Of all the things you need to do during your home buying process, working with a trustworthy real estate lawyer (or notary in Quebec) could be the most important. Your lawyer will calculate the majority of your closing costs and will facilitate the transaction between you, the seller, and the bank on closing day. With this in mind, it’s important to work with someone you trust from the minute you’re ready to buy.
A real estate lawyer has one job: to make sure all of your paperwork and transactions are filed and completed accordingly.
This job might sound easy but includes everything from reviewing your offer to purchase and conducting a title search for you, to registering the home in your name and making sure all of your payments are made in full and on time. They will conduct accurate research to ensure that the title and ownership are finalized properly and that all facts and figures are correct. Knowing the complexity of the transaction, it’s a good idea to find a lawyer who specializes in real estate.
As soon as you are ready to sign an offer to purchase, you should involve a real estate lawyer. Because it’s a legal contract, and the implications of breaking it could be costly, it’s important to have someone clarify all of the terms before you sign.
A few days prior to closing day, you’ll meet your lawyer to complete your mortgage and title documents. Your job on this day is to give your down payment (minus your deposit) to your lawyer, along with any other remaining closing costs. Your lawyer’s job is to ensure all of your payments are made and that all of your paperwork is signed and filed. When everything is completed on closing day, your lawyer will give you the deed and the keys to your new home.
When choosing a real estate lawyer or notary, it’s a good idea to work with someone who:
Don’t be afraid to ask lawyers about their experience, and their fees, before agreeing to work with someone.
Lawyer/notary fees depend on the complexity of the transaction as well as their expertise. Most start with a base legal fee, which often varies with the type of home you are purchasing (detached, condo, etc.). From there, you can expect to pay for disbursements—faxing, photocopying, and carrier fees—and registration fees like title registration, title insurance, and registering the deed.
|Legal Professional Services:||$750 - $1,500|
|Disbursements||$200 - $500|
|Title Insurance||Varied based largely on mortgage size - as your lawyer|
Legal fees are what a lawyer charges for serving on your behalf. Essentially, they are service fees used to cover the overhead needed to run their business, which includes rent, insurance, equipment, and other dues.
Disbursements, on the other hand, are expenses the lawyer charges you for any out-of-pocket expenses they have had to pay ahead of time for you. Disbursements may include faxing, photocopying, carrier fees, municipal tax searches, and title registrations you have asked your lawyer to complete.
When you pay a title registration fee, you are simply paying for your lawyer to change the ownership of the home from the seller’s name to yours in all municipal, regional, and national systems.
Title insurance, however, is purchased to protect your ownership in the event that an undetected title defect is found. Possible defects include but are not restricted to: violations of municipal zoning by-laws, existing work orders, encroachments on adjoining property, realty tax arrears, and more. Should something come up, title insurance protects you from having any liability.
Both title registration and title insurance fees are paid at the time of closing.
On top of paying legal fees, you will be handing over a number of other payments to your lawyer/notary. First, you will pay the remainder of your down payment. To do this, subtract your deposit and pay whatever is leftover.
Second, you’ll need to be ready to pay the land transfer tax. Land transfer tax varies by province and even municipality (in Toronto) and actually needs to be given to your lawyer before closing day.
On closing day, your lawyer will submit your land transfer tax to the appropriate government office.
Even though mortgage default insurance is added to your mortgage balance and paid off through your mortgage payments, buyers in Manitoba, Ontario, and Quebec are responsible for paying PST on CHMC insurance at closing. Your lawyer may also ask for an underwriting fee for processing the default insurance application. Finally, if the seller has prepaid their property taxes, any utilities, or HVAC contracts, you will need to pay them back a prorated amount from the day you take possession to the day they have paid up to.
The best ways to find a real estate lawyer are to ask for recommendations from your agent, family, friends, and lenders you are working with and trust. A good reference is worth more than any amount of publicity you find online, so ask around.