You just signed off on a firm offer to buy or sell your house and your Realtor asks you the question “who is your lawyer?” You may be asking yourself “I have a firm deal, so why do I need to use a lawyer to complete the transaction?”
Your lawyer forms part of your real estate team, along with other professionals such as your Realtor, mortgage broker or banker, insurance broker, and potentially a building inspector, home builder or other contractors. The role of your entire real estate team is to help you make a fully informed decision when buying or selling your property, minimize risk to you throughout the process, and hopefully make the process a little less stressful for you by helping you navigate the steps along the way.
What is the role of a lawyer if you have had a Realtor put together your real estate deal?
A lawyer typically becomes involved once the deal has been put together by a Realtor on your behalf. In this case, the basic role of the lawyer is to give effect to the deal that has already been struck, rather than to analyze and critique the terms of the deal. If you are selling, this means helping you convey title to your property to the buyer, paying out and discharging any mortgages registered against your property, and making sure you get paid in full on time. If you are buying, this means putting together any mortgage financing you require (sometimes including bridge financing if you are selling and buying in a short time frame) and then making sure that when you pay your money to the seller you are receiving back good clear title to the property as you expect.
In addition to giving effect to the deal, there are other things which, depending on the circumstances and particular deal, lawyers may also do, such as the following:
1. Review the land title to the property and advise on any registered encumbrances or risks associated with them:
- As an example, if there is an unexpected easement, a tax lien, a builders lien or a family property claim registered against the land title, these need to be addressed. If you are buying, you don’t want to be left to sort these issues out once you have closed the deal. If you are selling, you will need to address these upfront and not be in breach of your sale agreement and obligation to deliver clear title.
2. Prepare any other agreements required depending on your use of the property:
- Co-ownership agreements where multiple parties have acquired a property;
- Agency agreements where one or more names are on the title even though they are not the actual “beneficial” owner of the property. This often occurs if someone requires a co-signor for mortgage financing; or
- Lease agreements if you have acquired a property intending to rent it.
3. In the purchase of a condominium, a lawyer may be asked to review the condominium plan or bylaws to provide comments on them. Keep in mind, however, that if the lawyer is asked to review these after the deal is firm, this will only help you understand what you are getting in to, and if something negative is uncovered, you may not be able to back out without forfeiting your deposit or incurring other financial penalties.
Is the role of a lawyer different on a private sale?
In some circumstances two people have come together and agreed on the purchase or sale of a property without it ever having been listed. In a private sale such as this, all of the above still applies. However, a lawyer can further assist by putting together a written purchase agreement to document your private sale and hold deposit funds in trust until the deal closes. Keep in mind that in these scenarios, lawyers are involved to advise on the law and document and give effect to a transaction, but it will still be up to you determine the price you are happy with.
When should you contact your lawyer?
If you ever have a question about your real estate transaction, whether it is in the works and you are unsure about something, or you haven’t even listed your property but want to know more about the legal side of the real estate transaction, you are encouraged to reach out to your lawyer to discuss this. You do not need to wait until your Realtor asks you “who is your lawyer” to reach out and discuss your transaction.
As part of the team approach, there may also be circumstances where an issue arises that yourself or your Realtor would like the input of your lawyer on prior to removing conditions or signing off on a sale. Keep in mind that once conditions are removed, there is a lot more on the line if you then uncover an issue. Due to this, it is best to do as much due diligence upfront, and sometimes that due diligence includes contacting your lawyer to review certain aspects of your transaction. In the event you uncover something so bad that you want to consider walking away from the deal, your lawyer will be able to help you to understand what your options are based on the agreements signed, and what the legal consequences to you will be of moving forward with any of those options.
Has COVID-19 impacted real estate transactions?
In the present societal landscape of physical distancing and public health orders due to COVID-19, real estate transactions continue to proceed. The way that you communicate and sign documents with your lawyer may now be different than in the past, including the use of video conferencing instead of in-person meetings, however the advice you will obtain and the assistance we provide in closing your transaction remains the same.
If you have questions with respect to your real estate transaction, we are here to help. Feel free to contact any of our real estate lawyers to discuss your real estate needs.
Gregory A. Kirzinger
STEVENSON HOOD THORNTON BEAUBIER LLP
500 – 123 2nd Avenue South, Saskatoon, SK S7K 7E6
The information in this guide is not legal advice. We encourage you
to consult with your legal advisor for specific advice.