Buying and Selling real estate in Toronto involves collaborating with a number of different professionals, one of which is a real estate lawyer who ensures a property under contract to exchange ownership completes without issue or delay. And given a property purchase and sale is often one of the largest financial transactions most Canadians will make, it's well-advised to enlist the services of legal experts who can negotiate, problem-solve, and respond promptly. For those who are purchasing a property, my post outlining what a real estate lawyer does on behalf of the Buyer is detailed in my post called I’m Buying A Property. What Does A Real Estate Lawyer Do? .
In this piece, I explain the role and scope of work completed by a real estate lawyer who is representing the Seller of property in Ontario.
As A Property Seller, Why Do I Need A Lawyer?
For a property to change ownership successfully, it requires a willing Seller and Buyer to enter a legally binding contract, then collectively execute a series of due diligence steps with lenders, utility and service providers, and municipal and provincial governing departments and authorities, and finally exchange multiple documents requiring an extreme level of specificity. It's a complicated system beyond the scope of understanding for most laymen, but a matter of course for a real estate lawyer.
Enlisting the services of a real estate lawyer assures you legal counsel, a professional who can identify potential issues specific to your land and dwelling, and ensure any disclosures or material facts associated with your property are included in an Agreement of Purchase and Sale contract. They will prepare all the legal documents required by a Seller to complete a property exchange and ensure the full financial proceeds of the property sale have been delivered before transferring the property title and releasing the keys to the Buyer. In addition to guiding you through the necessary contractual commitments and obligations, a real estate lawyer can identify potential problems, navigate unexpected issues, and mitigate unforeseen delays or expenses.
Personally, I consider the expertise of a real estate lawyer invaluable, for they understand the nuances of property law, offer rational prudent guidance throughout a process which can often be fraught with emotions, and gently steer clients who may have conflicting opinions or interests in the sale of a property. For example, a lawyer representing the beneficiaries of an estate can advise on the optimum way to sell a property without duress in a timely manner without showing favour to one party over another. They can also find a resolution for a property exchange complicated by divorce, title issues, existing judgements, or registered liens. The lawyer you hire to represent you in the sale of a property is obliged to protect and serve your interests.
Typically, most Sellers who hire a realtor to market their property on the Multiple Listing Service so that it garners the highest price in the shortest amount of time after being exposed to the largest pool of potential bonafide purchasers will enlist a real estate lawyer once a firm and binding Agreement of Purchase and Sale contract has been negotiated with a Buyer. However, it can be beneficial to engage a real estate lawyer in advance of listing your property so they can assess and identify any potential issues which may be specific to the title, the land, the dwelling, or the location of your property. Completing this due diligence in advance offers you greater assurance that any issues or concerns will be identified and addressed before you come to market for sale, and that the appropriate clauses or disclosures will be included in the Agreement Of Purchase And Sale contract before you negotiate a meeting of the minds with your Buyer.
Once the terms of the Agreement of Purchase and Sale have been negotiated and accepted by both the Seller and Buyer, and any conditions on due diligence included in the Agreement of Purchase and Sale have been satisfied and waived by the party making the request, the Buyer's lawyer will execute a title search on the property - usually a couple of weeks in advance of closing - to ensure that there are no liens or charges or outstanding permits or work orders registered against it. If there are, the Seller's lawyer has to ensure the Seller complies with any work orders, closes any open permits, and agrees to pay any outstanding costs from the proceeds of the sale. The title search also checks for easements, rights-of-way and other restrictions that may affect the property and, in the event any of these were not disclosed to the Buyer who subsequently deems them problematic, it's up to the Seller's lawyer to offer solutions to the satisfaction of the Buyer.
Mortgages & Lines Of Credit Registered On Title + Property Taxes
The Seller's real estate lawyer will confirm the mortgage and lines of credit details specific to the property, in addition to any discharge fees, penalties or per diem interest charges that will be owing. They will also verify the annual property taxes and status of payment with the local governing authority. Because the Seller is obliged to provide clear title to the property to the Buyer on closing, the Seller's lawyer will secure a Letter Of Direction from the Seller agreeing to use the proceeds from the sale to discharge any outstanding financing and property tax debts. The Seller's lawyer will provide this information, in addition to any other fees, costs or expenses tied to the property that the Buyer will be obliged to pay once the sale is completed, to the Buyer's lawyer well in advance of closing.
Statement Of Adjustments
Prior to closing, the Seller’s lawyer will review the proposed Statement Of Adjustments that the Buyer’s lawyer has prepared, which lists all the charges, fees and expenses tied specific to the property. This includes the annual property taxes, water/sewage and garbage charges, homeowner association or condominium common expense fees, annual front pad parking permit costs, and/or rental item contracts such as hot water tanks, alarm systems, or hearting/cooling equipment which is being contractually assumed by the Buyer on closing. The Seller's lawyer is obliged to confirm every item tied to the property, in addition to their terms and costs, and provide them to the Buyer's lawyer in a timely manner from which the Statement Of Adjustments will be created. This Statement reconciles the debits and credits of each expense based on the sums owing or prepaid by the Seller as of the Closing Date. The Seller's lawyer is obliged to review and confirm the accuracy of the Statement Of Adjustments for the property provided by the Buyer's lawyer.
The Seller's lawyer will meet with the Seller, usually four to seven days in advance of the Completion Date, to explain and review all the required property documents. Along with signing all the necessary paperwork required to complete the exchange, the lawyer will verify the identity of their client using a valid provincial driver's license or Canadian passport, as part of the legal obligation set by the Financial Transactions And Reports Analysis Centre Of Canada. FINTRAC monitors monetary transactions to identify and prevent illegal activities such as money laundering and funding to terrorist organizations. Realtors are also required to verify the identity of all Buyers and Sellers with whom they do business.
The Completion (Or Closing) Date
On the Completion Date, which is stated in the Agreement of Purchase and Sale Contract, the lawyers for both the Seller and Buyer will confirm the veracity of all the required documents to transfer ownership of the property. The Buyer's lawyer will electronically transfer the balance of funds owed to the Seller to the Seller's lawyer's trust account who, once confirming receipt, will promptly pay any outstanding debts registered against the title of the property so that the Buyer's lawyer can then register any charges or mortgages incurred by the Buyer as security. At that point, the Seller's lawyer will prepare a reporting letter confirming that the transaction is complete, and release the keys to the Buyer or their representative.
After the Seller's lawyer reconciles the debts listed in the Seller's Letter(s) of Direction, and any further expenses owing such as realtor fees, legal fees and disbursements, the remaining balance of funds will be credited to the Seller, often in the form of a cheque, which the Seller can pick up, usually within 24 hours.
Curious how the real estate lawyer's process differs for Buyers? Here's our post: I’m Buying A Property. What Does A Real Estate Lawyer Do?
For most of us, real estate is often one of our largest financial investments, which is why it's wise to surround yourself with a circle of professionals who can guide, negotiate and support you through the process. As a realtor with a comprehensive multi-disciplinary education on housing, and decades of experience in the sales, marketing and redevelopment of Toronto real estate, I offer Sellers and Buyers a rich understanding on the dynamics of the shelter industry. If you're seeking a real estate professional who subscribes to a 'no pressure no hassle' approach to serving your property requirements, please know it would be my pleasure to assist.
If you're interested in Toronto real estate, consider reading some of my other posts:
May my team and I become your realtors of choice, and guide you to the best of the best Toronto real estate as it meets your wishes, wants and needs?
Thanks for reading!
-The Urbaneer Team
Steven Fudge, Sales Representative
& The Innovative Urbaneer Team
Bosley Real Estate Ltd., Brokerage - (416) 322-8000
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