Why do you need a Lawyer in buying a Home?

In Ontario, all closings must be done by a lawyer. I highly recommend a real estate lawyer for handling your purchase. I have seen too many transactions go awry when clients used lawyers not familiar with real estate transactions such as immigration lawyers or family lawyers.  It would be like going to an ear nose and throat doctor for open heart surgery.

The lawyer is responsible for so many behind the scenes pieces of making sure your purchase goes smoothly that saving a few hundred dollars on this crucial element may not be the best place to be frugal.

The closing lawyer will do some of the following things to make sure your purchase goes smoothly.

Title Search: They will check to make sure that the home can be sold and see if there are any liens, mortgages, encroachments or other claims to the title so that they have to be addressed by the lawyers and lenders beforehand. The lawyer will make sure that the title can be transferred on the date you are to acquire the home.

Title Insurance: Title insurance will protect you in case there are any problems with the title after your purchase.  After the title search is complete, the lawyer will obtain title insurance for you. Most lenders require it but if not, you should always get title insurance anyway.  It will protect you against any claims in the future for the duration that you own the home.  

It will protect you against: Unknown title defects (title issues that prevent you from having clear ownership of the property); ■ Existing liens against the property’s title (for example the previous owner had unpaid debts from utilities, mortgages, property taxes or condominium charges secured against the property); ■ Encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property); ■ Title fraud; ■ Errors in surveys and public records; and Other title­ related issues that can affect your ability to sell, mortgage, or lease your property in the future. Your title insurance policy will protect you as long as you own your property, and will cover losses up to the maximum coverage set out in the policy. It may also cover most legal expenses related to restoring your property’s title.

Well worth a one-time purchase of a few hundred dollars.  

Your Lawyer will Coordinate the closing between the seller’s lawyer, the buyer’s lawyer, the lenders, insurance company, tax office, condominium corporations, other parties as necessary and your sales representative. The lawyer will prepare a settlement statement for closing with total costs associated with the purchase.

They will Review documents with you:  The closing lawyer will review all the documents associated with the closing including the deed, deed of trust, settlement statement, loan documents and any disbursements. 

They will Record the title and disburse funds :  The lawyer is responsible for transferring the title, recording it with local land registry office and distributing funds.  Your lender will send the mortgage funds to your lawyer and your lawyer will send the funds to the seller’s lawyer. 

Questions: 

Is hiring a lawyer expensive? In the grand scheme of things, no. A lawyer to purchase a home in Ontario can range anywhere from $1200--$3000 depending on the complexity of the purchase.  For a normal purchase, I would recommend budgeting $1800 for your lawyer fees. 

Who will pay the lawyer? The seller or the buyer? - Buyers and sellers will each have to hire their own lawyer. You cannot use the same lawyer for the same transaction.

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