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In Ontario, when buying or selling a home, hiring a real estate lawyer is not just a recommendation; it is a requirement. The law is clear that only licensed lawyers can complete real estate transactions.
Under the Law Society Act, it is prohibited to provide legal services without a license. Section 1(6) of the Act outlines actions considered as "legal services". These include, but are not limited to:
- providing advice with respect to legal interests or rights;
- drafting, completing, or revising documents in rights to real or personal property; and
- negotiating legal interests.
Therefore, real estate transactions such as purchases, sales, title transfers, or mortgage registrations all fall directly within the scope of "legal services." As a result, none of these procedures can be completed in the absence of a real estate lawyer.
Similarly, Section 3(1) of the Land Registration Reform Act demands that documents registered under the Ontario's Land Titles Act and Registry Act comply with specific forms and execution rules. While the Land Registration Reform Act does not explicitly say only lawyers can register title, it is an implied term given that Ontario's electronic land registering system (Teraview), requires a Professional Services License. These licenses are only issued to individuals who register documents, thus, limited to legal and real estate professionals.
These statutes make it clear that real estate lawyers are essential in every transaction in Ontario. To understand why their involvement is required, it is important to look at what their role entails.
What Role Do Real Estate Lawyers Have?
Depending on whether you're buying, selling, or refinancing, your lawyer's role will look a little different. In every case, nonetheless, they are working to protect you and your interests.
If You're Buying
Your lawyer will:
- Conduct a thorough title search. The title search will:
- confirm that the seller is the rightful owner and has the legal ability to convey the property to you;
- verify that the legal description of the land matches exactly what you believe you are purchasing; and
- ensure the property is free from liens, claims, or other encumbrances that could affect your ownership.
- Carefully review the agreement of purchase and sale, ensuring the terms protect your rights and that you receive exactly what you have negotiated.
- Prepare and register your mortgage.
- Confirm that property taxes, utilities, or condo fees are accurately adjusted for at closing.
- Arrange for title insurance.
If You're Selling
Your lawyer will:
- Ensure you are not left with ongoing obligations after closing (for example, payments on a rental hot water tank);
- Arrange for any mortgages, liens, or other encumbrances to be properly discharged at closing, thereby allowing title to transfer seamlessly to the buyer;
- Prepare the transfer and statement of adjustments, setting out exactly what you and the buyer owe to one another at closing; and
- Ensure that you get your sale proceeds securely and on time.
If You're Refinancing
Your lawyer will:
- Request a mortgage discharge statement for your existing mortgage.
- Assist in preparing your new mortgage.
- Conduct a title search to confirm that no liens or claims have been registered against the property
- Discharge the existing mortgage and register a new one.
Why It Matters
Given the wide range of responsibilities handled by real estate lawyers, obtaining a qualified one is essential. Real estate mistakes can be costly. For instance, an overlooked lien, an improperly registered mortgage, or a defect in title can lead to years of litigation and thousands of dollars in legal fees to rectify the mistakes. Thus, it is important to have a real estate lawyer who holds themselves to the highest standard, prioritizes your interests, protects your investments, and reduces all relevant risks.
This blog was co-authored by articling student Adriana Piccolo.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
