The purchase and/or sale of a house is often times the largest and most important transaction of a person’s life. Throughout this real estate transaction you will likely be in contact with a number of different people, including the listing realtor, selling realtor, seller’s lawyer, buyer’s lawyer, mortgage broker, lender, appraiser, home inspector, and insurance agent.
This article is written to bring insight to the prospective home buyer or sellers as to what the lawyer’s role is in completing the home deal. When buying or selling your home you may only spend a small amount of time actually meeting and interacting with your lawyer. However, in fact, there is a great deal of work done by real estate lawyers and paralegals behind the scenes of any residential real estate transaction that is crucial in making sure your purchase and/or sale goes smoothly and completes on time.
Legal Steps for the Home Purchase:
In British Columbia, the purchaser’s lawyer prepares most of the documentation required for completion of the home purchase. The following are the steps taken by a lawyer in a typical home purchase:
1. Receives and reviews the conveyance instructions and purchase contract from the purchaser’s realtor. If there are changes that need to be made, the lawyer will prepare an amendment to the contract. If the parties are entering into a private transaction, with no realtor involved, the purchaser’s lawyer will prepare the contract of purchase and sale.
2. Obtains a copy of the title report for the subject property. This document shows any outstanding charges effecting the title of the property. If there is anything unusual or out of the ordinary, the lawyer will request a copy of the documentation from the Land Titles Office (“LTO”) and will advise the purchaser of its legal implications with respect to the property.
3. Receives and reviews the lender’s instruction letter. This letter instructs the lawyer of the terms of the mortgage and what documentation the lender requires to advance funding.
4. Prepares all the documents required to complete the purchase which includes:
- Form A – Transfer of Land (transfer document registered with LTO);
- Form B – Mortgage (mortgage document registered with LTO) and any other documents required by the lender;
- Property Transfer Tax Form – if you are not a first time homebuyer, you will have to pay property transfer tax;
- GST Certificate – you may have to pay GST if the property you are purchasing is a newly built home, or if you are planning to use the property as a rental
- Buyer’s statement of adjustments – document showing all of the proceeds and expenditures required in order to complete the deal. These extra expenditures outside of the purchase price for the property are known as “adjustments” and include municipal property tax payable, title insurance, strata fees (if applicable), etc. The Buyer’s lawyer will ensure that all municipal property taxes for the property have been paid and are up to date.
- Seller’s statement of adjustments – document showing the proceeds of the sale received by the vendor and the allocation of such proceeds for realtor commission and pay-outs for discharging and existing mortgage or other charge on title, all of which are necessary to complete the deal;
5. Clears title. Once the seller’s lawyer receives the sale proceeds, the seller’s lawyer will pay-out and discharge any existing mortgages or other charges on title of the property.
The above items are the main steps in a residential real estate transaction. It is important to note that every home deal is different and quite often legal issues/problems can arise right up to the final closing date. Accordingly, it is important to retain a lawyer right from the beginning to handle the purchase and/or sale of your home and work with the other parties involved in order to minimize the possibility of issues arising. The lawyers at Mair Jensen Blair have extensive experience with residential real estate transactions and would be happy to assist you with to ensure your home purchase and/or sale goes smoothly.