It is no secret the Canadian real estate market is on fire right now with home prices surging across the country, sky-high demand, and record-low housing supply in many cities. These conditions, typical of a seller’s market, are great if you are considering listing some real estate in the region. Whether you want to attract buyers to one of the homes for sale in Ontario or spacious Vancouver condos, it’s important to understand all the steps involved in the selling process. One of those steps is deciding if you need a real estate lawyer or not. This blog post will explore the role of real estate lawyers in Canada, and advice when it’s necessary to hire one.
What Is A Real Estate Lawyer And What Do They Do?
A real estate lawyer or real estate attorney is a lawyer who specializes in real estate law. The real estate lawyer goes through all of the legal requirements of a real estate sale, from drafting and reviewing documents to closing the deal. Here is a brief overview of the lawyer’s responsibilities during a home selling transaction in Canada:
Review the purchase agreement and other legal documents
Normally, the Listing Agent is in charge of drafting and preparing the purchase agreement because it is a pretty standard real estate contract. The real estate lawyer goes over the purchase agreement to verify that it is appropriate and includes all the relevant details. A professional well-versed in the real estate law will make sure that all the clauses needed are included.
Assist in negotiating the terms and conditions
A real estate lawyer might assist with negotiations surrounding the purchase agreement’s conditions during the house sale. If you are not skilled in negotiating, that’s an asset.
Resolve pending legal difficulties
The real estate lawyer will deal with anything from remedying a title issue with disputed property lines to outstanding liens that need to be paid. This person can address any difficulties before your home is put on the market or resolve everything before closing day.
Make closing smoother
The seller’s real estate lawyer will keep the keys to the property in escrow at closing. They will also prepare the statement of adjustment and get the required cash from the buyer’s lawyer. After the money has been received, the seller’s lawyer will first pay any outstanding liens, such as a mortgage or unpaid property taxes. The seller’s lawyer also covers real estate commissions paid to the listing agent and buyer’s agent. The rest of the money will be sent to the homeowner after the closing date.
Do Home Sellers Need To Hire A Lawyer In Canada?
It depends. For the most part, if an attorney is required, it’s required on the buyer’s side of the transactio. However, if you’re looking to sell a home or condo in the complex Canadian real estate market, you’ll want to hire an experienced, competent, and knowledgeable real estate lawyer. It doesn’t matter if you’re selling for the first time or if this is the second or third property you put on the market; there are parts of the process that only a lawyer can do.
For example, only a lawyer may execute a title transfer in Ontario, so you’ll need to engage one to complete the transaction. In the past, the two lawyers involved in the deal would meet at the Land Registry Office (LRO) on closing day to conduct title searches. Today, most of the process can be completed electronically, but only lawyers and law firms have access to Ontario’s Electronic Land Registration System to register a property transfer or look for land property records.
Something similar occurs in other provinces, like Nova Scotia, where only real estate lawyers can access the property registry. In Alberta, home sellers also need a lawyer to be part of the process, but this professional doesn’t need to be a specialist in the real estate sector.
If I Have A Lawyer, Do I Still Need A Listing Agent?
Though real estate lawyers and real estate agents appear to be similar at first sight, they have distinct roles and responsibilities in property transactions. And yes, they are both critical to the process, and we don’t recommend you to proceed without either of them.
The real estate agent handles and processes any paperwork, including contracts and purchase agreements. They assist in finding the best buyer who will appreciate and care for your beloved property by listing the dwelling and having other duties like organizing, staging a home, and running open houses.
On the other side of the spectrum, attorneys will document and evaluate the transaction paperwork and help you resolve any legal issues with titles and purchase contracts. The real estate lawyer will negotiate contract clauses on your behalf and will always safeguard your best interests, acting as your trusted legal advisor at every step in the process.
In addition, if at some point the deal goes sour and you need court representation it is wise to have a lawyer ready to intervene.
How Much Does A Real Estate Lawyer Cost In Canada?
Your home selling budget will most likely include legal expenses, but how much money are we talking about here? For a home-selling transaction, you can expect to pay around $1,500 or more depending on factors like the location, the home value, how experienced the lawyer is, and how much they charge for their services.
According to the Canadian Lawyer’s 2019 Legal Fees Survey, the most popular way to bill customers is a combination of flat fees and hourly rates for law firms of all sizes. The hourly rates depend on the professional experience and the practice area. For real estate, the national average in 2019 was around $195 for a lawyer with one year or less experience, to $452 for an attorney with over 20 years of experience.
The national average flat rate for a residential real estate sale and purchase (including mortgage) was between $1,400 – $1,600 the same year. Legal fees usually pay for the lawyer’s time and don’t include any of the costs they need to pay as part of the transaction. In most cases, the lawyer’s fees are paid off on closing day as they are included in the sale’s profit.
While purchasing a home in Canada can cost up to a million dollars, legal fees are around $1,000. It’s well worth it to pay a little money for protection and peace of mind, especially in a transaction so significant.
What Should You Look For In A Real Estate Lawyer?
Make sure that the lawyer of your choice is specialized in real estate law. To be considered specialized, attorneys in Canada must have at least 30% of their practice in that single area.
Also, look for someone experienced in your market. A professional who has previously worked on real estate transactions in your area will be aware of where issues with house sales typically develop, and they will make sure that your interests are adequately taken care of.