What does a Real Estate Lawyer do for a Buyer?

When dealing with a real estate purchase, the role of the real estate lawyer is to ensure a smooth and secure closing process with the right legal advice. 

From reviewing contracts to conducting title searches and handling closing details, a real estate lawyer protects their client's interest every step of the buying process.

In this article, we'll explore the key responsibilities of a real estate lawyer when representing a buyer, highlighting how their expertise helps you navigate the complexities of buying a home with confidence.

Reviewing the Agreement of Purchase and Sale

The Agreement of Purchase and Sale is the single most important document in a real estate transaction. When reviewing this real estate contract, several key elements must be meticulously considered.

These include the purchase price, closing date, title search date, and schedule A conditions.

In Ontario, it's common for the Agreement of Purchase and Sale to be drafted by the real estate agents. However, it can be extremely valuable to engage a lawyer for a thorough analysis of the document, as they can uncover potential legal issues that may arise before the buyer signs.

This step is particularly vital in new build construction contracts, which there is typically a condition that requires legal approval of the agreement to safeguard the buyer's interests.

Resale home purchase contracts usually do not include pre-signature reviews, making the role of a lawyer essential in conducting post-signature checks to address any concerns that may surface and facilitate the transaction accordingly.

Complete the Title Search

Once the Agreement of Purchase and Sale has been thoroughly reviewed, the real estate lawyer will move on to conducting a title search. 

The first thing a lawyer does is confirm that the seller has the legal right to transfer the property. This is done by reviewing the title deed and any relevant ownership documents. This ensures that the seller has valid title and the authority to sell. Buyers incur title search fees as a result of this process.

Next, they investigate any liens on the property, such as mortgages, tax liens, or other encumbrances that could affect the buyer's ownership. This involves searching public records and title databases to uncover any ongoing issues that may hinder the title's validity.

Additionally, the real estate lawyers ensure that all property taxes are paid up to date. Unpaid taxes can lead to future legal disputes or financial liabilities for the buyer.

An important aspect of the title search process is obtaining a municipal tax certificate, which outlines any property tax credits associated with the transaction. This certificate provides essential information regarding potential tax liabilities and benefits, helping the buyer make an informed decision.

By diligently following these steps, a lawyer secures a clear title, safeguarding the buyer’s interests in the property acquisition.

Managing Mortgage Instructions

More often than not, real estate is purchased with a mortgage. The buyer's lawyer is responsible for ensuring that all necessary mortgage documents are compliant with legal requirements. This differs from the selling process where the lawyer has to discharge a mortgage.

Once the loan proceeds are secured, the lawyer will receive these funds and subsequently transfer them to the seller's law firm, ensuring a seamless completion of the transaction.

It is common for the buyer's lawyer to act for both the buyer and the lender, given their aligned interests in achieving a valid mortgage and ensuring the successful completion of the transaction. This dual representation promotes efficiency and coordination, ultimately benefiting both parties.

The exception to this is private mortgages exceeding $75,000. When a buyer is relying on a private lender, they are required to have their own real estate lawyer (real estate attorney).

To ensure a smooth process, clear communication is paramount. The buyer, their real estate agent, and the mortgage broker must effectively communicate and provide the lawyer's contact information to facilitate the exchange of legal documents and directions. This collaborative approach helps streamline the entire process and ensure a successful transaction.

Ordering Title Insurance

Ordering title insurance is a crucial step for buyers in the real estate process, as it safeguards them against title issues such as title fraud and other potential defects that may not be discoverable. These hidden issues, such as undisclosed liens or fraudulent claims, can pose significant risks to homeownership.

Title insurance is often required by the mortgage lender - so it most transactions it has to be ordered.

A real estate lawyer obtains the title insurance and provides advice regarding the title insurance premium and purchase options available. A knowledgeable real estate lawyer will review the title insurance policies to ensure that the coverage is adequate and appropriate for the buyer's needs. 

Ultimately, acquiring title insurance is a prudent decision, providing essential protection against unforeseen issues that could affect the ownership of one's home.

Completing the Closing Documents

Completing the closing legal documents is a critical step in finalizing a real estate transaction, and a real estate lawyer facilitates this. The lawyer prepares and reviews essential paperwork, including the deed, closing statements, land transfer tax, statutory declarations, and mortgage documents, ensuring that every detail is accurate and compliant with legal requirements.

The lawyer meticulously verifies that all financial aspects are settled, including the disbursement of funds, statement of adjustments, and payment of closing costs. This financial settlement is essential to ensure that all parties fulfill their obligations before the transaction is completed.

Once all documents are in order and the financial settlement is confirmed, the lawyer will set up a signing meeting with the client. This can be performed in office or by using virtual closing methods (remote closing).

Transfering Closing Funds

The process of transferring closing funds begins with the real estate lawyer preparing a statement of adjustments, which outlines the financial details of the transaction. This includes calculating prorated amounts for property taxes, condo fees, and any other necessary adjustments.

On the closing date, the buyer's real estate lawyer delivers the required closing funds to the seller's real estate lawyer in trust, ensuring that all other fees are appropriately disbursed. These other fees typically include the land transfer tax, registration fees, title insurance premiums, and the real estate lawyer's costs.

Registering the Transfer Deed and Mortgage Charge

Registering the transfer deed and mortgage is the final step in the real estate transaction process. The registration typically involves submitting necessary documents, including the executed transfer deed, mortgage deed, and identification proofs of both parties. Additionally, clear writ certificates of the parties from relevant authorities are required.

For each of the transfer documents that get registered on title, there are applicable registration fees, which can vary each year. The specific governmental office responsible for this registration is usually the local sub-registrar's office or land registry, depending on the jurisdiction.

Timely registration is essential for the transfer of ownership; failure to do so can result in significant consequences, such as the risk of losing ownership rights or complications in selling the property in the future. Unregistered documents may also lack enforceability, leaving parties vulnerable to disputes and challenges.

Ultimately, ensuring prompt registration of the transfer deed and mortgage is fundamental in protecting one’s legal interests in real estate transactions - so it's important to have a lawyer who specializes in real estate law.

Summary

A legal professional plays a critical role in protecting a buyer's interests throughout the property purchase process. They ensure a smooth transaction by reviewing the Agreement of Purchase and Sale, conducting thorough title searches, managing mortgage instructions, ordering title insurance, and handling all closing documents. From transferring funds to registering the transfer deed and mortgage, their expertise in real estate law ensures that every legal aspect is meticulously managed, providing the buyer with peace of mind and safeguarding their investment.

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If you have questions about the real estate closing process or any other real estate legal matter, we're here to help. As real estate law specialists, our mission is to provide the clarity and direction you need to protect your property rights.

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