Selling a Home: Transferring Clear Title

It will be a requirement of most Offers to Purchase that the seller transfers to the buyer title to the land, clear of all registered encumbrances, mortgages, liens, etc., with a few exceptions. As a result, your lawyer will conduct a search of the title upon opening their file to determine which registrations will remain on title and which must be discharged as a requirement of the Offer to Purchase.

The most common registration to be discharged is the mortgage(s) granted by the seller to their lender. Your lawyer will obtain from the lender a payout figure to determine how much of the sale proceeds will be required to obtain a discharge of the registered mortgage(s). The mortgage payout(s) will include the principal and interest accruing to the date of the payout. The lender will also add other amounts owing pursuant to the terms of the loan, which additional costs could include interest penalties, refund of cash-backs paid, discharge fees and tax account deficits. All of these additional costs will increase the amount payable to obtain the discharge and decrease the net proceeds payable to the seller.

In addition to paying out your mortgage(s), you will also be required to attend to the payment of home improvement loans obtained through utility companies or government agencies. If you have obtained personal loans in which your lender has filed a caveat against the property as security for the loan, then these loans will need to be paid out in order to obtain a discharge of the caveat. If you have been involved in legal proceedings in which a judgment was issued against you for monies unpaid, then you may find that your property has liens or judgments registered against it which also must be paid out in order to clear the title for the buyer. Finally, certain registered claims may need to be paid out including hot water tank rental agreements, (if you rented your tank and the buyer did not agree to assume the rental agreement), and your final water bills. As with the mortgage(s), all of these payouts will necessarily add to the amount of monies taken from the sale proceeds and decrease the amount of monies payable to you for your purposes.