At urbaneer.com we are often reiterating the message that buying or selling a home is a far more complex process than making a “must-have” list or putting up a “for sale sign”. The complexities of this dynamic are more pronounced in an intense market like that present in the City of Toronto.
By the same token, when buying a property, there are a number of different people with different roles involved in helping you along the process to close your deal, including advising you, conducting due diligence and processing necessary paperwork.
An essential one is a real estate lawyer, who is critical to a home purchase. When it comes to lawyer’s fees, many homebuyers are tempted to try to cut costs. But, if you understand what your real estate lawyer actually does for you, and why it is a potentially essential component to keeping your costs down in the long term, you quickly understand that this is not an area in which to cut corners. It’s worthwhile to understand what you receive in return for your fees.
Homebuyers typically bring their lawyer in at the end of the process, but as we have often said before, knowledge is power, especially when it comes to matters of real estate. Establishing a relationship early on in the process can save you time (and potentially money) when you need it most – at closing.
Here’s our synopsis on what a lawyer will do for you when making a home purchase.
Your lawyer can be invaluable in helping you determine what the “big picture” costs will ultimately be in your home purchase. Namely, they will be able to advise you on costs that you can expect at closing, including Land Transfer Tax (here’s a calculator), disbursements and legal fees.
If you’ve bought a new home, they can help you determine what some so-called “hidden” costs might be, like the Ontario New Home Warranty Enrollment Fee, Hydro and Water meter installation charges, property taxes fencing and landscaping charge, grading deposit charges and a myriad of others.
If you’re purchasing from a developer, you should definitely have a lawyer review the Agreement of Purchase and Sale and all the accompanying documents, as the contracts are constructed to pass on development charges, school levies and even the HST on top of your purchase price. Without your lawyer reviewing this information ahead of time, Buyers could find themselves paying thousands of dollars that they hadn’t budgeted for when closing the deal.
When conditions have been met and your offer is firm, your lawyer will perform a series of searches on title for the property in question to make sure it is free and clear, including utility searches, property tax searches, building, zoning and planning searches and registered title searches.
Via letter, the lawyer contacts the municipal or regional utility departments to ensure that there are no arrears or outstanding charges. They also ensure that there are no conditional sales contracts, liens, easements or unregistered agreements against the property. Furthermore, they make sure that there are no other encumbrances affecting the property or equipment being left by the Seller. It is especially important to be aware of any potential issues around easements, because misinformation on this particular item translates into a potential homeowner nightmare.
Furthermore, your lawyer will recommend and make arrangements for Title Insurance, which protects you from a host of potential losses for things such as fraud, survey errors, encroachment issues, existing undisclosed liens, as well as any other issues that prevent you from having clear ownership of your property.
The Mortgage Documents
Your lawyer helps with mortgage documentation as well, by reviewing the contents of the Mortgage Commitment letter your bank will prepare when you arrange your financing, and helping you understand the legal implications and responsibilities of signing it. Furthermore, if your lawyer is acting on behalf of your lender, they will prepare the necessary mortgage documents. They will also submit these documents to the financial institution for approval prior to closing
Your lawyer can help you ahead of time to make sure that your needs and interests are being accurately met by making sure that your purchase offer and other paperwork is worded correctly, or to help you properly interpret paperwork ahead of time.
Language is an ambiguous sort of thing, and while a phrase may have a meaning that you or I might infer from a basic reading, it may hold a whole other legal meaning, which could also spell extra costs for you down the road if you don’t know all of the potential implications at the outset.
While your lawyer may be able to help you mitigate some of your potential costs by advising you, they can most certainly help you anticipate all of the costs that you will be responsible for, helping you make fully educated decisions around your sale and/or purchase.
Here is an interesting article from the Globe and Mail called “Home Buyers: What should a real estate lawyer do for you?” that illustrates some of the complexities associated with buying property.
At urbaneer.com we aim to assist our clients at each stage of the home buying process by sharing our experience in the Toronto market, which spans two decades. We firmly believe that the most successful experiences emerge from knowledge, derived from through due diligence. We are here to help!
~ Steven and the urbaneer team
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** Lead image can be purchased at Zazzle.ca **