My first property purchase was fourteen acres of a vacant, rural, wooded lot north west of Kingston. A river crossed over the northeast corner, separating the land into two pieces. The parcel across the river was pretty much unusable-it was landlocked and surrounded by conservation land, ensuring that we would never be looking at a condo or any other unwholesome development. As Torontonians, this seemed like paradise found!
I wasn't practising real estate law at the time and I don't remember much about the transaction except that we visited a lawyer and signed a lot of paper. A Kingston lawyer who, coincidentally, is now a peer.
I often think about this experience when I meet my real estate clients-especially first time purchasers. Because so much of the real estate lawyer's work goes on behind the scenes-and not much of this work is evident in the final product-I like to take the time to explain exactly what the heck the real estate lawyer is doing in the time between agreement and closing!
For both purchasers and vendors, we prefer to receive the offers and agreements before our clients sign. For purchasers, if there is a conditional period, we can receive and review the documents prior to the expiration of the conditional period and offer our thoughts and advice on the terms and structure of the deal. For vendors, if it's not possible for lawyer review prior to signing, a condition that permits review of the agreement by the solicitor is a good idea. Once the deal is firm, any changes must be made with the consent of both parties.
The agreements we receive are usually perfectly fine as drafted. However, certain situations require specifically drafted content that, if omitted, can result in broken deals and litigation. Solicitor review can help prevent these unwelcome and unexpected wrinkles.
On a residential purchase transaction, we review the offer and ensure that the purchaser understands exactly what is being transferred. We complete a title search, looking at the chain of title, the boundaries of the property, the owners of neighbouring properties, and any restrictions, easements, and rights of way or encroachments that may disturb our clients' enjoyment of the property. We also order a tax certificate in order to ensure that our purchasing clients won't inherit any tax arrears with the property and perform a search of execution judgments to make sure the opposing vendor doesn't have any outstanding judgments to be enforced against the property.
In a condominium purchase, we also review the condo documents that set out the existence, bylaws, rules, and budget of the condominium, the registration of the condominium with the provincial registry office, and the status certificate, which sets out information related to the specific unit being purchased.
Where the property is a new build, we review the builder's contract in detail and correspond with you on the important features-new build agreements differ from resale agreements and a purchaser of these kinds of properties needs to be aware of these additional details.
For the purchase of rental property, we review the leases and ensure that the month of closing rental payment is appropriately prorated and any deposits are correctly credited to the purchaser. If the property is a duplex or a triplex, there are additional searches to be done at the municipal level in order to ensure that the property meets the requisite bylaws, codes, and, zoning for that area.
Your real estate lawyer also prepares the mortgage financing in accordance with terms and conditions set out in the lender's instructions. Each lender has its own set of requirements and a list of work to be done before the funds can be released, which includes coordination with the home insurer and title insurance company.
Once these details are in place, we need to prepare the report to the lender, the report to the title insurer, the conveyancing documents, ensure we have the appropriate undertakings from the other side to discharge outstanding mortgages, arrange for the transfer of documents and keys between solicitors, and meet with you for signing. A final report summarizing the details of the transaction, with your title insurance policy, will be prepared and sent to you following closing.
On the selling end of the transaction, your real estate lawyer must arrange for the discharge of mortgages and any other encumbrances not being assumed by the purchaser. We need to answer the title requisitions of the purchaser and solve any outstanding title issues going forward. We also need to make sure that all of the items set out in the agreement of purchase and sale are completed and the property is being conveyed in the state expected by the purchaser.
Where the property is rural, we need to coordinate fuel-oil or propane-fill ups and ensure the charges for these services are properly credited on the statement of adjustments.
Discharges, undertakings, representations, warranties, declarations, debt payouts, and the statement of adjustment are prepared in order for final signing day. Again, we send out final reporting letters with the transaction details following closing.
So the next time you take that big step to buy the home of your dreams-or sell your existing property-know your real estate lawyer is busy making sure the transaction runs as smoothly as possible!
Please feel free to contact us with your questions related to real estate buying, selling, leasing, and any other issue that arises. We service clients from Kingston to Toronto and everywhere in between. And Ottawa too! :)
Thank you for reading!