Real Estate Lawyers deals with the legal aspects of acquiring, developing and managing real estate. When properties are bought, firms will come up with and negotiate contracts for the purchase and sale and provide legal services to the buyer and any lenders involved in financing. They also offer advice on environmental issues, conduct due diligence and draft agreements in co-ownership or joint ventures.
Firms may also help property owners with development projects by negotiating Development Agreements and Site Plan Agreements with the local government, applying for rezoning or Official Plan changes, preparing documents for condominium or other strata ownership or negotiating Reciprocal Operating Easements with neighboring landowners. They could also be asked to manage a property’s leasing process by organizing Offers to Lease, Commercial Leases or Ground Leases.
In addition, they advise on real estate taxation issues that appear during property ownership and support both public authorities in expropriation cases as well as private landowners undergoing expropriation proceedings initiated by those authorities. Finally, Real Estate Law covers litigation related to boundaries, usage of property, environment, title and other areas relevant to ownership.
How does a real estate lawyer help you?
Legal aspects of a real estate transaction are handled by a real estate lawyer, also known as an attorney for real estate, from preparing and reviewing documents to closing the sale. As part of a real estate transaction, both buyers and sellers will have their own real estate lawyers, and their roles and responsibilities will differ depending on which side of the deal they are on. For home buyers and home sellers, real estate lawyers do the following:
The role of a real estate lawyer for buyers is as follows:
Having a real estate lawyer on your side helps ensure that your best interests are represented when buying a home. In addition, you need to make sure the deal is fair, that what you are buying is what you thought you were getting, and that title insurance is available.
Taking a look at the purchase agreement and other documents
Real estate transactions rely heavily on documents and contracts. In Ontario, the real estate purchase agreement is known as an agreement of purchase and sale, whereas in BC it is referred to as a contract of purchase and sale. This important document outlines the terms of the offer which may include the home price, conditions on the sale, or key dates. Real estate agents prepare the agreement from a pre-made template while buyers typically have their lawyers review it for any red flags that need to be addressed. Should issues arise, your lawyer can request amendments to be added to the document.
The purchase agreement is a vital document since it encompasses all aspects of the transaction. It will contain details of what exactly you are buying, and is not affected by the original home listing or MLS description. An example of this being that, while the MLS listing may state there is a backyard, if this isn’t listed in the purchase agreement then it isn’t part of the home purchase. Additionally, regardless of any verbal promises made by the seller, a written contract such as this will always supersede these; for example, if a seller gave someone a discount off of the home price but this wasn’t noted in the purchase agreement then legally it does not exist.
Arrange for title insurance
Despite the fact that title insurance is not required by law, it can still be a good idea to purchase it to protect your home purchase. If you are applying for a mortgage with your mortgage lender, you may also be required to purchase title insurance. In addition to protecting you from leftover liens, title defects, and title fraud, title insurance is a one-time payment.
A real estate agent can assist you with the process of obtaining title insurance from a title insurance company. You have the option to buy your own policy by either going to an insurance agent, broker, or directly to a provider. In certain cases though, some companies may require assistance from legal experts like lawyers, notaries, law clerks and legal assistants. Additionally, your real estate legal advisor may be able to clarify home insurance choices in Canada.
Make sure there are no liens or issues
Title insurance protects you from certain matters that could affect the title of the property. Nevertheless, it is essential for a buyer’s real estate lawyer to double-check the records. This investigation will uncover issues such as liens and possible title flaws, while also overviewing the survey of the property looking for any encumbrances like restrictive covenants, municipal by-laws or easements that may limit your ability to utilize it. Furthermore, an off-title search can be completed by a buyer’s real estate agent. Here, neglected property tax and utility costs, not found in the title records, are revealed by talking to local municipal and utility companies.
Closes the deal
At the closing of the sale, responsibility for handling the details will fall to the respective real estate lawyers. As part of the escrow procedure, buyers are expected to transmit their initial payment to their lawyer. Then, when lenders have made available the necessary funds to buy the home, they too will be delivered to your lawyer who will place them in a secure account until such time as you receive possession of the keys. You will be reunited with these once you meet with your lawyer on consummation day.
The buyer’s real estate lawyer will also be responsible for reviewing the statement of adjustments and registering the transfer in your province’s land registry office.
The role of a real estate lawyer for sellers is as follows:
A real estate lawyer helps home sellers avoid expensive delays or additional costs by resolving or mitigating any potential legal issues that might arise during the transaction.
The purchase agreement and other documents should be prepared and/or reviewed
The seller’s real estate agent, or listing agent, will draft and prepare the purchase agreement. The purchase agreement is often written from a real estate template, and it is important for a real estate lawyer to review it to ensure that it is suitable and covers every aspect of the transaction.
While real estate agents are licensed and can prepare the purchase agreement themselves, it is still a good idea to have a second set of eyes to review the contract before it is sent to the buyer. A lawyer that specializes in real estate law might be able to spot particular nuances with your property, and might be able to include disclosures or conditions that might need to be added to the purchase agreement.
Assists with negotiations
Real estate lawyers can assist in negotiating terms in a purchase agreement during the home sale. Perhaps the buyer wants to add on a lot of conditions, some of which are unnecessary and against your best interests. If you’re unfamiliar with real estate law, you may not be able to identify or comprehend these conditions yourself. If you don’t, your lawyer can negotiate conditions and clauses on your behalf.
Resolve any legal issues that remain
A title search may have revealed encroachment issues with disputed property lines, or you may still have liens that need to be paid. Your lawyer can resolve these issues before listing the home, or make sure they are resolved before closing.
Closing facilitation
The seller’s real estate lawyer will be responsible for holding the home’s keys in escrow at closing. They will also prepare a statement of adjustments then collect funds from the buyer’s lawyer. After this, they will pay liens such as mortgages, any unpaid property taxes, and other debt connected to the property. The lawyer will then disperse real estate commissions to the listing agent and buyer’s agent before forwarding the remaining funds to the seller.
What is the cost of a real estate lawyer?
In Canada, real estate lawyers usually charge a flat legal fee for the transaction. Depending on whether you are buying or selling a home, the value of the house, and your location, this fee can range from $700 to $1,500. In lieu of a flat fee, some real estate lawyers may charge an hourly rate.
In a 2017 article published by the Canadian Lawyer magazine, a real estate lawyer with less than one year of experience earned an average hourly rate of $200. This means that if the lawyer needs to spend five hours on your transaction, from reviewing the purchase agreement to handling closing, then the legal fee charged would be $1,000. As of 2017, the average hourly rate for real estate lawyers with more than 20 years’ experience was $421.
It is important that you make sure that your real estate lawyer’s time is used as efficiently as possible if you are paying them by the hour. In addition to ensuring that there are no duplicate tasks performed, title insurance means that the company will conduct certain title searches. It might save your real estate lawyer time and money if you purchase title insurance, so they won’t have to make certain municipal title searches.
What do legal fees cover?
Generally, legal fees cover the time of the real estate lawyer. However, some law firms may also charge a flat fee for certain costs, such as photocopies, postage, and faxes. Legal services in Canada are subject to sales tax. In Ontario, for example, you will have to pay 13% HST on the legal fees you charge, and in Alberta, 5% GST.
Legal fees do not cover what?
Legal fees do not include any money necessary to complete the transaction. Your real estate lawyer will pay for title insurance premium, land transfer tax, title search fees and registration fees upfront. These are called disbursements and you need to refund your lawyer for them. Application and registration fees can total hundreds of dollars, with land transfer tax usually being the largest amount.
The following are some common disbursements:
Obtaining a permit or license, such as a building permit or zoning permit, requires an application fee
Fees for registering a property when transferring the title, and registering encumbrances such as liens
In some cases, the buyer’s lawyer may disburse the buyer’s funds to pay for land transfer tax rather than making the payment out of pocket.
The Law Society of Ontario made changes in 2017 that now require lawyers to advertise all-inclusive prices which include legal fees, disbursements, and other charges, except for government fees (such as for registration), land transfer tax, and certain other charges. Also, Ontario real estate lawyers must state that their advertised price does not include HST and excluded disbursements.
Are Real Estate Lawyers Really Necessary?
In Canada, when selling or purchasing a home, you’ll need the services of a real estate lawyer. Even though it’s possible to buy or sell without an agent, Ontario’s Electronic Land Registration System – which is used to register property and search land records – can only be accessed by lawyers and certain other professionals with professional liability insurance covering real estate law practice. This includes land surveyors, real estate agents/brokers and mortgage brokers. Therefore, if you don’t have a legal representative on your side, you won’t be able to complete the purchase of a property.
A real estate lawyer is also required in Nova Scotia. Lawyers are also required in Alberta, but not necessarily real estate lawyers who specialize in real estate law.
Besides the fact that a lawyer is required to purchase or sell a home in many provinces, having a real estate lawyer protects your interests and ensures that your transaction is legal. Compared to legal fees for a lawyer, the cost of a home in Canada might be $1,000 or less. It’s well worth paying a small fee, especially for high-value real estate transactions, to be protected should something go wrong.
Agents vs. lawyers in real estate
A real estate lawyer provides legal services, so the cost is generally much lower. However, without a real estate agent, you won’t have access to services such as locating new listings for buyers and potential buyers for sellers; creating a comparative market analysis; hosting showings and open houses; and marketing the property.
You will need a real estate lawyer if you have any legal questions or need legal advice. An agent cannot answer any legal questions if he isn’t a licensed lawyer. Lawyers are also independent of the price of the home and can provide unbiased advice because they are paid a flat fee, as opposed to real estate agents who are paid a commission based on the sale price of the property.
Canadian Real Estate Lawyers
Lawyers practicing real estate in Ontario
Ontario’s real estate law market is large and competitive. In fact, the Law Society of Ontario’s 2018 Lawyer Annual Report found that 15% of Ontario lawyers practice real estate law. It is more than the 11% of lawyers who practice criminal law and the 10% who practice family law.
In Canada, how are lawyers licensed?
A lawyer in Canada must pass their province’s bar examination in order to be licensed and to practice law. Lawyers are admitted to the bar by their province’s law society. Law societies serve as the legal regulatory body for their province. Quebec, however, has two regulatory bodies.
You can search each provincial law society’s lawyer directory to find out if your lawyer is licensed, practicing, and restricted from practicing in a particular area.
Notaries vs. Real Estate Lawyers
Generally, a notary public performs the same tasks as a real estate lawyer in a real estate transaction. Notaries usually charge the same legal fees as real estate lawyers for reviewing the purchase agreement, conducting a title search, and registering the transfer.
It is important to know that a notary cannot represent you in court, while a real estate lawyer is able to. If a dispute turns into litigation and legal action that makes its way into court, you will need the services of a real estate lawyer. However, a notary can always refer you to a lawyer should you need one.
Addendums vs. contract amendments
A purchase agreement might require amendments or addenda. An amendment modifies the existing agreement, while an addendum adds to it.
A real estate lawyer may need to modify the closing date, for example. An addendum might contain information that needs to be added to the contract, such as disclosures about defects or repairs that have already been completed.