30 Oct What Can A Real Estate Lawyer Do For You?
In Ontario, it is required by law that all real estate transactions, be they sales, purchases, or mortgages, be handled and “signed-off” by a lawyer who is a member of the Law Society of Ontario. Most real estate transactions involve two lawyers, one for each side.
As such, lawyers are an integral and routine part of every real estate matter. From your perspective, however, it may be unclear what exactly the lawyer and the law firm do for you and how the process works. It is, in other words, anything but routine for you. Having some insight into the process, and being prepared and informed, is therefore important. This guide outlines the different ways in which lawyers can and should be involved in real estate transactions, from the earliest phases of signing the Agreement and to the closing of the deal. We hope you find it helpful in your planning and in your choice of picking the right lawyer and law firm for you.
Buying Real Estate
Whether you are buying a home, condo, or townhome, or even land, the formal transaction starts with the signing of the Agreement of Purchase and Sale (the “Agreement”). The Agreement outlines all of the rights and obligations for both the buyer and the seller. Many people will enter into such Agreements with the assistance of a realtor, or do it themselves, and it is only once the Agreement is firm (meaning there are no outstanding conditions), that they will send the Agreement to a lawyer.
However, there are many situations where it is prudent and even necessary to involve a lawyer earlier in the process. Some examples include:
- Used residential property – the lawyer can review a draft of the Agreement, including any special provisions or conditions, to ensure that you are adequately protected and aware of the issues at play. It may also be worthwhile to have a lawyer review a preliminary search of title. This is can be especially important if the property is old, in a rural location, is a rental property, of if there are any potential easements or restrictions on title;
- New construction homes – when you buy a new construction property, you are generally entitled to a ten (10) day “cooling off” period to have the Agreement reviewed by a lawyer. The lawyer will also review any additional documents that the builder gives to you. Having the lawyer’s insight into the Agreement and its provisions is critical at this stage, as the special new build provisions and numerous schedules, conditions, and timeline terms, can be intimidating and hard to understand;
- Condominium purchases – when you buy a condominium property it is normal that a condition for the review of the status certificate be included. This certificate is provided by the condominium corporation and provides a snapshot of the financial status of the unit you are purchasing as well as the corporation overall. Real estate lawyers generally review these certificates, and it only after their review that parties can make a fully informed decision on whether they should proceed.
Once an Agreement is “firm,” meaning there are no outstanding conditions, the process usually proceeds as follows:
- If you had no prior involvement from your lawyer, generally your broker or you personally will send your lawyer a copy of the firm Agreement;
- Your lawyer should, at this stage, provide an estimated Funds Summary, outlining the law firm’s legal fees, as well as estimates for disbursements (outlays for closing that are passed onto you), Title Insurance (if applicable), and other taxes and transaction costs;
- The law firm will likely ask that you fill out a questionnaire of some kind, to help ensure that they have all of your information and some additional context for the deal. It is important that you flag any concerns for the lawyer, and they will do likewise as they begin to review the Agreement;
- The next stage is generally the title search. This historical review of the title history of the property will help ensure that you obtain title free of any liens, debts, mortgages, or other title “defects” which impact your future ownership;
- If you are getting financing, your lawyer will take instructions from the lender and coordinate the finalization of the loan and the payment of the loan advance to the firm. These mortgage funds are then combined with any down-payment needed from you in order to ensure that the balance due on closing is satisfied.
- Within the last week or two before closing, you will meet with your lawyer to review and sign all of the final documents.
- On closing, your lawyer will coordinate the delivery of funds and ensure that the transaction closes in a timely manner. The lawyer will generally also receive and hold the property key(s) for your pick up once closing is complete.
While the outline above is not exhaustive, it at least provides a snapshot of the various steps involved in closing a purchase transaction. As you can see, having a reliable and detail orientated lawyer and firm acting for you is important. It is also advisable to have the lawyer involved early in the process, and perhaps even when the Agreement itself is coming together, to ensure that issues are caught early and that you are fully informed of what will lie ahead.
Selling Real Estate
As with purchases, a sale transaction starts with the finalization of the Agreement and people often do not think to involve a lawyer until after the Agreement is firm. However, there are scenarios where having a lawyer involved early can help ensure that you fully understand the terms of the sale. Most notably, lawyers can help ensure that key financial terms of the deal are clear, such as the amount and timing of deposits, and can also help ensure that any “Representations and Warranties” included in the Agreement – which are statements you make to the buyer as to the condition of certain parts or aspects of the property – are sensible.
Once the Agreement is finalized, the lawyer and firm follow much of the same process as outlined above, but with the obvious difference that they act as intermediary for sending keys and closing documents and for receiving closing funds from the buyer and their lawyer.
If you are also buying that day or selling before you buy, the lawyer will also coordinate the closing of those other transactions and the finalization of any new or “bridge” financing, as applicable.
The Vandeputte Law Real Estate Team
As this guide has shown, the buying and selling of real estate is a process that should be treated as anything but routine. The team here at Vandeputte Law is ready to assist you in your transaction and to help ensure things go as smoothly as possible. We have experience acting on and dealing with:
- Mortgage Refinances
- First Time Home Buyers
- New Home and Condominium Purchases
- Real Estates Sales that are part of Estates
- Private Agreements of Purchase and Sale
- Co-Ownership Agreements
- Survivorship Applications
- And much more…
Contact us today with any questions you may have. We look forward to working with you.