What Does the Lawyer Do in a Real Estate Deal? (purchase)
By Brian Madigan LL.B.
You might wonder what a lawyer is supposed to do in a real estate deal? According to the standards of practice, when undertaking the representation of a client in the purchase of a residential property, a solicitor must always:
1) Prior to the execution of an agreement of purchase and sale
• Advise with respect to the agreement, with reference to the title opinion available from the purchase
2) After execution of the agreement
• Review the agreement immediately
• Advise with respect to the need for a new survey or updating of the survey
• Arrange for the preparation of a new survey, if necessary
• Advise with respect to the manner of taking title
3) Commencement of the processing of a file
• review the title search and check details of size of lot, mortgages etc. against the terms in the agreement of purchase and sale
• consider the applicability of section 50 of the Planning Act, assist in any application for severance, if required, make any searches of adjoining properties that may be required
• check plan of survey for encroachment of buildings, fences and eaves, size of lot
4) letter of requisitions
• review draft requisitions
• incorporate any of the problems arising out of the search, the agreement of purchase and sale, the plan of survey and other inquiries
5) review documents and correspondence from vendor’s solicitors
• review Undertakings
6) interview Clients to review file and sign documents
• review of search
• review plan of survey especially with respect to municipal by-laws, encroachments, agreement of purchase and sales, registered restrictions, boundaries, location of buildings and out-buildings and access to the property
• take instructions with respect to extensions and further undertakings
7) Report
• Preparation of Title Opinion
• Review of Fee to be charged
These are the seven areas in a transaction where the solicitor is expected to have specific and direct dealings with the matter. They cannot be delegated to a third party paralegal, no matter how experienced that person may be.
It is evident that this expectation is not always observed by all law offices. Nevertheless, this is intended to be the minimum practice standard. In some law offices a solicitor will have a greater involvement. These are simply the matters that should not be delegated. They are considered to be that important and that integral to the transaction.
In all circumstances, the law firm will be responsible for the work undertaken by its employees and those to whom it has delegated a portion of the work.
From the perspective of a real estate agent, you will notice that a review of the agreement, that is, prior to execution, is the personal responsibility of the lawyer acting for the purchaser in every case. The mere fact, that you don’t send it, doesn’t mean that the client doesn’t get charged for this review. It’s just too late for any worthwhile input.
You will notice the importance of the survey to the purchaser’s solicitor. Title insurance is not an answer. It is simply a method of risk management. The answer whatever it may be, is still found in the survey. If there is one, get it to the purchaser’s solicitor as soon as possible, and if there isn’t one, let them know right away. Don’t hold onto this information. The clock is ticking, and you’re the one who set the time limit. So, be careful!
In any event, it’s important to know the roles of various parties assisting your client in the transaction.
Brian Madigan LL.B., Realtor is an author and commentator on real estate matters, Royal LePage Innovators Realty
905-796-8888
www.OntarioRealEstateSource.com
