Twenty-two years ago, my family moved from one city to another. Our children were young, and coordinating the move was stressful. We closed on a Friday. Due to a mistake (an oversight, really) on the part of a real estate lawyer we used, we could not close that day. We were homeless until Monday, with all our earthly possessions stuck on a truck for three days past the date we were supposed to return it. On top of that, the Seller, a widow, was experiencing a very emotional bout of Seller’s remorse – wishing she had never sold her house – and now we were in breach of contract, since we could not close on the date we promised.
On any team, there are people working in the background, out of the spotlight, who are crucial to the success of a project. When we talk about a real estate transaction, a good real estate lawyer is one of those very important people. In this time of COVID-19, many lawyers who focus on real estate are busy crafting special clauses to protect buyers and sellers in the event that financial institutions or registry offices must close down.
In Ontario, you must hire a lawyer to transfer title to a property. According to the Land Registration Reform Act, buyer and seller must have separate representation – each retaining their own lawyer.*
As realtors, we are often asked for a recommendation to a law office, with the only stipulation being the price.
Unfortunately, hiring a lawyer based on cost alone can often end up being very expensive – not to mention stressful.
To help select the right professional, it is helpful to understand a little about your real estate lawyer’s role in your transaction.
What Your Lawyer Does for You
A lawyer will read and interpret your Agreement of Purchase and Sale, surveys, title, registered reference plans of survey, and condo status certificates, among other documents. They ensure that property taxes are up to date, that there are no claims against the property, and that you will be able to take clear title to the property at the end of the transaction.
In the case of new construction, an experienced and thorough real estate lawyer will help you navigate and understand the (sometimes overwhelming) volume of paperwork required to arrive at an accepted agreement.
Every so often, a buyer and a seller have a disagreement about something before closing that requires mediation. For example, a major repair may become necessary. Perhaps the roof or basement begins to leak, and the parties can’t agree on who pays what. The skill of the lawyers on both sides can become very important to a satisfactory outcome.
In an extreme example, a house could burn down completely. The Agreement of Purchase and Sale stipulates who has what rights in such a case, but the guidance of your lawyer will undoubtedly be crucial to help you make the right decisions.
Most transactions in Ontario are handled professionally, and go quite smoothly, from a legal standpoint. However, for what is likely the largest transaction you’ll make, it makes sense to protect yourself well by hiring someone who ensures that your purchase or sale is one of the smooth ones.
Communication is Essential
As a buyer, you should always insist on meeting your lawyer personally at least once. The purpose of this meeting is to review the transaction, to clarify your goals for the property, and to ensure that your instructions are understood. [For example, if you plan to put in a swimming pool, the lawyer will know to check carefully for easements that may make that impossible.]
Sadly, there are busy offices where the law clerks all but take over the entire process, and the lawyer is ‘out of the loop’ until a problem arises. According to LawPro, the insurance company chosen by the Law Society of Ontario to provide the mandatory professional indemnity insurance for Ontario lawyers in private practice, the two most common errors that lead to a malpractice claim are:
- Lawyer/client communication failures
- Inadequate discovery of facts or inadequate investigation
By selecting a law firm that has a policy of meeting with clients personally, you ensure that you have a lawyer who values the kind of communication that prevents problems like these.
The old adage remains true: You really do get what you pay for most of the time. When it comes to choosing your real estate lawyer, do compare prices. But also take the time to get referrals and interview more than one potential firm. You’ll be glad you did.
On Monday and Tuesday after that harrowing moving weekend so many years ago, we did a lot of driving back and forth between the two cities to get the mess straightened out. We also spent a LOT of time on the phone to both the careless real estate lawyer who had put us in that position, and a really great lawyer, who helped us to get our transaction closed so that we could finally move in!
*There are few exceptions, which are laid out in Section 3.4-16.7, 16.8, 16.9.