Buying a new home is one of the most significant investments you’re likely to make, so you want it handled the right way. While it may be tempting to want to look at possible savings when it comes to legal fees, this could prove to be a costly decision. Here’s why.
Protect Your Investment
Buying a home is exciting, but protecting your investment is paramount. The legal complexities can be overwhelming. It’s always best to consult with a real estate lawyer to be sure that you’re making the best choices for you and your family. For example, who should hold the title of the property? Have you considered any potential tax implications? Are certain types of mortgages better suited to your needs than others? Are there matters registered on title that will impact the use and enjoyment of your new property?
The right lawyer will take you through this process, protecting your rights and investment, and possibly help you think of things you never even considered.
Signing An Offer To Purchase
An offer to purchase is the legal contract that you enter into with the seller, when buying a home. It’s important to ensure that you not only understand the terms and conditions, but that your rights are covered and future expectations of the property are met.
When you hire a lawyer, he/she can advise you on escape clauses if you need to back out of the deal, ensure that you’re in compliance with municipal by-laws and zoning regulations, and ensure that the property you’re about to purchase has no illegal activity associated with it, or restrictions registered that will impact your use and enjoyment. A lawyer can also request that your deposit be secured in a bank account in order to protect it. Avoid future disputes by clearly stating what items stay in the home as part of the purchase agreement. Your lawyer can be instrumental in this.
Uncover Hidden Costs
When buying a home, there are always unexpected costs associated with the purchase:
- Land transfer taxes
- registration fees
- title searches
- other procedural necessities should be factored into your finances when determining how much you can afford.
Don’t be caught off guard.
If you’re buying a home that has not yet been constructed, your purchase agreement will be quite long and complicated. It’s always best to have a lawyer go over it, to ensure you understand all the complexities of the agreement.
Type of Properties
Depending on what type of property, your lawyer needs to assist with the due diligence. This is one of the most important functions of a real estate lawyer. From condominiums that have status certificates, or rural or cottage properties which deal with a multitude of issues such as road access, water and waste concerns and water access issues.
Read more about property easements.
The type of property will drive the scope of the due diligence, as will other matters such as tenanted properties, homes under renovation or recently renovated, homes with a pool or homes other than a single family residence and more. Be sure to speak with your lawyer and have a full discussion about the property, so that they can conduct the appropriate searches.
If you are buying a condominium unit, you should have a lawyer review the condominium status certificate to determine whether there are concerns related to the unit or the building as a whole. It’s also recommended that you review the condo’s rules and by-laws, as they will affect your everyday use of the property.
After You Sign the Agreement
It is always a good idea to get your lawyer involved in the drafting and negotiation of the Agreement of Purchase and Sale. Not everyone uses a lawyer for this purpose, and if you have already signed the Agreement, and if you are obtaining bank financing to purchase, your lawyer will draft and review the mortgage documents and negotiate the terms when necessary.
Amongst other things, your lawyer will assist with the final meter readings for utilities and adjustments, so that you don’t get caught with unnecessary expenses. Your lawyer will also review your insurance documents to make sure everything is in order.
When purchasing a home, there are two options available to protect your interest and minimize your risks in a real estate transaction. They are:
- The traditional lawyer’s opinion on title, and
- Title insurance which is readily available from Stewart Title Guaranty Company, First Canadian Title Insurance Company, Chicago Title Insurance Company and Lawyers’ Professional Indemnity Company.
(a) Your title insurance policy will insure you and your interest in the property, as of the date of your purchase. If a defect in title shows up, no matter how that defect arose and whether or not a solicitor acting reasonably and in accordance with good professional standards would have discovered it. It will also insure you against any forgery, after your purchase date, of a document by which someone else claims to own an interest in or have a lien on your title. There is no need to prove solicitor’s negligence before damages incurred by you are compensated for.
(b) The title insurer may agree, and in this case has agreed, to insure over unknown problems which may arise as a result of there not being an up-to-date survey of the property. You should however, understand that insuring over such problems does not mean that such problems will not occur. It simply means that the insurer will pay the damages that you may incur as a result of such problems.
Further, title insurance can in many instances be cost effective. Although a title insurance policy will not have the effect of increasing or decreasing the legal fees expended, it can in many instances significantly reduce the disbursements payable on your file. Title insurance can thereby reduce your overall expenditure by potentially providing cost savings on real estate purchases as searches are rationalized and streamlined.
Title insurance also allows the property owner to have a direct claim against an insurance company if a specified title risk causes a loss regardless of the source of that loss. It is important to remember that when a purchaser of real estate receives a lawyer’s opinion on title, the purchaser only has a claim if he or she can prove that the cause of the loss fell within the scope of the lawyer’s retainer and that the lawyer acted negligently in respect of that issue. A loss arising from an error on the part of any other party would not generally be covered by the lawyer’s errors and omissions insurance.
Hire A Real Estate Lawyer When Buying A House
To sum it up, working with a lawyer for the purchase of your new home will cost you something in legal fees, but the service and potential savings are invaluable. Contact Hummingbird Lawyers LLP to learn more about the real estate services that we provide and get to know our professional team.
Title insurance will in certain circumstances cover these additional risks. Therefore, it is our opinion that in most circumstances title insurance will have both an economic benefit to you and provide a greater degree of “peace of mind” with respect to potential future risks. It is therefore our intention to utilize a policy of title insurance in most purchases, and, unless we hear from you to the contrary, prior to signing this Retainer, we shall proceed to close your purchase transaction on the basis that you have granted to us your express consent to purchase a policy of title insurance in the event we deem it advisable.