Most real estate transactions involve $100,000's of thousands of dollars. Could you afford to lose that kind of money? Even if you could afford it, would you want to? Probably not.
The banks require that a lawyer act on your behalf and theirs. They usually will not do a transaction, e.g. they would likely refuse to advance mortgage proceeds on a purchase transaction without a lawyer ensuring that they are protected. Why? Lawyers reduce risk.
For example, imagine spending all the time and effort into finding the perfect property, then handing over two, three or four hundred thousand dollars, or more, and not actually owning the property that you thought you paid for.
Or, imagine getting the title to the property but shortly after getting notice that you are now responsible, i.e. liable, for the previous owner’s debt(s).
While every transaction is unique, generally, lawyers help ensure that:
- The seller or mortgagor does in fact own the property and has the right to sell it;
- The owner or buyer’s name is properly registered;
- Everything that needs to be registered with ISC (land titles) is registered;
- That whatever interests need to be discharged are discharged;
- That the financial aspects of the transaction are processed properly, for example, by registering the mortgage and procuring the mortgage proceeds, obtaining cash-to-mortgage amounts, paying the sellers, obtaining sale proceeds, discharging liens and paying out appropriate debts or interests;
- That everyone pays their proportional share of property taxes; and,
- That everything is in place for keys to be exchanged on the possession date.
The common perception is nothing ever goes wrong in real estate transactions. However, it is not true. Approximately 35% of all claims against lawyers arise from real estate transactions. So, what can you do? You can hire any lawyer you want to, so make your life easier, reduce your risk and hire someone whose primary area of practice is in real estate.