For most of us, residential real estate is the largest single-item investment we will make in our lives. As such, the selection of a competent and qualified lawyer is a serious decision. This entry will outline where, when and how a lawyer adds value to a real estate transaction.
Reviewing the Agreement of Purchase and Sale
Once the agreement of purchase and sale is executed and the conditions have been fulfilled or waived, it is a binding contract – it cannot be altered without the express agreement of the parties. Conditions often allow for the cancellation of the agreement, before it becomes binding, such conditions often include a “financing condition” and a “home inspection condition”. It is imperative that a lawyer reviews these conditions to ensure that they have been drafted fairly, and that they allot an appropriate timeframe for the conditions to be completed. Furthermore, if the completion of any of the conditions results in delay (i.e. the buyer’s financing will take another month) or uncovers minor deficiencies (i.e. the furnace needs to be replaced) you should be entitled to renegotiate the purchase price to reflect this change in circumstance.
Advising with respect to the Nuances of the Transaction
Your lawyer should also have experience with the nuances of your transaction, some of which are not readily apparent to first-time homebuyers. For example, in the case of a new-construction condominium, a buyer has the right to cancel the agreement of purchase and sale and have their deposit returned within a 10-day cooling off period from the time they received a copy of the signed agreement or the disclosure statement (whichever is forwarded later).
Completion of a Title Search and other Recommended Searches
It is important that your lawyer completes a title search to ensure you take the property free and clear of all encumbrances upon closing. A title search is performed primarily to answer three questions:
1) Does the seller have a saleable interest in the property? For example, the seller’s spouse may also need to sign the agreement of purchase and sale.
2) What kind of restrictions or allowances pertain to the use of the land? These include real covenants, easements and other servitudes.
3) Do any liens exist on the property that need to be paid off at closing. These include mortgages, back taxes, mechanic’s liens and other assessments.
There are other searches that may be advisable to obtain given the context of the transaction. For example Personal Property and Security Act searches, property tax and insurance information, building and zoning compliance letters and environmental searches may be advisable to obtain before closing the transaction.
A discussion of title insurance, the registration of the deed, and the transfer of funds will follow in two weeks.