Closing Your Home? What To Know And When To Call Your Lawyer

Posted on March 7, 2024 |

The mortgage closing process is famously complex. There are a lot of contracts to sign and big decisions to make. That’s why bringing in a real estate lawyer is a game-changer. While your real estate broker or mortgage lender can give you advice, a real estate lawyer dives deep into the legal side of things to ensure everything is above board and complies with the law while also making sure you are aware of any issues with the property you are purchasing.

When Should You Involve Your Lawyer In Your Closing?

Most would think that you really only need a real estate lawyer before you sign any contracts or agreements however, involving a real estate lawyer from the start, can make sure that you avoid various issues in the purchasing process as they hold your hand through your mortgage pre-approval, negotiations, and closing too. Real estate lawyers are essential for making sure property deals go smoothly. They check all the legal papers, like the Agreement of Purchase or Sale, they also look into property taxes, any claims against the property, and make sure the title is valid. Plus, they figure out how much tax you’ll owe when you close the deal.

If there are any legal problems involved with the property sale, a real estate lawyer can help sort them out. But, not every real estate transaction is the same. For example, if you’re buying a condo, it’s important for your lawyer to review the Status Certificate. This document tells you how much money the condo has saved up in reserve and if it’s enough for future repairs so that you can avoid getting stuck with random bills to fix things throughout the property which should have been taken care of by your condo fees. A real estate lawyer doesn’t just look at the purchase, they look at everything as a whole, to help you make smart, informed decisions across the board.

Why Do I Need a Real Estate Lawyer When I Close?

Traditionally, real estate transactions were closed by lawyers at a Land Registry Office, where they conducted title searches. Subsequently, both lawyers would meet there to exchange documents and keys and formalize the transfer. Today, thanks to electronic registration, every step from title searches to land transfers is done by specialized software. Access to this software is exclusive to real estate lawyers and real estate law firms. However, despite this switch to electronic registration, a lawyer is still required to sign the transfer of land.

That’s an overly simplified description though. Your real estate lawyer does a lot of behind the scenes work.

If you’re the buyer, a lawyer will:

Review the Agreement of Purchase and other legal documents;
Make sure there are no claims registered or on file against the property;
Arrange for title insurance;
Ensure you have a valid title when closing;
Check that property taxes are up-to-date;
Calculate how much land transfer tax is due;
Draw up the mortgage documents;
Collect and hold the funds in trust until the process reaches completion.
Close the transaction, making sure all legal and financial conditions are met;
Draft the closing documents
Exchange legal documents and keys with the seller’s lawyer.

When you’re selling a property, your lawyer will:

Review the Agreement of Sale and other legal documents;
Assist you with negotiating the terms and conditions;
Prepare the deed to your house for the buyer;
Check for title issues, write executions, and deal with them if they arise;
Close the transaction, making sure all legal and financial conditions are met;
Draft the mortgage documents and request the discharge payout statements from the existing lenders.
Collect the money from the purchase and transfer funds to pay the lender while also transferring the remaining funds to the sellers
Exchange legal documents and keys with the buyer’s lawyer.

What Will I Need To Do To Complete The Closing?

Although your real estate lawyer will handle all of the paperwork in the final stages of closing, there are some things you will need to do.

Sellers will need to provide a copy of any deed, mortgage, survey, and current property tax bills to their lawyer and sign any papers a few days before closing. They will need to give their lawyer one set of keys for the buyer’s lawyer at closing. Non-residents of Canada must obtain a certificate from the Canada Revenue Agency stating any income tax payable, or else the buyer will hold back 25% of the sale price until they get it. All of your utility meters need to be read and billed for the day of the closing and house insurance should be canceled. The seller needs to be out of the property when it closes, so moving should be arranged and completed before 5 p.m. on closing day.

Buyers should also take into account and be sure they’re aware of all closing costs, so they need to ask their lawyer about a statement of adjustments if the seller has prepaid some expenses like property taxes. Closing costs also include mortgage insurance, appraisal fees, and HST, as well as legal fees. Their lawyer will need the balance of money needed at least 2 days prior to your closing and the buyer will have to let them know how they want the title on the property to read (joint tenants or tenants in common). Home and fire insurance need to be arranged, as well as title insurance through a lawyer. Appointments need to be made for utilities to start up on the closing date and a move late in the afternoon should be scheduled. Overall it’s a lot to keep track of which is why working with a real estate lawyer who does these types of transactions daily will help ease the stress of it all while offering your guidance as to what needs to be done next. They are there to coach you through the process while ensuring everything gets done.

Is Hiring A Real Estate Lawyer For Closing Worth The Cost?

While hiring a real estate lawyer involves initial expenses, their expertise proves invaluable in the long run and in Ontario it’s a mandatory requirement. You must have a real estate lawyer to close any sale or purchase transactions. By overseeing all the legal aspects, they help property buyers and sellers steer clear of unnecessary costs and potential legal issues in the future. Their profound knowledge of real estate law can save you time, money, and stress whether that stress stems from a property line debate or a lien on the house you weren’t aware of that could impact you financially.

The fees associated with real estate lawyers vary depending on whether you’re buying or selling a property and the complexity of the transaction. Typically, these services range from $700 to $2,000, excluding additional expenses such as HST, disbursements, title insurance, and land transfer tax. Most lawyers offer flat rates for their services, with additional charges for things like registering a mortgage.

Beyond the paperwork real estate lawyers provide support throughout the buying or selling process, relieving clients of legal burdens. Given the complexity of legal language, especially for first-time homebuyers, the potential for costly mistakes underscores the importance of professional legal guidance.

You Need A Real Estate Lawyer Who Puts You First When Closing Your Home

Although your real estate sales representative or broker is an expert at what they do and can help you negotiate a deal, remember that they have a stake in making sure your closing goes through. This is also true of a mortgage broker. A real estate lawyer will review all the legal, financial, and property details to make sure that you are getting the best possible deal. Making sure that you hire a local lawyer will ensure that they know about any potential laws, bylaws, or zoning issues that could affect your home. For example, if you live in Toronto but, are buying a home in Barrie, you would want to hire a Barrie real estate lawyer. Toronto bylaws are different than Barrie bylaws, as are various property rules, variances, zones etc. Toronto lawyers know Toronto, and Barrie lawyers know Barrie which is why their location and areas of expertise matter.

At Hukam Law, we have a rich background in real estate transactions and are experts in the Barrie and Simcoe County area. We’re here for you and we’ll do the due diligence to make sure that you have the support you need and are happy with your real estate transaction, today and in the future.

If you’re buying or selling your home, give us a call 📞 at 705-915-0884, or send us an email at info@hukamlaw.ca, and we’ll make sure that you have the legal representation you deserve.

***The information provided in this blog is for general informational purposes only and should not be construed as legal advice. If you have legal questions, we strongly advise you to contact us.