DO I NEED A LAWYER TO DO THIS DEAL?

by Christopher Arnold - Dickie & Arnold, Barristers & Solicitors

Simply, NO, you don't. In the same way that you don't NEED a surgeon to cut out your appendix. You CAN do it yourself, however, if you have never done it before, we can guarantee that it will be extremely time consuming and dangerous.

Potentially, if you miss something, it can be exponentially more expensive than paying a lawyer to do it. There are a very large number of inquiries to be made with respect to the title to the land itself, and with regard to the building that is upon it. Does it conform with the municipal zoning requirements? Are the taxes current? Are there any outstanding municipal or utility work orders on the property? Does Ontario Hydro claim any easements over the property?

You get the idea. Lastly, some of your rights that arise under the Agreement of Purchase and Sale can only be protected by properly requisitioning (making a formal legal demand) in writing to the Vendor or their solicitor. Do you know what to look for? If your lawyer is handling the deal, RELAX, worrying is his or her job. If there is a problem, it is their job to find it - and tell you - BEFORE closing.

What could happen that would be so bad? Let's say you buy a house for $150,000. You are told that there is a basement apartment that brings in $700 a month in rental income. The value of the home is based upon this income stream. You get excited. You are told that this is a great deal, and this place won't last long on the market. You call a lawyer and he quotes some big price. You say, Forget that! I can get a title searcher buddy of mine to register the title documents for peanuts! So you do that. You move in. Everything is fine for two months, after which a neighbour, ticked off at your tenant for parking too close to their car, calls the City about your "apartment". Because you didn't have a lawyer looking out for you, you didn't realize the apartment is illegal, and that your area is not zoned for the rental unit. You can no longer rent out the apartment. You lose $8400 a year in income, and probably $40,000 in value on your home. Ooops.

HOW MUCH ARE THEIR FEES?

Legal fees vary greatly from one law firm to another. Many lawyers will provide you with accurate quotes including listing all proposed disbursements pertaining to a typical real estate transaction.  Many legal firms have interactive web sites that will allow you to request quotes electronically.  Remember that the law is like anything else, there are several areas that lawyers specialize in.  Make certain that you are using a solicitor well versed in real estate rather than a criminal or civil litigation specialist that a friend or relative may have recommended.  Often times these individuals will end up costing much more than you need to pay as they may be unfamiliar with real estate transactions and take more time on them than would be the norm.

WHAT DOES THE LAWYER DO ANYWAY?

For a Purchase

RESALE HOMES - The lawyer, acting for the purchaser, will first review your Agreement of Purchase and Sale (HOT TIP - Most lawyers will review your Agreement of Purchase and Sale before you sign it - for free - if they are handling the deal).  The lawyer will then handle everything required by the transaction, like search of title, review of contractual documents, negotiations with builder or Vendor regarding closing date, obtaining survey of the land and home, review of survey for compliance with zoning regulations, letter inquiries to appropriate public and private authorities, requisition of vendor regarding matters of title, arrangement of all details regarding closing of the transaction, attendance at closing, registration of documents at the appropriate Registry Office, preparation of all documents necessary, etc. Finally, the lawyer will report to you after everything is finished, and tell you exactly what they did for you.

NEW CONSTRUCTION - If you are considering having a new home constructed for you by a builder, you will definitely want to have a lawyer review the contract prior to you signing it. Do not be pressured by builder sales representatives to sign immediately. Your lawyer will ensure that items and issues such as a condition allowing you to have a professional home inspector inspect the property during construction are included to protect your interests.  Most contracts are worded to protect the builder's interests not yours. Have a lawyer read the contract carefully to make sure there are no surprises down the road. 

Most contracts clearly stipulate when your home should be completed. They also indicate how much notice the builder must give you, if they are unable to meet the possession date. Often buyers are forced into rental accommodation or worse, hotel accommodation when a builder cannot deliver on time. Many buyers incorrectly assume that the interim housing costs associated with the delays in completion are the responsibility of the builder. In most cases they are not provided that the builder has supplied notice of the delays as stipulated in the contract. Do not assume – make sure that your lawyer discusses all the clauses in the contract with you in detail. 

You may also need the assistance of a good real estate lawyer should your home inspector have issues with any building practices or deficiencies that they may find during their inspections, especially if your builder is unwilling to do anything to correct it.  Do not move into a home that is not ready for occupancy just because the builder says that you have to by a certain date. Ask your lawyer… and they will tell you that the interior of your home should be totally completed and an occupancy permit must be issued by the city or municipality prior to possession. Your financial institution will also want the home to be 95% complete before releasing mortgage proceeds. This generally means that the home's interior is totally completed, bricking or siding will be done but the landscaping and driveway may remain unfinished at closing.  Once money changes hands upon closing, you may find it very difficult to get the builder to remedy any outstanding issues. 

For a Sale

If you are the vendor, the lawyer acting for you will first review your Agreement of Purchase and Sale. Hot Tip - Most lawyers  will review your Agreement of Purchase & Sale before you sign it - for free - if they are handling the deal. The lawyer will then handle everything required by the transaction, like a review of the title documents, creation of all the new documents necessary to transfer title, negotiation with the purchaser regarding the closing date, letters to the appropriate public and private authorities to advise of the transfer of title, answering the requisitions of the purchaser regarding matters of title, arrangement of the details of the closing of the transaction, the closing itself, including ensuring the registration of the documents at the appropriate Registry Office, and the discharge of your mortgage. Finally, the lawyer will report to you after everything is finished, and tell you exactly what they did for you.

For a Mortgage

Receive and review the instructions from your lender (bank), prepare all mortgage documentation, preparation of initial opinion for your lender, involving review of title matters on their behalf, preparation of the actual Charge/Mortgage document, registration of same, meeting with you for explanation of documents and signatures, handling of funds, etc.

PITFALLS!!

Ask any lawyer who has been around a while - long enough to see a real estate deal gone bad - and they'll tell you - DON'T DO IT YOURSELF!! They'll also warn you about just going for the lowest priced deal too. If a lawyer or someone else is telling you they'll do the deal for cheap - find out why. Are they doing all the required searches? If not, will they be giving you a solid title opinion, or will it be full of qualifications? The title opinion is important - it is the lawyer's way of certifying to you that your title is good and marketable.

If your title has problems, your potential purchaser may not want to go through with the deal. We are all price-sensitive these days, but hey, you are not driving a Lada are you? Why not? It is the cheapest after all . . . We recommend going with a lawyer who can give you a solid title opinion at a reasonable price. 

Ask the tough questions. You'll be glad you did.

Used by permission from Dickie & Arnold – Barristers & Solicitors and written by Christopher Arnold. Reproduction in whole or in part is strictly prohibited. Additional information and quotations are available by visiting their web site at: www.dickieandarnold.com 

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