are not part of the standard APS. Two
of the most common are:
ScheduleofLeasedEquipment—All leased and rented equipment, such as wa-
ter heaters, propane tanks, and furnaces, must be recorded on the Schedule of
Leased Equipment. The schedule must specify whether the equipment is leased
or rented, and for leased equipment, whether the leases can be assumed or
bought-out by the buyer.
If the property contains leased or rented equipment, the seller must supply
you with the Schedule of Leased Equipment and copies of the leases/rental
agreements by the date specied in the APS. As with the previously menoned
clauses, you have a set period of me to review the schedule and deem it sas-
factory or provide noce to the contrary. If sasfactory, the Schedule of Leased
Equipment forms part of the APS.
WaterandSepcSchedule—As menoned previously, the buyer is responsible
for ensuring that well water is safe to drink, that there is sucient quanty of
water to service the house hold, and that the sepc system is funconing prop-
erly. While the PCDS, if it exists, provides informaon on well and sepc, it only
documents the seller’s knowledge of these systems. The seller is a home owner,
not an inspector. It is important to do your own tesng, especially regarding
water quanty, because what is sucient for one family may be woefully inad-
equate for another, or vice versa.
Time for acceptance
The Time for Acceptance clause sets a me and date that the oer is open for
acceptance by the seller. If the seller does not accept the oer before the dead-
line, the oer is null and void.
Practical Guide for Buyers 35
Pre-closing viewing
The APS contains a clause that allows the buyer to view the property, before clos-
ing, to ensure it is in the same condion as it was when the oer was made. This
is not another inspecon; it is a home viewing to conrm the condion of the
property hasn’t changed since you agreed to buy it.
Signatures
The APS must include the buyer’s and seller’s signatures as well as that of their
respecve spouses, if applicable. Each copy must bear the original signature of
each of the pares. In addion, a witness’s signature is strongly recommended.
An APS that is not witnessed is sll valid; however, it is less desirable from a
legal standpoint. Should there be any changes or addions to the wording of
the agreement, they must be inialed by all pares.
The Counter Oer
The seller may accept or refuse any oer presented to them. The seller may
also make a Counter Oer. The rst purpose of the Counter Oer is to signify to
the buyer that their oer has been rejected, but that the seller would be agree-
able to the oer if specic changes or addions are made.
The Counter Oer can also be used to include or exclude certain items, to
change the selling price or simply to further clarify the oer. The buyer, in turn,
may not accept the Counter Oer and wish to make a new oer. You cannot
counter a Counter Oer. A new agreement must be drawn up.
Conditions of acceptance
The condions of acceptance of the Counter Oer set a deadline for its accep-
tance and nocaon. Therefore, the deadline for accepng the Counter Oer
is a date and me by which the seller cannot withdraw their Counter Oer, and
by which the buyer must accept for the contract to be legally binding.
Any Counter Oer should include a reasonable deadline (usually between 12
and 24 hours) by which the Counter Oer must be refused or accepted.
If the Counter Oer is accepted, subject to the condions spulated in the agree-
ment, the property is considered sold, although the transacon only becomes
ocial on closing. However, the transacon cannot be completed unl all of the
condions of the contract are fullled. Therefore, a nal deadline must be set for
the condions to be carried out so that the closing can be nalized.
36 Practical Guide for Buyers
Home inspector
We urge you to carefully select a home inspector and if possible, to check refer-
ences. You also need to ensure that the inspector has a professional liability
insurance against faults, errors, and omissions.
A home inspecon is an assessment of the condion of property. It is not an
inspecon to determine whether or not the property meets the current build-
ing code.
Land surveyor
The land surveyor carries out either a full survey or completes a locaon
cercate. The surveyor expresses, using a locaon cercate, an opinion on
the locaon and the condion of the real estate compared to the tles and the
legal descripon as well as any easements, laws or regulaons governing the
real estate. A full survey includes actually staking out the boundaries of the
property. Consult your lawyer to determine which is appropriate. Purchasing
tle insurance may be an alternave to having either type of survey completed.
Survey informaon may be provided by the seller for informaon purposes.
While it may be tempng to save money, relying on a locaon or survey cer-
cate that was not prepared for you may leave you with no legal recourse if the
survey is wrong. Alternavely, if you have a surveyor prepare a new cercate
for you and the work is negligently done, you have direct legal recourse against
that surveyor for your loss.
Mortgage broker
A mortgage broker can help you idenfy the best loans available on the market,
based on your needs and the type of loan you want.
Lawyer
The lawyer plays a pivotal role in a real estate transacon, including reviewing
the APS and tle examinaon. One of the lawyer’s main responsibilies is to
complete a tle search to conrm that the buyer gets clear tle to the property.
Your lawyer, of course, will give you advice on any legal aspects of your property
purchase.
Using specialized
services
Practical Guide for Buyers 37
The mortgage
Most people need to take out a mortgage to nance the purchase of a home.
A mortgage is a loan in which the real estate serves as collateral for the debt
repayment. To evaluate your nancing needs, see “How much nancing do I
need?” on page 14. The amount borrowed is referred to as the principal, from
which the interest is calculated at interest rates in eect in the lending market.
Your monthly or biweekly payment is based on a spread of the debt and the
principal to be repaid over the term (duraon) of the loan, typically between six
months and ve years.
The number of years required to repay the loan is called the amorzaon pe-
riod, typically between 10 and 25 years.
The net value of the real estate is calculated by subtracng the unpaid poron
of the loan from the purchase price.
Types of mortgages
Dierent types of mortgages are available on the market. Some may or may
not include prepayment privileges (open or closed term). In others, the interest
rate is frozen for the term of the loan (xed rate) or follows market variaons
(variable rate).
Certain types of mortgages may suit your needs beer than others. This is why
we recommend that you shop around to negoate the best possible terms.
Mortgage insurance
Mortgage loan insurance is typically required by lenders when the down pay-
ment is less than 20 per cent of the purchase price. Mortgage loan insurance
protect lenders against mortgage default, and enables consumers to purchase
homes with a minimum down payment of ve per cent with interest rates com-
parable to those with a 20 per cent down payment.
To obtain mortgage loan insurance, lenders pay an insurance premium, which is
passed on to the buyer. The premium payable is based on a percentage of the
home’s purchase price that is nanced by a mortgage. The premium can be paid
in a single lump sum or it can be added to your mortgage and included in your
monthly payments.
Mortgage loan insurance typically ranges from 0.5 to 2.9 per cent of the total
mortgage amount. The rate is dependent on the down payment amount—the
more money you put down, the less you have to pay. For example, a ve per
cent down payment means you will have to pay 2.9 per cent for mortgage
38 Practical Guide for Buyers
loan insurance, while with a 15 per cent down payment you will only have to
pay 1.75 per cent. Insurance premiums are higher for people who are self-
employed.
For more informaon about mortgage insurance, see the Canadian Mortgage
and Housing Corporaon website: www.cmhc-schl.gc.ca
The property transfer
Once the oer or the counter oer has been accepted and the condions have
been met, the next step is to make the transacon ocial. The two main com-
ponents at this stage are the tle search and the clos ing. The property transfer
requires the services of a lawyer, but your industry member connues to play a
central role at this step of the transacon. Among other things, they will make
sure that all documents required are available and will bring assistance in case
any problem arises.
Title search
Your lawyer performs the necessary research to guarantee marketable tle of
ownership. Your lawyer also veries that the seller is indeed the owner of the
property, whether they have the right and the ability to sell, if a spouse or other
person must consent to the sale, and so on. All property sales in Nova Scoa are
now registered through the new Land Registraon Act requirements and the
government ceres tle.
Should you have any concerns regarding zoning, legal property usage, and so
on, you should consult a lawyer. The Commission recommends that you, in
conjunc on with your lawyer, have a surveyor review the legal descripon of
the property and provide either an up-to-date locaon cercate or a full sur-
vey to conrm the locaon, easements and other important informaon about
the property.
Through the tle search, your lawyer can detect the charges or real rights likely
to aect, limit or devalue your right of ownership. You may wish to purchase
tle insurance to protect against unexpected tle encroachment issues or other
tle defects. Ask your lawyer whether you need tle insurance.
The closing
The nal step of the transacon is the closing which involves the compleon of
the necessary legal and mortgage documents. This is typically completed aer
the preclosing viewing.
Registration of rights of ownership
Once the closing is nal, the lawyer will register the transacon with the Reg-
istry of Deeds. The lawyer may retain the funds unl this step has been com-
pleted.
Practical Guide for Buyers 39
Created by the Real Estate Trading Act, the Nova Scoa Real Estate Commis
sion is an independent, non-government agency, responsible for regulang
the real estate industry in Nova Scoa. The Commission’s mandate is to ensure
consumer condence in the real estate industry. Among other dues, it ensures
that industry members carry out their acvies in accordance with the Act and
Bylaw.
The Registrar, the senior sta person at the Commission, is responsible for over-
seeing the acvies of the industry members, including auding their records,
accounts and acons. The Registrar may order an invesgaon and lay charges
if an industry member refuses to follow the Act and the Bylaw.
At the direcon of the Registrar, the Commission’s compliance team is respon-
sible for invesgang if there is reason to believe that an industry member has
acted improperly, and may recommend charges to the Registrar if necessary.
Any industry member who does not act in accordance with the Act and the
Bylaw may be charged and required to appear before the Discipline Commiee,
which has the authority to impose nes, suspend violators or even revoke their
right to pracce.
Do you have a problem?
The rst thing to do is to discuss the problem with your industry member. If
you are not sased with the outcome of the discussion, contact the broker or
managing associate broker where your industry member is licensed. If this does
not yield results or if you feel you haven’t received informaon leading you to
believe that everything is being handled properly, contact the Commission’s
compliance team who can get the informaon you need to clarify the situ aon
and nd out about your rights.
The Nova Scotia Real
Estate Commission
40 Practical Guide for Buyers
Amorzaon
Period required to pay back a mortgage in
full through regular payments. The amor-
zaon is usually based on xed terms of
10, 15, 20, or 25 years.
Appraisal
Process which consists in esmang the
market value of real estate based on the
general condion of its components and
its specic features. The appraisal is oen
the result of a comparison with similar
real estate up for sale or recently sold in
the same area. It is done by a licensed
appraiser.
Cancellaon
Cancellaon of an agreement or the
registraon of a right through which one
is freed from certain obligaons, under
certain condions.
Charge
Amount to be paid according to a preset
deadline. Tax payable on the use of a
public ulity, for example.
Chaels
Personal property which is moveable and
not aached, such as furniture and appli-
ances.
Client
A client is any person that is in an agency
relaonship with an industry member.
This relaonship may be formalized, as in
a Seller or Buyer Brokerage Agreement or
it may be verbal or as a result of acons of
the industry member. The client relaon-
ship ends once the purchase or lease
negoated closes or the expiraon date of
the contract. If the industry member does
not provide disclosure, then it is assumed
you are in a client relaonship.
Commonarea/condofees
Expenses related to the maintenance and
management of the common areas of a
condominium property. Monthly payment,
usually xed, used to set up a fund to pay
for current and unforeseen expenses (re-
pairs, equipment replacement, and so on).
Counteroer
A response from the seller presented in
reply to an oer.
Note: The rst purpose of the counter
oer is to signify refusal by the seller of an
oer by the buyer.
Customer
A person who has not engaged or em-
ployed the brokerage in an agency capac-
ity or as the person’s transacon broker.
Deedtransfertax
Tax imposed by a municipality on any
transfer of right of ownership in its juris-
dicon. In Nova Scoa, deed transfer tax
may be up to 1.5 per cent of the purchase
price.
Deposit
A sum of money that accompanies an
oer to purchase real estate to be applied
against the purchase price if and when
the sale is nalized. The deposit must
be placed in a trust account and will be
deducted from the balance payable at the
closing, or will be returned to the buyer
if the sale does not go through. It may
also be claimed by the seller if the buyer
refuses to complete the sale.
Lisngcut
Document on which a brokerage has
presented the features (construcon year,
taxes, measurements, and so on) of real
estate listed for sale.
Downpayment
Personal contribuon of the buyer to the
nancing of real estate purchase. Cash
poron deducted from the selling price,
which determines the amount of nancing
required to complete the purchase.
Note: If the down payment for the pur-
chase of the real estate is less than 20 per
cent of the purchase price, the loan must
be insured by the Canada Mortgage and
Glossary
Practical Guide for Buyers 41
Housing Corporaon (CMHC) or another
mortgage insurer.
Easement
Restricon of the right of ownership for
reasons of general interest or public use.
Right of access or use of land by others,
for a dened purpose (passage, parking,
public ulies, and so on).
Financing
Means used by a buyer to acquire real es-
tate. Financial resource, oen in the form
of a mortgage loan provided to the buyer
by a nancial instuon for the purchase
of real estate (see Mortgage).
Fixtures
Items aached to the property or a build-
ing and considered part of it, such as
plumbing xtures or a fence. If in doubt as
to whether an item is a xture or a chael,
include it in the Agreement of Purchase
and Sale.
GrossDebtService(GDS)rao
Poron of the borrower’s gross income
used to pay monthly housing expenses
(principal, interest, taxes, heang).
Industrymember
A person who holds a license issued by
the Nova Scoa Real Estate Commission
authorizing them to carry out brokerage
transacons on behalf of others for the
purchase, sale or rental of real estate.
An industry member is only authorized to
act for and on behalf of a broker. They act
as a representave of the brokerage.
Inspecon
General vericaon of the state of the
main components of real estate (foun-
daon, structure, roof, heang system,
electrical system, and so on) to assess
condion.
Interestrate
Percentage represenng the amount of
interest produced by an amount of one
hundred dollars. A four per cent interest
rate will produce an interest amount of
$4 payable to the lender for every $100
borrowed.
The interest rate is used to calculate the
amount to be paid to the lender in ex-
change for nancing to allow the buyer to
purchase real estate.
Licence
Operang permit issued by the Nova Sco-
a Real Estate Commission to any person
or company, who meets the legal require-
ments to carry out real estate brokerage
acvies in Nova Scoa. The granng of
a license is condional to the successful
compleon of a specialized real estate
brokerage course and an entrance exam.
Lisngcontract
Agreement under which a person autho-
rizes a real estate brokerage to act on their
behalf for a given period of me, as inter-
mediary in the purchase, sale, rental or
exchange of real estate. The Seller Broker-
age Agreement documents the obligaons
to which the broker and the seller agree
by mutual consent.
Locaoncercate
Document containing a report, in which
the land surveyor expresses their opinion
on the locaon and condion of real
estate compared to the tles and the legal
descripon as well as laws and regulaons
governing the real estate. The locaon
cercate indicates whether or not the
buildings are on the property, but does
not verify any dimensions.
Mortgage
Method of nancing in which the real
estate is used as collateral for debt repay-
ment.
Mortgageinsurance
Insurance purchased by a home buyer to
guarantee the payment of the monthly
installments required to reimburse a
mortgage in full.
Note: If the down payment for the pur-
chase of the property is less than 25%
of the purchase price, the loan must be
insured by the Canada Mortgage and
Housing Corporaon (CMHC) or another
mortgage insurer.
42 Practical Guide for Buyers
NovaScoaRealEstateCommission
Regulatory body created under the Real
Estate Trading Act whose mandate is to
ensure consumer condence in the real
estate industry by regulang the acvies
of all real estate brokerages and industry
members praccing in Nova Scoa.
Oertopurchase
Undertaking by a person to purchase real
estate under certain condions set by that
person. Contract through which the seller
agrees to sell the real estate once they
have accepted the oer to purchase.
Principal
Amount of money borrowed through a
mortgage.
Professionalliabilityinsurance
All industry members are required to have
professional liability insurance (errors and
omissions). This insurance protects indus-
try members against the nancial conse-
quences of any fault, error, negligence or
omission, which their representaves or
themselves could be responsible for in the
course of their acvies.
Realestatebroker
A licensed broker is responsible for the
supervision of a brokerage, its sta, and in-
dustry members. Supervision includes be-
ing acvely engaged in the management
of the business and must be physically
available to oversee the business. A broker
ensures the business is run competently
and in accordance with the Act, the Bylaw,
and the Policies and Procedures. Brokers
may also trade in real estate.
Realestatebrokerage
The professional acvity of industry
members. Brokerage transacons and
professional acts carried out by industry
members concerning the purchase, sale,
rental or exchange of real estate. Services
which can only be pracced by individuals
licensed by the Nova Scoa Real Estate
Commission.
Recoveryfund
Fund created under the Real Estate Trad-
ing Act, to which all industry members
in Nova Scoa contribute to compensate
consumers who are vicms of fraud or
breach of trust by an industry member.
Relatedexpenses
Addional expenses to be paid when buy-
ing real estate, including building inspec-
on, property appraisal, loan applicaon,
legal fees, taxes, insurance, and so on.
Rightofownership
Recognion that gives the owner of a
property the right to use, enjoy and
freely and fully dispose of the property,
to the extent of the limits and condions
imposed by law.
Salesperson
A salesperson is a licensed to trade in real
estate on behalf of a brokerage under the
supervision of a broker.
Titleofownership
Ocial proof of the right to own a lot and
buildings erected thereon.
Trustaccount
Deposit account in a nancial instuon in
which a real estate brokerage can deposit
sums entrusted to it in the course of a real
estate transacon.
When presenng an oer, the buyer oen
gives the lisng broker a deposit on the
purchase of the real estate. This deposit
must be placed in a trust account once
there is an accepted Agreement of Pur
chase and Sale.
Practical Guide for Buyers 43
44 Practical Guide for Buyers
We are just a phone call away!
• Licensing information
• Standards of business practice and code of conduct
• Complaints or problems
Email: info@nsrec.ns.ca
Tel: 902-468-3511 or 800-390-1015
Fax: 902-468-1016 or 800-390-1016
Website: www.nsrec.ns.ca
7 Scarfe Court
Suite 200
Dartmouth NS B3A 1W4