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Buying a home in Canada (for UK immigrants)

Buying a home in Canada is slightly more complex, and compared to England, Wales and Northern Ireland can be significantly more litigious.

I’m writing this because I recently had the pleasure of performing a home inspection for a couple from the U.K.    They only had their Inspection and Finance clauses to complete to fulfill their offer on the home here in Canada.

The inspection showed up a few concerns with the home, but these were explained to my clients and they were happy to forge ahead with the purchase.  They signed the fulfillment for the inspection.

They had a confirmed offer on their home in the U.K. so they waived the finance.  Here’s where the problem, and my warning, begins.

Unlike Canada most of the U.K. (with the exception of Scotland, and from here on in this post, when I say U.K. I mean excluding Scotland) has some pretty slack Real-Estate laws.

When you sell (or buy) a home in the the U.K. you have no protection, (or penalty rights) until the contracts are exchanged.   That seems pretty similar to Canada right?   Wrong.

In the U.K. the contracts generally don’t get exchanged until the last minute.   Although the time-frame is ,given as  “usually” between seven and 28 days before the possession date, it could  be as little as 24 hours or even sometimes on the day of moving.

Here in Canada, if you make an offer on the home, and it is accepted.  You’ve bought it.   You are liable for any costs incurred if you fail to follow through with the purchase and may even be sued for the full amount of the property.

So, here’s where it all went wrong for my clients, and the lesson for all buyers of property in Canada from the U.K.

They put their home in the U.K. on the market.  They saw the home they wanted here in Canada.   They got an offer for their home in the U.K which they accepted and put in an offer on the home here in Canada.   Rightly so, they had a home inspection, but then made the mistake.   They assumed the home in the U.K. (the first time they had sold) would sell the same way it does in Canada, and waived their finance condition on the home here in Canada, and fulfilled the Home Inspection agreement.

They had now purchased the house in Canada, in contract and in law.  Unfortunately, even though they had an agreed offer on their house in the U.K. with no conditions, contracts hadn’t been exchanged.

As so often happens in the U.K.  their buyers continued searching the market, and their Realtor found them a home they liked better.  So they pulled out of the U.K. deal leaving my clients high and dry and without the funds to close on the Canadian property.

It now appears they may be sued for breach of contract.

If there’s one thing others from the U.K. can learn from this lesson is: “a sale is not a sale in the U.K. until the money is in your bank”.   Even after exchanging contracts in the U.K. sometimes the only penalty is loss of deposit.   Even at the current exchange rate, £5,000 won’t buy you the home of your dreams here in Canada.

It is unlikely to even pay the costs if you back out of a purchase.    Click on the flowchart below to explain further.