Last Updated on February 16, 2022 by Kravelv
Buying your own house is indeed a thrilling experience.
However, when weighing the countless options placed before you, narrowing down on one immediately is impossible. So if you have your heart set on a house yet you want to check out a few more options, then reserving the new build is the best solution for you.
When you reserve a house in Canada, you get to explore as many options as you want without risking your previous selection. So today, we will discuss a property reservation agreement and how you can reserve a property in Canada.
Also, if you are looking for the best builder in Brampton to help you get your dream home, get in touch with Ballymore Homes to check out their upcoming community and make your own reservation.
What is a Reservation Agreement?
A reservation agreement is a legal contract between a builder and a potential buyer. Here, the latter reserves the right to buy the property in exchange for paying a reservation fee.
If the reservation turns into a sale, then the fee is compensated with the deposit amount. However, if the buyer decides against buying the reserved property, the fee is usually reimbursed after deducting legal and administrative expenses.
Steps Involved In Reserving a New Property In Canada
Here is a comprehensive guide on how you can reserve a property in Canada:
1. Go Property Hunting
The first step will obviously be to go on a property hunt. This is the most fun part of the process. However, if you want to make it easier for you, you should probably consider getting a realtor to help you find the best properties.
Hiring a realtor helps you:
- Find the best property available in the market
- Select the best localities with a healthy environment
- Ensure that you get a good return on your investment
- Negotiate the price better
- Simplify the hassles of buying a new property.
Finding the right realtor is like winning half the battle. Just make sure that you hire a licensed realtor with substantial industry experience, knowledge, and connections.
2. Inspect The House You Plan to Reserve
Once you have narrowed down on a house that you plan to reserve, inspect it thoroughly before signing the reservation agreement. Although small, you are paying a fee to get the rights to buy the house. So make sure it’s well spent.
While inspecting the house, these are the few things you need to check:
- Electrical sockets and water outlets
- Quality of the walls, floors, and surfaces
- House warranty and financing options accepted by the builder
- Plot ownership and if the land is under any kind of legal dispute
Once the plot and the house have been closely inspected, it’s time to reserve it.
3. Reserving the House
To reserve the house, you will need to sign a reservation agreement and pay the reservation fee. Once you do that, the builders will take the house off the real estate market for a stipulated period, as mentioned in the agreement.
All that you will need to reserve the house is photographic identity proof like your driving license or passport. Along with that, you will also need your utility bill or bank statement as proof of address. The builder might ask for a few more documents for their satisfaction before they prepare the reservation agreement.
You will also be given a copy of the agreement. In case you are taking the help of a bank or other financial institution to finance your purchase, your lenders will also be informed about the deadline within which you will either buy the house or lose your reservation rights on it.
4. Get a Solicitor
Getting a solicitor isn’t mandatory, but it certainly makes things easier for you. If you feel that you need help navigating through the legalities or reserving a newly-built property and then getting back to it within the deadline as we all manage your finances for the purchase, then hiring a solicitor is the right move for you.
At this stage, you will also need to give your financier an update about all your moves so that they can have the funds ready for you when you decide to confirm your purchase.
5. Wait For The Final Touches to be Done
Once you have reserved the property, it’s all about waiting for the construction with the final touches to wrap up. Make sure you keep taking regular updates on the construction progress. Seeing your house being built is a heartwarming experience, but along with that, you also need to keep track of the construction to plan your next move accordingly.
You are also free to visit and evaluate other properties that might catch your eye during this period.
6. Finalizing the Agreement
When the construction of the house is finally complete and your reservation period is over, you can either buy it or move on to a different property. If you choose to buy the house, you will be required to inform the builder and your solicitor, who will work out a contract to transfer ownership.
Your finance provider will also release your funds, and your solicitor will ensure a smooth transfer to finalize the deal.
In case you don’t want to buy the house anymore, you will be reimbursed for the reservation fee after a small charge for legal and administrative processes is deducted. And you can move on to the next property and repeat the process once again.
Endnote
Reserving a property in Canada does not just require a financial commitment. You are also required to invest your time and efforts. Hence, it is always advisable to think it through before and weigh your options before reserving a property. Doing so will help you save a lot of time, energy, and money.
