Why home buyers need a real estate lawyer

Updated: 07 March 2024

Buying a house is a big decision and is likely the most expensive purchase most people will make in their lives. As such, getting legal guidance from a real estate lawyer is important.

This article will discuss the roles of a real estate lawyer in Canada when helping buyers and sellers of properties.

What does a real estate lawyer do?

A real estate lawyer assists the buyer or the seller in a transaction involving homes, land, condominiums, and buildings.

Other than brokers and agents, real estate lawyers can help clients from the initial negotiations with the other party, until the closing of the transaction.

Knowledge on Canadian real estate laws

An important role of a real estate lawyer is navigating Canadian real estate laws for their clients.

These laws include:

• provincial and territorial statutes on real estate
• common law principles related to real estate
• civil law under the Civil Code of Quebec

Whenever parties are represented by their own real estate lawyers, they are confident that their interests and rights are protected based on Canada’s laws on real estate.

Here’s a quick video to understand more what a real estate lawyer does:

Real estate lawyers can also engage in property development, such as in commercial and residential real estate financing and development. Check out the best property development lawyers in Canada for help in this area.

Roles of a real estate lawyer

The roles of a real estate lawyer change depending on whether they’re representing the buyer or the seller in the transaction. In most cases, there are roles that will also apply to both parties:

Reviewing legal documents

The review of the Purchase or Sale Agreement is one of the main responsibilities of a real estate lawyer.

This is important since the rights and obligations of parties in buying or selling a real property are also contractual in nature. It means that the Agreement is a vital legal document that binds the parties, which must be thoroughly reviewed by a lawyer.

Closing the transaction

There are many steps in closing the transaction, and a real estate lawyer is a big part of that.

Aside from exchanging legal documents, certain procedures are best handled by legal counsel, and not just by the seller or buyer alone.

Ensuring compliance

Real estate lawyers ensure that their client and the other party comply with the terms and conditions of the Agreement. This is in addition to what Canadian real estate law says about the responsibility of sellers and buyers, such as when backing out of an accepted offer.

Compliance with the parties’ Agreement and with the law does not end when the transaction closes. A real estate lawyer is still helpful even after closing day.

Role of a real estate lawyer for a buyer

From a buyer’s perspective, here are some areas that a real estate lawyer can help with:

• ensure that there are no claims against the property being purchased
• ensure the valid transfer of title on the closing day
• verify whether the property taxes are updated
• set up the title insurance, if preferred by the parties
• calculate the payable land transfer tax at the time of closing
• if mortgage is involved, prepare the mortgage documents

Role of a real estate lawyer for a seller

On the side of a seller, and in addition to the above-mentioned, here are other duties that a real estate lawyer can help with:

• assist in negotiating the terms and conditions of the Agreement
• prepare the Agreement and title of the property to be sold
• deal with the issues regarding the title, before or after its transfer

How much does a real estate lawyer cost?

There are two costs involved when hiring a real estate lawyer:

• legal fees: for their lawyer’s time, which can be a flat fee or an hourly rate
• disbursements: for their lawyer’s advance expenses that the lawyer paid on behalf of their client

Legal fees

There are a lot of factors that come into play as to the computation of legal fees, such as:

• whether their client is the buyer or the seller in the transaction
• the transaction’s complexity, such as complications on the property’s title
• value and location of the property being sold

Legal fees can range from $700 to $2,000 depending on these factors.

Disbursements

The legal fees are in addition to these disbursements made by the real estate lawyer:

• application fees
• land transfer tax
• title insurance premium
• mortgage registration
• title search fees
• registration fees

In most cases, real estate lawyers offer a flat rate for their services that will cover these transactions, including their own fees.

Why do we need real estate lawyers?

Real estate lawyers are important for many reasons. Because there’s a lot of money on the line – not just for buyers but for sellers too – having a lawyer by their side is a guarantee that all their decisions are protected.

Real estate lawyers help with:

1. Closing the real estate transaction

The closing of the transaction refers to the completion of the deal. This is both the symbolic and actual realization of the Agreement between the parties.

Closing a real estate transaction involves lawyers of the two parties conducting title searches at a Land Registry Office (LRO).

Meeting at the LRO would also involve:

• exchanging legal documents (e.g. the Agreement)
• turning over the keys to the property
• handing in the payment
• registering the transfer

Alternatively, because of the availability of electronic registration, specialized software can be used to do title searches and to register the transfer.

Only lawyers and law firms have access to this software, so engaging the services of a real estate lawyer can be convenient for the buyer and seller.

It is also a requirement under law that a lawyer sign the transfer of land, making the presence of a real estate lawyer more important.

Reviewing the statement of adjustments is another important process during the closing that a real estate lawyer can help with. This document provides all the other details of the transaction, such as the final amount due on closing day and other fees.

To know more about closing day, watch this video:

2. Reviewing legal documents

Another role of real estate lawyers is to review all legal documents related to a transaction. This includes doing the legal review of the Agreement of Purchase or Agreement of Sale, and other relevant documents that may be executed by the parties.

They can check whether these documents are legally sound and are not unfavorable to the interests of the party they represent.

Most importantly, real property lawyers can also verify if the subject property to be sold or bought has a valid property title. Aside from checking with the local registries, real property lawyers have other means to confirm that the title is clean and that there are no issues related to it.

Reading through legal jargon

Related to the review of legal documents, a real estate lawyer can read through the legal jargon. Because understanding legal terms is a difficult task on its own, a buyer or seller can entrust this to their lawyer.

3. Reviewing legal issues in the sale or purchase

Other legal issues must be checked when selling or purchasing property, and this is where real estate lawyers are of big help.

They ensure property taxes are up-to-date, and that there are no claims or liens filed against the property. They can also check with the relevant tax authority and land registries in the province and municipality where the property is located.

Aside from these, real estate lawyers can also calculate what land transfer tax is due upon closing.

4. Helping to negotiate a good deal

Real estate lawyers are experienced with negotiating deals, not just with the other party, but also with their lawyer, broker, or agent. Real estate lawyers can also get the best deals for their client, while making sure that the transaction itself will not fail.

5. Applying knowledge in real estate litigation

Real estate lawyers can also help in litigation when the court’s intervention is necessary.

If there is any need for litigation involving the purchase or sale of real estate, a lawyer experienced in real estate law can also point clients in the right direction. Whether representing the buyer or the seller before the court, a real estate lawyer is best placed to handle the case.

6. Explaining joint tenancy or joint ownership

In some cases, the transaction may involve multiple buyers, as in the case of joint tenancy or joint ownership, where the buyer owns the property with someone else. This can be their spouse, or another family member.

Here, real estate lawyers can help their buyer-client with the ins and outs of joint tenancy or joint ownership, according to Canadian laws. This is also where a real estate lawyer’s knowledge on Canada’s succession laws, such as the laws on wills and estate, is useful.

Some examples of joint tenancy or joint ownership include:

• rights of survivorship: when one of the owners dies, their ownership share passes on to the surviving joint tenant. Probate fees won’t be due in settling the estate of the deceased owner because it does not need to go through the deceased’s estate
• tenants in common: owners will state in their respective wills who shall inherit the ownership of their portion to the property. In this case, probate fees must be paid on the property share passed on

7. Purchasing a condo

Real estate lawyers can help not just in the purchase or selling of a house and lot, but also condominiums.

For instance, one of the key aspects in purchasing a condo is reviewing the Status Certificate, which discloses the condo’s reserve fund. Through the Certificate, it can be determined if this reserve fund is enough to cover the condo’s needs in terms of renovations and repairs.

This will help a buyer foresee if a big one-time special assessment fee may be coming down the line to beef up the reserve fund.

Long-term benefits of having a real estate lawyer

Sellers or buyers may be hesitant to engage in the services of real estate lawyers because of legal costs. However, the work these lawyers do will ultimately benefit them in the long-term.

By engaging the services of real estate lawyers, clients can avoid additional unnecessary expenses associated with court battles that could have been prevented at the early stages.

And it’s not just the fees that are avoided, but also the legal trouble itself, which can be stressful for the parties. These factors will help them weigh whether the costs of hiring a lawyer are worth it or not.

The work of real estate lawyers

Hiring a real estate lawyer is both beneficial and cost effective in the long run.

While it may seem expensive at first, having the best legal counsel who understands the details of Canadian real estate law will help give the parties some peace of mind.

In the end, it can even save time and money, since the transaction is ensured to go smoothly with the help of a real estate lawyer.

More articles on the work of real estate lawyers and some news on the real estate industry can be found on our Real Estate page under the Practice Area tab.