Overview of Home Mortgage Process 101 | Stage 3
Stage Three | Completion of Purchase
In Parts One and Two of this three-part article we showed how to pre-qualify for a mortgage loan, find a property within budget and make formal application for that loan. Part Three deals with the process to completion of your purchase.
The date set for completion of the conveyance of title to the property you are buying is laid out in the Sale Agreement, usually 90 days from the date you signed.
Because your loan cheque must be ready on or before that date or a breach of contract may result, ben sure to keep in regular touch with your bank and/or attorney to satisfy yourself that they will be ready on time. If a short delay seems likely, a formal written request is made by your attorney to the seller or his agent giving notice of good reason for an extension. ‘Time is of the essence’ is a legal phrase in many Sale Agreements and means that unnecessary delay is not acceptable. So do not assume everything is going fine. Check and keep yourself informed. This is an important investment!
During the 90 day period from Agreement to Conveyance the attorney searches title to the property you chose, looking for :
• a good root of at least 20 years continuous ownership
• any other encumbrances such as an existing mortgage or judgment
• proof that no L&B taxes or water rates are unpaid
• additional searches are made in the case of Leasehold property
If searches come up clean, the bank’s attorney draws up the Deed of Mortgage and the loan cheque is prepared. At the same time, the conveyancing attorney having completed the same searches draws up the Deed of Conveyance and a date is agreed for completion when all parties are ready to close. You then meet with the bank’s attorney to :
• sign the mortgage Deed and other documents required by the lender
• make payment of all outstanding fees
The loan cheque is made payable to the seller or his attorney and goes direct to them in exchange for the signed Deed. If you are building a home or carrying out improvements, a partial amount of the approved funds will be disbursed on signing and the balance on agreed terms as the work progresses.
Also on the date agreed for completion, either together or separately :
• the seller will sign his Deed conveying title to you
• you will, together or separately, sign the same Deed if there are Restrictive Covenants that will be legally binding on you as the new owner.
• If buying a home, keys must be handed to you along with vacant possession of the property you now own.
This closing procedure can be done at different times in different locations, even different countries, but needs to be carefully arranged beforehand by your attorney in collaboration with the seller so that completion takes place on time.
The executed (signed) Deeds are passed by your attorney to Valuations Division for stamping and then to the Registrar General for registration of both your title and your mortgage on the property. The lender now effectively owns the property and holds the Deed during the term of the mortgage, until you have repaid the loan. Fire insurance cover is necessary.
Now that you own your house, you will make a statutory declaration (notifications to government department) to Board of Inland Revenue (BIR)/District Revenue Office (DRO) and WASA to ensure that your name is accurately recorded as registered owner.
• Submit Return of Ownership to the DRO Port of Spain or San Fernando, or BIR Scarborough which registers your new ownership and assigns an Assessment Number against which to charge future Rates and Taxes.
• Submit the DRO Certification received to WASA for the assignment of an account number for future billing of quarterly water and sewerage rates. WASA will only put your name on the account as owner if you present a copy of the Registered Deed, and this can take several months to be issued.
Keep copies of all your house documents together, in a safe dry place, for future reference or for when you eventually sell the property. When your loan is fully paid off, don’t forget to have the bank issue a confirmation of release of mortgage and ensure you are given back your Deed. If you have RPA (formerly RPO) title, this is most important since the Certificate of Title is an original document that must be presented as proof of ownership, so keep it extra safe to guard against fraud or loss. It may take 6 months and $10,000 to replace it.
You have now become a home-owner with few if any problems along the way because you took the time to become familiar with the process and the language of the contracts you had to deal with. Congratulations, and enjoy your new home.
AREA is currently the Governing Body of the Real Estate industry in Trinidad and Tobago, established under Section 2 of the Association of Real Estate Agents (Incorporation) Act, 2012.