Saving enough money to purchase a home in Ontario can take years. In addition to building a down payment, buyers must prepare for land transfer tax, legal fees, title insurance, adjustments, moving expenses, and other closing costs.
Registered savings programs can make that process more manageable. But that is just the start of establishing an account and increasing your funds. Buyers must also ensure that their withdrawal, purchase agreement, and closing arrangements satisfy the applicable requirements.
This is where a real estate lawyer can help.
Although people still search for terms such as Ontario home ownership savings plan and registered home ownership savings plan Ontario, the original provincial program associated with these terms is no longer active. Today, most eligible first-time buyers use the federal First Home Savings Account, commonly called an FHSA.
A real estate lawyer does not provide investment advice or prepare your tax return. The lawyer’s role is to manage the legal side of the home purchase and help ensure that the transaction supported by your savings plan closes properly.
What Was the Ontario Home Ownership Savings Plan?
The Ontario Home Ownership Savings Plan, sometimes called OHOSP, was a provincial initiative designed to help eligible Ontario residents save toward purchasing a home.
The program was administered pursuant to the Ontario Home Ownership Savings Plan Act. It permitted eligible persons to establish a registered savings plan and receive certain tax benefits while saving for an eligible home.
However, the legislation was repealed in 2009. As a result, buyers searching for an OHOSP Ontario home ownership savings plan should understand that it is a historical program rather than a savings option they can open today.
This distinction is important because some outdated articles, forms, or online discussions may still refer to an Ontario registered home ownership savings plan as if it were still available. Relying on old information can lead to confusion about eligibility, contribution limits, and withdrawal procedures.
The current program buyers should generally investigate is the First Home Savings Account.
How Does the Current First Home Savings Account Work?
A First Home Savings Account (FHSA) is a registered account that helps eligible Canadian residents save for the purchase or construction of a qualifying first home.
Contributions are generally tax-deductible, subject to the applicable rules and limits. Qualifying withdrawals, including eligible investment growth, can be made tax-free when the money is used to purchase or build a qualifying home.
Unlike an RRSP withdrawal made through the Home Buyers’ Plan, a qualifying FHSA withdrawal does not normally need to be repaid.
Opening an account does not automatically guarantee that every future withdrawal will qualify. The buyer, the property, and the purchase arrangement must meet the requirements in effect at the time of withdrawal. Buyers should therefore consult their financial institution and tax adviser before transferring or withdrawing funds.
How Can a Real Estate Lawyer Help?
1. Review of the Agreement of Purchase and Sale
Your Agreement of Purchase and Sale is the cornerstone of the transaction. It identifies the property, purchase price, deposit, closing date, included items, and conditions that must be met.
A lawyer can review the agreement to identify terms that may affect your ability to complete the purchase. For example, the closing date must leave enough time to arrange financing, request savings-plan withdrawals, and deliver the required funds.
Ideally, buyers should obtain legal advice before signing the agreement. Once an offer becomes firm, changing its terms may require the seller’s consent.
2. Confirming the Property’s Legal Details
Savings-plan rules may require the funds to be used for a qualifying home that the buyer intends to occupy as a principal residence within the required period.
Your lawyer reviews the legal description of the property and conducts a title search. The lawyer also checks for registered mortgages, liens, easements, restrictions, and other title matters that could affect ownership.
This work does not determine your tax eligibility. But it does confirm that the property being bought is legally identifiable and that ownership can be passed on to you on closing.
3. Coordinating the Closing Timeline
A home purchase involves several parties, including the buyer, seller, lender, real estate agents, financial institutions, and lawyers.
Funds from an FHSA or another savings program may not arrive instantly. Your lawyer can tell you when the closing funds must be available and how they need to be delivered.
This allows you to work backward with your bank or financial adviser. Waiting until the final day to request a withdrawal may create a funding shortfall, particularly if the financial institution requires forms, supporting documents, or processing time.
4. Explaining the Difference Between Savings and Closing Costs
Many buyers assume their saved down payment represents the full amount they need. In reality, the final amount required at closing may include the following:
- The remaining down payment
- Ontario land transfer tax
- Municipal land transfer tax, when applicable
- Legal fees and disbursements
- Title insurance
- Property-tax adjustments
- Utility or common-expense adjustments
- Registration costs
Your lawyer prepares a statement of adjustments and trust ledger showing how the required amount is calculated. Knowing this figure in advance helps prevent the buyer from withdrawing too little or committing every available dollar to the down payment without reserving money for closing expenses.
5. Helping First-Time Buyers Claim the Land Transfer Tax Refund
Eligible first-time homebuyers in Ontario may qualify for a refund of some or all of the provincial land transfer tax, up to the applicable maximum.
This refund is separate from the FHSA. Qualifying for one program does not automatically establish eligibility for the other.
Your lawyer will normally ask questions about your age, residency, previous property ownership, intended occupancy, and your spouse’s ownership history. Based on the information provided, the lawyer can claim the available refund through the electronic registration process or explain what further documentation may be required.
Buyers purchasing in Toronto may also need to consider the separate municipal land transfer tax and its first-time buyer rebate rules.
6. Working With Your Mortgage Lender
Most buyers combine their savings with mortgage financing. Before releasing the loan, the lender sends instructions to the buyer’s lawyer.
The lawyer reviews those instructions, prepares the required mortgage documents, explains the legal obligations, and registers the mortgage against the property. The lawyer must also satisfy the lender’s funding conditions before the mortgage money can be advanced.
A problem with financing cannot necessarily be solved by having more savings available. Buyers should secure mortgage approval early and avoid making major financial changes before closing without speaking to their lender.
7. Protecting the Buyer Against Title Problems
A substantial portion of your savings may be invested in the property on closing day. Proper title review is therefore essential.
Your lawyer searches the title and raises concerns with the seller’s lawyer where necessary. Depending on the transaction, the lawyer may also review surveys, condominium status documents, writ searches, and municipal information.
Your attorney can explain what the title policy covers, which might include some risks such as certain title defects, fraud, registration issues, or problems that weren’t uncovered before closing.
8. Transfer completion and purchase recording
Your lawyer will place the funds, receive the registered deed, and confirm that ownership has been put in the correct name or names at completion.
The legal records from the transaction can also support future questions about when the property was acquired, how ownership was registered, and how the purchase funds were applied.
Buyers should retain their closing documents, withdrawal records, and tax documents. These materials may be needed if the Canada Revenue Agency later requests information concerning an FHSA withdrawal or another first-time buyer benefit.
Can Buyers Use an FHSA and the Home Buyers’ Plan Together?
An eligible buyer may be able to use funds from an FHSA and withdraw money from an RRSP under the Home Buyers’ Plan for the same property.
The two programs operate differently. A qualifying FHSA withdrawal generally does not need to be repaid, while an RRSP withdrawal through the Home Buyers’ Plan is normally subject to repayment requirements.
Because eligibility depends on federal tax rules and individual circumstances, buyers should speak with a qualified tax or financial adviser before making either withdrawal. The real estate lawyer can then coordinate the legal closing around the confirmed funding arrangements.
Speak With a Real Estate Lawyer Before Closing
Registered savings plans can help buyers build a stronger down payment, but they do not replace careful legal planning.
Whether you originally searched for an Ontario home ownership savings plan, a registered home ownership savings plan Ontario, or the historical Ontario Home Ownership Savings Plan Act, the program most first-time buyers now need to understand is the federal FHSA.
If you are purchasing a property in Mississauga, working with a Mississauga real estate lawyer can help you understand the legal requirements of the transaction. Your lawyer can review the purchase agreement, investigate the title, coordinate with your mortgage lender, calculate closing costs, address land transfer tax requirements, and complete the transfer of ownership.
Nanda & Associate Lawyers assists homebuyers in Mississauga and other Ontario communities with residential real estate transactions. Contact our team before signing an Agreement of Purchase and Sale or well in advance of your closing date to discuss the legal requirements of your purchase.
