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Q. If I buy a house or condominium, do I need a lawyer?
A. Most people employ the services of a real estate agent when they are looking to buy a house or condominium. The agent will work with you to negotiate a purchase price and a date for you to take possession of your new home. However, when it comes to actually having your new property transferred into your name, you will need the services of either a lawyer or a Notary Public.
Lawyers and Notary Publics have training in preparing the documents necessary to transfer title to property. This training extends to the preparation of mortgages as well as the transfer documents. However, a Notary Public is not a lawyer, and as such cannot offer legal advice. Most people, especially first time home buyers, stand to benefit from receiving actual legal advice when they buy their homes.
Q. Should I consult with a lawyer before the deal is final?
A. Almost all offers to purchase property contain a clause or clauses that make the completion of the purchase conditional on the purchase being satisfied with all aspects of the transaction. These clauses are called “subject removal conditions”, and usually deal with issues like ensuring that the purchaser has satisfactory mortgage financing. If at all possible, your offer should be reviewed by your lawyer before all of the subject conditions have been reviewed. If your lawyer is able to review your offer to purchase before the subjects are removed, he or she can give you advice on whether the offer is in order. Usually your real estate agent will have done a good job, and the offer will be fine. However, there is no harm in having the offer checked out, and most lawyers will include this service in their legal fees.
Q. Can my lawyer act for me as the purchaser of a property and for the lending institution that I am going to borrow money from?
Yes. In most cases, your bank or credit union will give you the option of choosing your own lawyer to act for you on the purchase as well as preparing the mortgage documents. When you are approved for mortgage financing you can simply advise the lending officer that you wish a particular lawyer or law firm act for you and prepare the mortgage. This has the advantage of keeping your legal fees to a minimum. Almost every lending institution has a policy of getting you as the borrower to the fees and other costs associated with preparing the mortgage. It therefore makes sense for you to have this work done by someone you know and have already discussed the issue of legal fees with.
In rare cases your lending institution will insist that you retain your own lawyer while it hires a lawyer of its own choosing to prepare the mortgage. These cases are rare, but in this event you will have to pay two legal accounts. Usually, however, a bank or credit union will only insist on having two lawyers involved if there is something unusual about the transaction, such as having a relative other than your spouse or child guarantee payment of the monies borrowed.
Q. What legal costs can I expect when I hire a lawyer to act on my behalf when purchasing property?
A. Legal fees for the purchase of property vary from law firm to law firm. However, as a general rule, the fees charged do not vary significantly, as pricing in this area is competitive. When discussing legal costs with a lawyer, you should be aware of the distinction between the legal fee he or she proposes to charge and the amount of disbursements which will also be added to your account. Disbursements are monies your lawyer has to pay on your behalf to complete the transaction, and include filing fees paid to the Land Title Office. The cost of disbursements quoted for a particular purchase should be approximately the same from law firm to law firm.
You should also be aware that lawyers are required to charge GST and PST on their fees and on some of their disbursements. Make sure that the quote you receive prior to hiring a lawyer is broken down so that you understand what will be charged for fees, disbursements and taxes.
Q. Do Notary Publics charge less than lawyers for property transfers?
A. As a general rule, Notary Publics do not charge significantly more or less than lawyers for this service. The disbursements charged by a Notary Public will be the same as those charged by a lawyer.
Q. In addition to fees, disbursements and taxes, are there any other costs I should be aware of when making arrangements to hire a lawyer or Notary Public?
A. Yes. Unless you are a first time home buyer and the price of your new home is under a certain price, you will have to pay Property Purchase Tax on the price of your new home. The tax charged is 1% on the first $200,000.00 of the purchase price, and 2% on any amount over that figure. Prior to attending at your lawyer’s office to sign the documents necessary to complete your purchase, he or she will advise you as to the exact amount you will have to pay for Property Transfer Tax.
In advance of meeting your lawyer to sign the closing documents, he or she will provide you with a document called a Statement of Adjustments. This document will set out all of the costs which you will have to pay to complete the purchase. You should always ask for a Statement of Adjustments a few days in advance of meeting with your lawyer, so you will know precisely how much money you have to provide to ensure that the transaction completes as scheduled. You lawyer will also tell you that the amount of money required and set out on the Statement of Adjustments must be paid by bank draft or certified cheque payable to the his or her law firm “In Trust”. The Statement of Adjustments will include the amount of your lawyer’s legal account, so you will not have to pay him or her separately.
Q. What does my lawyer do for me after I sign the papers necessary to transfer the title to the property into my name?
A. Your lawyer will ensure that the sale funds are delivered to the seller of the property on the condition that any and all mortgages, judgements or Builders’ Liens against the property are paid from the sale proceeds. He or she will also ensure that all taxes owing to the Municipality are paid and/or properly adjusted as between you as the purchaser and the seller. In other words, your lawyer will ensure that you receive title to your new home, free from any claims which might arise as a result of the dealings the seller may have had in respect of the property. Your lawyer will also ensure that your real estate agent’s commission is properly calculated and paid.
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