Buying or selling a home is the largest business transaction most people will ever make. You probably have a good idea of what part your realtor plays in the real estate process, but your lawyer’s role may not be so clear.
This is not unusual, as people usually know that they need a lawyer as part of the home buying or selling process, but are not always sure why. Not many people know what goes on behind the scenes, and further, what a real estate lawyer does in addition to assisting with home purchases and sales.
Below is a short attempt to clarify what a real estate lawyer does and to provide an explanation of their role in various real estate transactions including sales and purchases.
What Does An Ontario Real Estate Lawyer Do?
You need a real estate lawyer when buying or selling your home to ensure that ownership is properly transferred and recorded as well as to protect your legal rights during the transaction.
However, this is just the tip of the iceberg of what a real estate lawyer can do. There are many aspects of legal work that relate to land or real property.
This includes helping individuals and businesses navigate legal issues related to:
- land ownership
- land use
- land development and subdivision
- title transfers
When Do You Need A Real Estate Lawyer
In addition to assisting you when buying or selling a home or commercial property here are some situations when either a residential or commercial real estate lawyer is useful. Situations where a residential real estate lawyer can help include:
- When you are leasing or renting a building or property
- Land disputes with neighbors or co-owners
- Dealing with transfer or succession plans for a family cottage
- Transmission of a property to an executor, beneficiary, or surviving spouse
- Independent legal advice related to transactions that involve spouses
In addition to the above, situations where a commercial real estate lawyer can help include:
- Advising and facilitating development, rezoning, or severance of land
- Completing due diligence in regard to potential land investments
- Negotiating and reviewing leases
- Refinancing of a property
Do I need a Lawyer before I enter a Real Estate Contract?
The reality is that most people do not find a lawyer until after they have already signed a contract of purchase and sale. However, there are certainly ways that your lawyer can assist before the contract is signed. This is particularly relevant to commercial real estate transactions.
When an experienced real estate investor is considering the purchase of a large plot of land or commercial building, they will often get their lawyer involved early in the process to assist them with due diligence. If you have ever bought or sold a business, you will probably already be familiar with the term due diligence.
Essentially, due diligence is the industry term for “doing your homework” before making a large purchase or investment. Real estate due diligence, such as title searches, or searches for encumbrances or liens can often save time and money. This is because possible obstacles are discovered early on in the process, and an educated decision can be made on whether an investment is worth pursuing.
A real estate lawyer can also review your contract of purchase and sale before you sign, as well as helping to negotiate, mitigate or point out any legal issues before you get caught in the midst of the deal.
Real Estate Lawyer Responsibilities
The responsibilities of your lawyer can change depending on the requirements of your real estate transaction. For example, the review of a commercial lease will require a different level of involvement than the purchase or sale of a residential home.
In most real estate transactions, the lawyer’s role includes:
- Information gathering
- Due diligence
- Document preparation and registration
- Record-keeping and filing
- Assisting with financial issues, such as mortgages or deposits
What Does A Real Estate Lawyer Do For Buyer
Responsibilities of the buyer’s lawyer can include:
- Reviewing the title of the property to check that the seller has the right to sell, and to verify that there are no other issues with the title of the property;
- Reviewing the agreement of purchase and sale;
- Act as an intermediary between you and your mortgage lender;
- Explaining insurance requirements and ensuring you have home insurance and possibly title insurance in place;
- Attend on the signing of legal documents, explaining the purpose of the documents, and answering any questions you may have;
- Holding closing funds in trust along with any funds provided by your mortgage lender, and transferring funds to the seller’s lawyer at the appropriate time, so the transaction can complete.
What Does A Real Estate Lawyer Do For Seller
Responsibilities of the seller’s lawyer can include:
- Review of Agreement of Purchase and other legal documents
- Assisting with negotiation of terms and conditions;
- Facilitating payout of seller’s mortgage if necessary;
- Attending on the signing of legal documents, explaining the purpose of the documents, answering any questions you may have;
- Exchanging legal documents with the buyer’s lawyer;
- Ensuring all legal and financial closing conditions are satisfied; and
- Closing the transaction.
How Can I Work with My Real Estate Lawyer
People often ask how they can help to make their purchase or sale go smoothly.
Your initial responsibility is choosing a lawyer and connecting them with your real estate agent.
Keeping lines of communication open is key when working with a lawyer on your transaction, especially if timelines are tight. Being available when needed to sign documents and responding promptly and carefully to requests for information can go a long way to ensuring your transaction is completed easily and efficiently.
Still have Questions?
Regardless of whether you are selling, leasing or purchasing, it is your lawyer’s job to explain the process and to protect your rights and interests throughout your real estate transaction.
In addition to the legal aspect of a transaction, your lawyer often plays a large role in managing the financial part of a real estate transaction, keeping the various parties on track, and overall ensuring a smooth closing date.