Picking the right solicitor is vital for any real estate transaction, particularly for a purchase. Like mortgage advisors, solicitors have deadlines they must meet. These deadlines are often overlooked, as clients typically do not have a solicitor ready and tend to accept the first one referred to them without fully understanding the scope of the lawyer’s responsibilities. Real estate transactions involve multiple contracts, which are also frequently overlooked.
In this article, we will cover:
- The duties and roles of a solicitor at each stage of the transaction
- What to look for in a solicitor
- Documents you can run by your lawyer during the process of your transaction
(purchase/sale, mortgage agreement, etc.)
The Duties and Roles of a Solicitor at Each Stage of the Transaction
While most forms you may sign can be read and understood by some clients, this right is often not exercised. If you’re not the type to read through your documents or find the language difficult to understand, it is highly encouraged to review what you are signing.
Selecting Your Realtor
When you select your realtor, there are various forms that their office will have filled out and will request you to sign. Depending on whether you are buying or selling, these documents will differ. These documents should be thoroughly reviewed, as clients often sign without realizing
they may be agreeing to something called “exclusivity.” Exclusivity refers to the exclusive rights for a particular brokerage or agent to list and sell your property for a set period of time if you are selling. In the case of buying, it refers to the exclusive right for the realtor to represent you.
Reviewing Your Offer Before Submission
Property purchases and sales happen so frequently that most provinces have developed generic templates for real estate agents to follow. These templates include a general set of terms that cover aspects not often discussed with clients (for both purchasing and selling). As the industry evolves into a marketplace with quick turnarounds, mistakes can occur that may end up costing clients tens or hundreds of thousands of dollars. Although a seasoned, expert, and ethical realtor can define the terms you are committing to, it may be in your best interest to review the agreement with another party, particularly your solicitor.
Upon Acceptance
This section applies more to the purchasing side of a real estate transaction. Upon acceptance of an offer, your solicitor must complete something called a “Title Search.” A Title Search essentially pulls the legal history of the property, showing past owners, sale prices, past mortgagees, and importantly, any work orders or city registrations on the property. For instance, sometimes work is undertaken on a property, and the municipality finds out only after the fact. This title search is crucial for uncovering potentially expensive or damaging details about your soon-to-be property. Your solicitor can use this opportunity to review the entire agreement if they haven’t already, including any particular conditions or stipulations that could affect the transaction.
Upon Mortgage Approval
While there are documents signed prior to obtaining mortgage approval—such as privacy and consent documentation—that you can ask your lawyer to review, the mortgage approval itself is a key document for your lawyer to examine. Just as you would want a seasoned and ethical
realtor, having a knowledgeable and ethical mortgage advisor is ideal for thoroughly explaining these documents. They bind both you and the lender to a contract regarding offering your property as collateral for a loan. While it may seem like a one-way transaction (the buyer receives a mortgage to buy a home), it is actually reciprocal. The mortgage approval states that for the selected term, you will pay a specified interest rate, which benefits the bank as well. Due to this, banks are careful about what they stipulate in the agreement, often protecting their interests more than necessary.
What to Look for in a Solicitor
Like all service providers, you want someone knowledgeable and attentive. Just as an individual may use a criminal lawyer if charged with a crime, your real estate lawyer represents you and your interests. Here are some key qualities to look for in a solicitor:
Someone who schedules a meeting with you (virtual or in-person): A good lawyer will either setup a small meeting or have a trained associate meet with you to explain what to look out for or expect. Many real estate lawyers today have become complacent regarding the “advice-giving”
aspect of their role. A good lawyer takes their duty to verify the identity of every client seriously.
Requests for documents at different stages of the transaction: A diligent real estate lawyer will request documents at various stages, showing that they are acting promptly rather than procrastinating, which could cost you.
Informs you of upcoming needs: Two major needs are home insurance and closing costs. Many lawyers leave this until the last minute, forcing clients to rush into finding coverage. Although your lawyer will receive instructions from your chosen bank regarding insurance coverage,
informing you in advance allows you to hunt for the best deal. Closing costs—typically including land transfer tax and legal fees—can amount to 3 to 4 percent of the purchase price, and many clients are not alerted by their banks to prepare these funds.
Breaks down fees associated with legal work: Various fees are associated with completing a real estate transaction, including government registration fees for land, title insurance, and service fees. These often go overlooked as they are pulled from the overall transaction total,
which includes mortgage funds, down payment, and other credits.
What Documents Can You Run by Your Lawyer?
- Real estate agreement between you and your realtor/real estate brokerage for representation
- Agreement of Purchase and Sale (before submission and after acceptance), including any schedules
- Bank or mortgage brokerage consent and privacy forms – these sometimes include acceptance into marketing programs or disclosure of your information to other lines of the bank’s business
- Mortgage approval or commitment
- Bank/brokerage closing documents – these documents depending on where the mortgage is secured include disclosures, any fees associated with obtaining the mortgage (typically only applying to Alternate Lending “B” or Private Mortgages)
You’re paying your solicitor—whether it comes from your mortgage proceeds or not—so you should maximize your transaction to ensure it goes smoothly and serves your best interests.