How Do Real Estate Lawyers Untangle The Closing Process?
Monday Jun 15th, 2020
Buying your dream condo is exciting, but it is also a significant long-term investment. This tedious process involves many steps, procedural formalities, the law of real property, and, thus, demands a real estate lawyer. With all the legal issues and last-minute disputes involved in the closing process, a lawyer comes in handy.
Once you have hired a real estate lawyer, you do not have to worry about legal matters. They offer a vast array of services that help clients in purchasing or selling a home. Most importantly, they are experienced in avoiding any hurdles during the closing process and carry out the process comfortably.
Of course, you can always take the leap and do it all by yourself. But let’s face it, you would rather have a professional by your side than make a costly mistake in the real estate world. Keep reading to know all about the tasks of a real estate lawyer and various things that you should know.
What do real estate lawyers do?
Buyers and sellers can hand over their to-do lists to their real estate lawyer when it comes to all their legal documents. Whether you want to prepare a home purchase contract or review the status certificate, a lawyer is trained and has the most experience to deal with them. They are always familiar with the current laws and regulations about real estate transactions.
A real estate lawyer will make sure that no claims are listed against the property. Besides calculating the land transfer tax, lawyers also take it upon themselves to look into whether the property taxes are up-to-date. Maintaining good relations with sellers, negotiating over repairs, and handling complex paperwork is second nature to experienced real estate lawyers. They are also known to have good contacts, which will make the buying or selling process effortless.
A good lawyer also comes in handy when involved in an assignment sale. This contract deal is related to buying a condo in its pre-construction stage from the original buyer who has bought it, and it’s to be done before closing. No one can take ownership of it as it has not been registered yet. These assignments have various benefits, but they can be complicated. So, an experienced agent and lawyer will prove to be beneficial.
How much do real estate lawyers cost?
A real estate lawyer in Toronto will charge you according to the services required by your specific transaction. The fees charged also depend on the complexity of the process and the lawyer's expertise. It will also differ according to whether you are interested in buying, selling, or refinancing. With all these into consideration, you might have to pay $1500 in legal fees and disbursements.
Having a lawyer during the closing
With the title passing from the seller to the buyer, the closing marks the most crucial event in the purchase and sale transaction. This procedure can get too puzzling for the average buyer and seller. That is when a real estate lawyer enters the scene. Real estate lawyers ensure that your rights are protected and are not at risk.
What happens when signing the contract?
A real estate lawyer makes sure that all the terms of your agreement of purchase and sale are compiled. After signing this agreement, the documents are forwarded to your lawyer. From here, your lawyer performs a series of tasks.
Your real estate lawyer will search the title of the property. He will authenticate the names of the owners and the legal description. After looking into any easements, judgments, charges registered against the property, your lawyer will review various issues.
It is important to look into whether the property taxes and outstanding utility accounts have been paid. Along with this, property insurance coverage and the status of mortgages are also necessary to check on. Your lawyer will additionally need to verify documents about the condo, including bylaws, disclosure statements, etc., and those prepared by the seller's lawyer.
Before and on the day of closing
Prior to closing, your lawyer will ensure that you sign mortgage documents and prepares documents linked to sales tax for the purchase. Usually, two days before closing, you will have to come up with a balance outstanding in providing to your lawyer. He will keep all documents ready for filing in the land registry office.
When the closing day finally arrives, your lawyer’s job is to search for the title of the property and avoid any last-minute claims. After releasing funds in his trust account, he will transfer any capital owing to the seller’s lawyer.
In case of new construction Toronto condos, he will obtain a copy of the certificate of possession. Then, your real estate lawyer will pay off any amount required, according to the statement of adjustments. This includes aspects like the sales and property transfer tax and the balance of the commission.
Your real estate lawyer's job does not end here. There are still a few important things left to do after the day of the closing. This includes forwarding you a 'reporting letter.' It contains the record, documents, and accounts of the fees. Your lawyer will also make sure that none of the seller's obligations is left unsatisfied.
Issues to overcome during the closing
There are many problems that may delay the closing or even prevent it. Here are some hurdles that may be an issue when you are involved in the closing process for buying a Toronto condo. Real estate lawyers are well worth the money when you need to overcome problems related to your dream condo. If you have no prior experience in buying or selling a property, lawyers are must make sure that the transaction is smooth.
Last-minute cold feet
It is possible that you find a condo that suits you better, or you just become unsure at the 11th hour. In this case, the contract lets the buyer or seller back out without any penalty. But, you may lose money if you refuse to go through with the process after waiving the contingencies.
You will have to pay a certain amount to compensate for the financial loss caused to the seller for the time he was on the hook. Similarly, you can legally collect damages from the seller if he ends up backing out at the last moment.
High-risk area condo
In case your ideal condo happens to be in a high-risk area, you will be given a document that will outline natural hazards that may strike. Additionally, you may have t purchase hazard insurance, which may be heavy on the pocket.
It is a smart move to have full information about the natural hazards that may affect your condo through your agent and the city planning department. You might also want to consider any impending insurance and how much it will cost to avoid issues during escrow.
Conducted by an authorized party, appraisals are required for taxation purposes for selling a condo. You will have to pay to get your house appraised by the bank to protect its interest in the condo. It is an issue if it turns out that the appraisal is low, and the home is not worth as much as you are putting in for it. In this case, the seller will end up lowering the price, or you will be forced to pay up for the difference.
Home inspection issues
Issues found during the home inspection can cause the buyer to walk away without penalty due to a home inspection contingency. Your earnest money is at risk in case this home inspection contingency is absent from the contract.
If you decide to go ahead with it anyway, you are potentially in for closing delays. Negotiating with the seller for helping you out with home repairs or an amount at closing can postpone the process.
The condo is not insurable
Any major insurance claim made on the condo will be present in the insurance records. In this situation, companies may deny coverage if they view the condo as a risk. So unless you are an all-cash buyer, you will have to bid farewell to your dream condo due to reasons like fire or theft.
You will not be able to buy the condo as the companies need you to maintain the owner’s insure till the mortgage is paid off. Even if you are an all-cash buyer, do you really want to risk buying a condo that is not insurable? This can be a major issue while to look out for to ensure an undelayed closing process.
Transferring ownership of a condo is a big decision and is demanding for the buyer as well as the seller. The closing process is crucial to ensure that any ramifications are avoided, and the deal is closed smoothly. An experienced real estate lawyer will definitely make this daunting and unfamiliar process a little less unchallenging for you to tackle. From complex documents to all the involved taxes, a lawyer will reduce your workload with his up-to-date knowledge and practice.