Buying a home entails a lot of transactions and paperwork. From making an offer to purchase and perhaps counter offer(s), putting down a deposit and securing a mortgage, to paying taxes and insurance and finally the remainder of the down payment. Between all these activities and participating parties, a great deal of coordination is required. This is where your real estate lawyer comes in. Your lawyer makes sure all the transactions and paperwork is filed accordingly and all payments have been made in full and on time.
Given the complexity of real estate transactions and the significant capital involved, it is best to use a lawyer who specialises in real estate transactions.
According to the Canada Mortgage and Housing Corporation (CMHC), your real estate attorney should:
- Be a licensed full-time lawyer/notary
- Live/work in the area
- Understand real estate laws, regulations and restrictions
- Have realistic and acceptable fees
- Be able and willing to explain things in language you can easily understand
- Be experienced with condominiums, if that’s what you are buying
Real estate lawyer responsibilities: Your real estate lawyer will oversee a number of transactions, including but not limited to the following:
Title insurance: Title insurance is necessary to protect yourself and the lender in the event of a dispute over ownership of the property. The title insurance may be chosen by the lender or by your real estate lawyer.
Land transfer tax: Land transfer taxes vary by province and in Ontario you are responsible for a municipal land transfer tax in Toronto as well. You can work out the amount you will be required to pay using a land transfer tax calculator like the one provided by Ratehub.ca. You must provide the funds for the Toronto land transfer tax to your Toronto real estate lawyer prior to closing. On the actual day of closing, your real estate lawyer will ensure these funds are handed over to the appropriate government office.
CMHC insurance: While you are not responsible for paying for the CMHC insurance at closing, since it is financed through your mortgage, you are still accountable for covering the PST. You might also require an underwriting fee for processing the CMHC application.
Remaining down payment: Most sellers require a deposit amount when you sign the Offer of Purchase and Sale. If for whatever reason you back out, you lose the deposit. However, if you do go through with the purchase, your deposit counts towards your down payment. If the deposit does not fulfill the down payment requirements, you must provide your real estate lawyer with the necessary funds to make up the difference.
Real estate lawyer fees: Lawyer/notary fees depend on the complexity of the transaction and the lawyer’s expertise, but generally fall in the range of $700-$1000. As is the case with selecting all the parties involved with your home purchase, you should compare real estate lawyers and seek out referrals and recommendations before settling on your provider. Your lawyer’s fees should be competitive and you should have no doubts as to their expertise and ability to fulfill their responsibilities in your home purchase.