October 21, 2023- Buying or selling a condo requires a lot of planning. The dates of signing the transaction and taking possession are an integral part of it. Indeed, a delay in the scheduled date has logistical and monetary implications that can be significant for both buyers and sellers.
You must leave your home, make renovations before moving in, notify a tenant of a notice of repossession of a dwelling, move to a new city, your children start their school year, you start a new job, you pay for your new acquisition with the proceeds of the sale of your current property, you take into account the availability of your moving truck, statutory holidays, the maturity of your investments for your down payment, etc.
These are situations that buyers, sellers, real estate agents and financial advisors consider when it comes to setting signing and taking possession dates.
However, did you know that the purchase price paid with a certified cheque can delay your transaction by 3 to 10 business days?
During a real estate transaction, the notary receives the necessary money from both the mortgagee and the buyer. These sums are deposited in his trust account, and he is responsible for verifying their final availability before signing the sale.
In the past, notaries treated bank drafts and cheques as subject to distinction. However, in recent years, the bank clearing period, i.e. the time required to confirm irrevocable access to these sums, has led notaries to change their practice.
The notary will not be able to confirm the availability of funds until the time necessary to clear the certified cheque has elapsed. For example, the death of the signatory, a seizure on his account, bankruptcy, or a stop of payment by him will result in the refusal by his bank to proceed with the transfer of funds to the notary's trust account and the latter will be notified within three working days of the deposit of the cheque concerned. The reasons for this refusal may take up to ten working days before they are communicated to you.
In conclusion, it is recommended to proceed by electronic funds transfer, both for the buyer's down payment and for the sums from the mortgagee. In this case, the notary has the final availability of the funds as soon as he notices the deposit in his trust account. In the absence of an electronic transfer, bank drafts are preferable to the cheques concerned since the maximum clearing time will be 72 business hours. In addition, once the clearing period has elapsed, a bank draft may not be stopped by the buyer or refused in the event of the death of the latter, seizure on his account or bankruptcy.
Notaries adapt their practice to ensure the protection of their clients. These new rules will require a planning effort on the part of stakeholders justified by the security that must be preserved during real estate transactions.
Me Émery Brunet, Notary
700, avenue Sainte-Croix
Montréal (Québec) H4L 3Y3
Phone : (514) 588-8751
Mail : [email protected]
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