The Lawyer’s Part of Purchasing or Selling Residential Real Estate. What to Do and Expect?

After all conditions are waived, typically the listing real estate office will send your Real Estate Purchase Contract and contact information to the lawyer you have chosen.

The lawyer will then review the Contract and do a tax and title search, including a search of liens and other encumbrances affecting the property. If something unusual is encountered, the lawyer may contact you at this stage.

If you are a Seller and if you have not already arranged for an updated Real Property Report (Survey), then call the law office and discuss that as soon as possible. Note that usually a Seller must provide a Real Property Report that shows all improvements built on the property, including fences, and it must have on it a Certificate Compliance from the City. (This requirement does not apply to most condos – but it does apply to bareland condos, where you own the land around your unit.)

If you are a Buyer, ensure at this time that all the money you will need to pay will be available to you in a bank draft by at least ten days before the possession date. If you need to make arrangements to get the money out of an RRSP, or investments, or by way of interim financing of another property, you need to make these arrangements now, as sometimes your bank will need time to make the money available.

If you are buying and getting a mortgage, do whatever your lender may still need in order for your lender to finalize your mortgage. Mortgage companies may need a lot of time to process your mortgage, so do this as soon as possible. If you are getting a mortgage, the lawyer will have to wait to get mortgage instructions from your lender.

Once a law office receives mortgage instructions from your lender, the law office will calculate adjustments to your purchase price, and the net amount of your mortgage advance.

Typical adjustments are for taxes, condo fees and homeowner’s association fees. For example, if a Buyer of a condo takes possession on September 15,

the Buyer will have to reimburse the seller for one half

(%) of September’s condo fees. If taxes on the condo are paid up to the end of the year, as is most often the case, then the Buyer will have to reimburse the Seller for those taxes pre-paid for the period September 15 to December 3 l.

Mortgage advance refers to the net amount your mortgage company will be paying to the lawyer to

complete your purchase. Since some lenders may take off high ratio fees, application fees, appraisal fees, a tax hold-back, or the first month’s interest, or even a courier fee, that will leave you with less than you may expect to receive under your mortgage. (You should ask your lender or broker about these deductions when you first apply for a mortgage).

Once these adjustments are calculated, the law office will call you. Note that lawyers will typically deal with transactions in the order in which they close (that is, by possession date). Therefore, if your possession date is not for several weeks, you will not likely receive a call until about two weeks before your possession date.

If you are going to be unavailable or difficult to reach, call the law office and let them know.

When the law office calls you they will set up an appointment between you and the lawyer. You will be told what you will need to bring in with you to that appointment. Note that all money payable on a real estate transaction must be paid by bank draft or certified cheque which you will have to obtain from your bank and bring to your appointment with the lawyer. You may have to bring in proof of fire insurance or, if it’s a condo, your condo documents. You will also have to bring picture I.D. with you of a type required by your particular lender, usually a valid driver’s licence and a credit card.

When you meet with the lawyer, the lawyer will review with you the title to the property, any encumbrances on title, and the Real Property Report or Condo status. The lawyer will review your mortgage and all calculations. If you are buying and placing a new mortgage, you will have to sign a lot of documents. Come prepared for that and if possible avoid bringing small children with you as the process can take some time and you should want to learn what you can about your mortgage and other aspects of the transactions.

The lawyers will ensure that the proper amounts are paid and arrange for the transfer of title. The listing agent will typically contact the Seller’s lawyer to ensure that everything has been done and that keys can be released.

The lawyers will payout any liens against the property that are not being assumed, and arrange to obtain a registered discharge of those liens. For example, if the Seller had a mortgage that has to be paid, then the lawyers will contact the Seller’s mortgage company, arrange for a payout of the Seller’s

©2006 – All Rights Reserved – Bill Fric

420, 1925 – 18 Ave NE Calgary, AB T2E 7T8

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