Selling or refinancing? Don’t wait to get your certificate of location
08 Sep 2021
When Eric Tinmouth-Poulin put his Vaudreuil-Dorion home on the market at the end of June, it was listed on a Thursday and had an accepted offer by Sunday. The speedy sale was not unexpected, given the high demand for houses in the neighbourhood. Yet as the date to close the sale approached, Tinmouth-Poulin discovered one routine, but very important, part of the process wasn’t going as planned.
Like many homeowners, Tinmouth-Poulin needed to renew his certificate of location in order to complete the sale. He had been advised there may be some delays but expected to get it in September.
September became October. October became November. Now he has been told it is impossible to get it done before mid-December — or maybe even January.
To seal the deal, Tinmouth-Poulin needed to take the additional step of getting title insurance to bridge the gap until a certificate of location could be issued.
“It’s also the same thing for the house that I’m buying,” he said. “Their certificate also expired, because I think it was from 2008 or 2009, so it also needed to be redone. We’re in the same boat, basically.”
Title insurance provides coverage for the buyer and/or lender in case the certificate of location reveals unexpected defects with the property, including undeclared servitudes, survey mistakes, improvements that are not compliant with municipal bylaws, or outbuildings or fences constructed outside the official boundary of the lot.
It will cost a little extra, but Tinmouth-Poulin said he’s just relieved that the delay in getting the certificate of location won’t jeopardize the sale of his home — and it’s nothing compared to the emotional ups and downs he has experienced while finding and buying his new home.
“Out of everything I’ve had to go through over the last couple of months with the market, I’d consider this a very minor factor compared to the rest,” he said.
West Island real estate broker Glenn Wildenmann said situations like Tinmouth-Poulin’s are becoming more common, because of backlogged demand for new certificates of location.
It’s not just that the housing market is hot. It’s also that interest rates are exceptionally low. Many homeowners are taking advantage of the bargain-basement rates to refinance their homes, which may also require getting a new certificate of location in some circumstances.
“I’ve experienced this numerous times during the past year. Pre-COVID, a standard certificate of location would take three to six weeks to obtain. My client just ordered a new one Monday for a future listing — the surveyor said it’ll be ready mid to late December,” Wildenmann said.
Prices for certificates of location have also jumped dramatically, he said. Two years ago, a seller would pay about $750-850 plus tax for a standard house. Now, the quotes he’s getting range between $1300-$1600 plus tax. One surveyor, who Wildenmann has used before, quoted a price of $2000 plus tax in order to deliver the certificate of location for the end of November. He said he could provide it earlier — for a surcharge of $250, paid in cash.
Certificates of location are valid for up to 10 years, Wildenmann said, but need to be renewed if you have made any significant changes to your property such as adding or removing a pool, deck, fence, or added any other permanent structures. The buyer’s notary may also require a new certificate if you have added a structure that is technically not permanent, such as a Rubbermaid-style cabana, he noted.
It is always the seller’s responsibility to provide a valid certificate of location to the buyer in order to complete a sale, Wildenmann said, so he recommends sellers check the status of theirs as soon as they decide they want to list their home.
“Anytime I meet with a seller, the first thing I do is look at the certificate of location to see if a new one is needed,” he said. “Even if an owner says maybe they’ll only list in three or four months, if you need a new certificate, I always say take that time to order a new one now, get in the queue right away — and don’t change anything to your property after it’s been surveyed!”
If title insurance is required, sellers can expect to pay at least $200-300, said Wildenmann. The cost may be higher for more expensive homes, or if there are unusual issues or situations that could affect the right of use or occupation of the property.
Sellers shouldn’t necessarily assume title insurance will be the right solution when there is a problem with their certificate of location, however. A title insurance company may refuse to insure a property, if there is the potential for a significant issue with the certificate of location Wildenmann noted. The buyer must also agree that title insurance is acceptable; some may demand a price reduction or that a known or suspected problem be corrected prior to signing the deed of sale.
“It is not a get out of jail free card for a seller that allows them to do anything to their property and covers all their sins when selling,” Wildenmann said.
