June 19, 2014
Congratulations! You have signed a deal to purchase or sell a piece of property. Even if you have used a realtor to assist you, you will still need to hire a lawyer to complete the transfer of the property.
Why do you need a lawyer? And what information does your lawyer need to know?
Why – a lawyer will help you:
- Determine if what you are buying or selling can legally be bought or sold.
- Find out if anyone is going to spring up and claim they are entitled to any part of the proceeds from the deal because they are a creditor who was never repaid on a loan.
- Obtain title insurance to give you peace of mind and safeguard your purchase of the property.
- Register the transfer to put your name on the title (if you are the purchaser) or prepare the transfer to take your name off the title (if you are the seller).
- Deal with taxes, mortgages and all the other details of buying or selling the property.
What to tell your lawyer – anything and everything you know about the property. Even if there are problems or potential problems, big or small, it is better to be upfront and deal with anything from the start. Lawyers are there to help solve problems. They have seen and heard all sorts of stories when it comes to real estate deals. Many times, the other side won’t care that the property isn’t 100% perfect. And what you think is a problem may not really be a problem at all. Being upfront means that everyone knows what to expect when the property changes hands and you avoid a possible (and expensive) lawsuit.
- (a) Contact information –
- your lawyer needs to be able to get in touch with you, especially on the closing day, so current contact information (home phone number, cell phone number, E-mail address, etc.) is necessary.
- (b) Present mailing address and forwarding address –
- your lawyer will need to mail documents (such as the deed) to you after the deal closes. Also, your lawyer needs to know the address of the property being purchased or sold so that he/she can do all the searches that need to be done to ensure the property can be sold and find out information about the property that you may not be aware of.
- (c) Current use of the property –
- your lawyer needs to make sure that the property is being put to its proper use and that you will not face any problems if you want to continue to use it for that purpose.
- (d) Intended use of the property –
- if you plan to change the use, your lawyer needs to know what you intend to use the property for to make sure that the property can be used for that purpose.
- (e) When was the house built –
- there may still be a new home warranty in effect. Or maybe your lawyer will suggest certain things for you to look for when you do a final inspection of the property. The date a house was built can tell you a lot about the property.
- (f) If you are married –
- even if you are the only owner of the property, your spouse still needs to consent to the purchase or sale of the property. (But this does not include “common law spouses.”)
- (g) Existing or intended mortgage –
- your lawyer will need to discharge any current mortgage on the property before the property changes ownership or arrange for a mortgage to be added to the property if you are financing the purchase of the property. Also, if you are purchasing the property and you intend to use any part of the mortgage proceeds to pay for any renovations to the property, your lawyer needs to know this information.
- (h) Insurance –
- your lawyer will probably need to confirm coverage to a lender, so he/she will need the details before closing. Older or unusual houses might have special insurance issues, so think about this when buying.
- (i) Bank branch, account number and contact information –
- if your lawyer has to handle any mortgage, your lawyer will need to contact the financial adviser to obtain the proper paperwork and details for the mortgage.
- (j) Tenants (if any) –
- if you are purchasing or selling a rental unit, the tenants need to be informed of any change in ownership. Or, if the tenants are supposed to leave before the deal closes, the tenants need the proper notice and length of time to pack up and leave.
- (k) Any improvements to the property –
- your lawyer will need to make sure that if any renovations have been done to the property, all proper building codes were obtained and finalized by the appropriate authority.
- (l) If you are a first time home buyer –
- this one is especially important if you are a first time purchaser, because it actually saves you money! If you are a first time home buyer, you can save a certain amount on the Land Transfer Tax, up to the entire amount of the Tax (depending on the value of the house you are buying).
- (m) Other nice to know information –
- if there is a septic system on the property and what type of fuel source (oil, gas, etc.) heats any structure on the property. Also, if you have an arrangement for the other side to pay your legal fees or an arrangement to exchange keys directly with one another, your lawyer needs to know so he/she can make sure that such arrangement is followed through with.
Your lawyer will walk you through the process and negotiate anything that needs to be negotiated before the deal closes. But the more information you are able to provide to your lawyer, the easier the closing process will be for you.
And, I always think that a well-informed client is the happiest client.