Buying U.S. property? Know the rules
Get all your documents. You won’t be able to get a mortgage loan unless you provide numerous financial documents. These are not bank rules; they are new government regulations which have been brought in to reduce the chances of another mortgage fiasco. You’ll need mortgage statements on your Canadian property, tax returns, employment information, asset statements (e.g. brokerage accounts), and bank statements (all pages). Get a list from your lender of choice.
Check and double-check title. There have been cases of people putting money down on a property only to discover the seller did not have clear title. The well-publicized foreclosure mess, in which some banks have been accused of falsifying documents, has complicated matters. Title insurance is a must but it is not foolproof. Make sure that the title search covers all previous owners of the property, from the time it was built to the present. Deal only with well-known, reputable companies. In Florida , Lawyers Abstract & Title and First American Title are among the largest.
Be cautious with condos. The speculative building boom that preceded the market meltdown saw the construction of thousands of condominium units that were never sold. As a result, some condo associations are strapped for cash, if not already bankrupt. Units that have never been occupied can be found for what seem to be absurdly cheap prices. However, the condo association bills that follow once you take ownership may produce a severe case of financial shock. Not all condo associations are in trouble but don’t even consider a purchase without verifying the financial situation of the one you’re considering.
Things have become so bad in the condo world that RBC won’t even consider a mortgage loan on a condo, co-op, or similar property.
Consolidate cash. If you plan to pay cash for your vacation home, make sure all the money is in a single account for at least 90 days before closing. Money laundering and anti-terrorism laws now require verification of the source of large amounts of money coming into the U.S. If you show up at closing with cheques written on several different accounts, the tracking process will almost certainly put everything on hold.
Obviously, there are a lot of hurdles to deal with when buying a U.S. property. But the billions of dollars being invested in Sunbelt real estate by Canadians prove that many people think it’s worth the hassle. The bargains are still available, there is no question about that. But the window of maximum opportunity appears to be closing. So if you’re interested, move now but be ready to jump through some hoops to acquire your dream home.