Purchasing a home – why you need a real estate lawyer

Guest blog by Ali Tisdall, Kahane Law

As a real estate lawyer, I sometimes get asked what exactly I do – which is an excellent question, especially if you’ve never bought, sold or refinanced a home in Canada before. Unlike in the States, where title insurance companies handle the transfer of funds from buyer to seller or from lender to buyer, in Canada, this responsibility typically falls with real estate lawyers. That means if you are buying, selling or refinancing property, you will likely need to retain a lawyer to close your transaction. The question then becomes, what should you expect when you meet with the lawyer and on closing?

[Note: This Article pertains to real estate transactions in Alberta specifically]

In a purchase and sale transaction, each of the buyer and seller will typically want to (or have to) retain their own respective lawyers (although there are circumstances where both sides can use the same lawyer or law firm if they want to). If the buyer is going to be using mortgage proceeds to assist them in purchasing the property, then their lawyer can usually also represent the lender in the financing portion of the transaction. Similarly, if a homeowner already owns the property and is refinancing, their lawyer can usually represent both the homeowner and the lender.

In a purchase transaction, you will want to decide who your lawyer is once the purchase agreement has been signed and advise your realtor and mortgage broker of your decision. Then, once all conditions have been waived and the transaction has gone “firm”, your realtor will arrange to have conveyancing sent to your lawyer via the seller’s real estate brokerage. Conveyancing will include your purchase contract and any associated waivers or amendments, which will assist your lawyer in preparing your purchase documents. Meanwhile, your mortgage broker will arrange to have mortgage instructions sent to your lawyer via your lender. Mortgage instructions will assist your lawyer in preparing your financing documents.

Once all documents have been prepared, the paralegal assigned to your file will be in touch to schedule you in to sign documents with your lawyer and to advise you on what you will need to bring with you to your appointment. Items that you will have to bring with you will typically include:

• identification (government-issued);
• bank draft (made payable to the law firm in an amount equal to the balance owing to the seller, less mortgage proceeds, plus legal fees);
• void cheque (for your lender, for mortgage payments); and
• confirmation of insurance.

Once you’ve meet with your lawyer to sign documents and have provided them with all required items, your lawyer will request funds from your lender. Then, on your possession date, your lender will wire the mortgage proceeds to your lawyer who, in turn, will courier the balance owing to the seller’s law firm. Once the seller’s lawyer has received the balance owing, your realtor will contact you to let you know that keys are ready to be picked up.

Just as a note: there are always possibilities of day-of-closing delays, particularly in getting mortgage proceeds in time to send the balance owing to the seller’s law firm by noon on your possession date. If funds aren’t received by the seller’s law firm by noon, late interest will begin to accrue and you likely won’t be able to move in until later that day. If funds aren’t received by the seller’s law firm that day, there’s a chance possession may be delayed until you’re actually able to close. Although these circumstances are rare, it’s important to plan ahead so that you aren’t sitting with your moving trucks outside of your new home, unable to move in. I always recommend that buyers push out any moving rentals or services until the day after their possession date, just in case of a delay in possession.

While real estate transactions can feel overwhelming if you are new to the game, they follow a fairly predictable formula which your realtor, mortgage broker and lawyer can help you navigate. Should you have any questions about the closing process for your real estate matter, you can always reach me by email (atisdall@kahanelaw.com) or phone (403.910.2591). You can also follow me on Instagram at @thesyclife. This is the first of three guest blogs on real estate transactions. Watch for the next two over the coming weeks!