Friday, November 14, 2008

Lawyers, Notaries and Real Estate Transactions

Anyone who has ever bought or sold a house will tell you there is an amazing amount of paperwork involved. Once you put your signature on any of the documents you will be presented with, you are legally bound to honour whatever obligations and conditions that particular contract contains.

So do you need a lawyer/notary in a real estate transaction? The better question might be "can you afford NOT to have one?". With a good lawyer/notary on your side, you will be able to make sense of the legal jargon that turns up on every page. You will also have someone to take care of the time-consuming legalities involved in completing the deal, someone to look after your legal rights and interests.

How do you go about finding a lawyer? If you are buying your first home, probably the best way is to ask around - friends, family and business acquaintances - for recommendations. Question your prospective lawyers about their experience with real estate transactions and also discuss their fee scales and the services they will provide for the money they charge. Ask about whether there could be other legal fees and, if unexpected costs arise, at what point can you expect to hear from them?

When do you start working with a lawyer? It's a good idea to hire a lawyer before you and your REALTOR® submit the Offer to Purchase to a seller of a home. This lets the lawyer look over such things as the legal description of the property you intend to buy before your offer becomes final.

Your lawyer can also ensure there is sufficient time for him or her to carry out various investigations and enquiries. If you are unable to have a lawyer look at your Offer to Purchase immediately, you can insert a condition that gives you another day or two to get that offer satisfactorily reviewed by a lawyer.

If you are buying a home, a lawyer will:

check to see if there are any claims registered against the property and that these are cleared away before you become the home's new owner;
investigate whether taxes are owing on the property;
make sure the property is properly described on every document you sign, and that you will have valid proof of ownership;
tell you how much Land Transfer Tax - the payment to the Provincial government for transferring property from the seller to the buyer - you will have to pay when the transaction is completed, and how much money (if any) you owe for utility bills, fuel or taxes prepaid by the seller; and
draw up mortgage documents, if your lender has not done so.
If you are selling a house, a lawyer will:

gather all necessary documents to complete the transaction and transfer the title to the new owner;
let the buyer's lawyer know that your mortgage, if there is one, will be paid off - or "discharged" - with the proceeds from the sale, and obtain a statement of the outstanding loan balance at the closing date from your lender;
draw up a statement of adjustments that itemizes proceeds from the sale and shows how they will pay off all the costs involved in that sale. He or she will also distribute the money to pay off these costs and discharge your mortgage from the property title. Any money left over is money you have made from the sale and your lawyer will write you a cheque for the net amount; and
arrange to file all the paperwork necessary to transfer the property title.
You can see why it is so important to have a lawyer on your team when buying or selling a home!

Multiple Listing Service, MLS®, REALTOR® and REALTORS® are registered trademarks of the Canadian Real Estate Association. REALTOR® identifies a real estate practitioner who is a member of the Association.

Article courtesy of OMREB

Sincerely,

Jason Neumann

3 comments:

New Jersey Real Estate said...

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AMIT said...

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