Pending Offer: The Due Diligence Period
Once we have negotiated the terms and conditions in a Contract of Purchase & Sale with a Seller, we will have an “Accepted Pending Offer” that is conditional upon you being satisfied with completing your due diligence on the property within a specified timeframe. In the Okanagan the buyer will typically have 10 days to 2 weeks to complete their due diligence on the property if there are no competing offers in play at the time of negotiations.
Offers are typically going to be made conditional to satisfying yourself with the following:
Title Search:
In British Columbia, a Title Search is conducted to ensure that the property title is free and clear of encumbrances which may prevent the transfer of Title or the use and enjoyment of the property. Common encumbrances can be in the form of right of ways, easements, building schemes & covenants in which your lawyer will be able to analyze and give you legal advice to ensure any restrictions will not interfere with your intended use of the property.
Property Inspection:
Once your offer is accepted, you’ll need to hire a licensed property inspector to examine the property within the time frame agreed upon in your purchase contract. Specialized inspectors can be hired for specific areas of the property (e.g., pool inspector, pest inspector, well inspector, septic inspector).
Depending on the results of these inspections, you might:
Successfully move forward with the purchase, waiving this condition as fulfilled. Alternatively, you may try to renegotiate the contract terms, typically the price, based on the findings of the inspection. Need an inspector? We have lots of reputable connections!
Appraisal and Financing:
Once we have an accepted offer your Mortgage Broker will require the Purchase Contract & a few other documents about the property that we can help provide. Staying in close contact with your mortgage broker is crucial to ensure timelines are met. Oftentimes the lender will require an appraisal to ascertain the property’s correct value. This will be done via a local appraisal company whereby we can help coordinate access with the listing realtor.
Home Insurance:
If you are obtaining a mortgage, your lender will require you to purchase insurance on the property for the Completion Date. Shopping around can help you save on the best insurance rates. When buying in a strata, we also recommend your insurance provider review the strata’s insurance policy to ensure you are covered for any deficiencies including adding on deductible insurance! Need a connection? We’re happy to recommend experienced, knowledgeable insurance agents.
Property Disclosure Statement:
A 4-6 page document which serves as a starting place for disclosures for Sellers. Please keep in mind, the property is still Buyer Beware. Your mortgage broker will want a copy of this document.
Strata Documents:
If the property you are purchasing is part of a strata, you’ll need to understand the bylaws, rules, and regulations of the strata corporation. We recommend you review these documents as soon as you have an accepted offer. Reviewing 2 years worth of council minutes, AGM’s, SGM’s along with the financials & depreciation reports is crucial to understanding how well the strata is managed while understanding what kind of ownership costs may arise from future expenses. Form B Certificates & Strata Plans should also be analyzed in detail, along with any engineer reports or pending litigation.
Seek Legal & Accounting Advice:
We always recommend you engage a lawyer and seek professional accountant advice when deciding the best way to structure your real estate purchase. A lawyer can review the Purchase Contract, Lease Agreements & Title Search. Together with your accountant, they can advise on the various legal, estate, and tax implications unique to your financial, family & business background.
Other Conditions:
Some properties may have additional conditions we can advise you to put in the Purchase Contract for your protection. Terms & inclusions can be equally important as well. All details our experience can help guide you with!
Subject/Condition Removal Date & Deposit:
Once you are satisfied with the due diligence and are ready to waive conditions, the Deposit will become payable. In BC, a reasonable deposit is around 5% & will get held by our real estate brokerage “In Trust” up until the Completion Date whereby it will form part of your total down payment. Once conditions are removed and deposit is paid, our office will prepare a Conveyance Instruction Report to send to your lawyer/notary so they can arrange for Title/funds Transfer with Sellers lawyer on the Completion Date.