This is the second entry of a two-part blog entry. For information regarding the agreement of purchase and sale; the nuances of the transaction; and the completion of title and other recommended searches, please see A Lawyer’s Role in a Residential Real Estate Transaction I.

Recommend whether Title Insurance Should be Purchased

Title insurance is an insurance policy that protects property owners and (usually) their lenders against losses related to the property’s title or ownership. For a one-time fee, a title insurance policy may provide protection from such losses as: unknown title defects; existing liens against the property’s title; encroachment issues; title fraud; errors in surveys and public records; and other title-related issues that affect the property’s ability to be sold, leased or mortgaged in the future. Each transaction is unique and title insurance is not the only option to protect a homebuyer’s interest in a real estate transaction. Your lawyer should discuss all of the options available to you given your specific circumstance, and if you decide to purchase title insurance, he or she should disclose that no insurer, agent, or intermediary is furnishing a fee or commission to the lawyer with respect to the coverage.

Registration of the Deed

The deed is the legal instrument that transfers title to the property and should be registered with the province to prove ownership. Once registered, these documents are stored in land registration systems and are available to be searched to determine interests on title. In Ontario, most deeds must be registered by a lawyer under the Land Titles Act RSO 1990, c L.5.

The Transfer of Funds

Large sums of money are generally transferred in real estate transactions. Often, first and second mortgages are paid off and the seller is paid out. Properly timing and administering the flow of funds is crucial to making sure the deal gets done while protecting each party’s interests. Typically, the funds will be forwarded to the vendor’s lawyer to be held in his or her trust account, in escrow. Once the lawyer confirms that the purchaser’s funds are being held in escrow, the vendor will deliver the deed to the purchaser’s lawyer, who will then have it registered. After the deed is registered the funds will be released and the transaction is complete. Hiring a diligent lawyer that has earned your confidence will make this final piece of the transaction happen smoothly and give you peace of mind in the days leading up to the closing.

Final Thoughts

An experienced lawyer has the potential to add significant value to a real estate transaction, at a relatively low cost. He or she should protect your interests by reviewing the agreement of purchase and sale, advising with respect to the nuances of the specific transaction, conducting the appropriate searches, discussing the benefits and drawbacks of title insurance, and ensuring that funds are transferred smoothly upon closing. Real estate is a serious investment; take the time to find a competent lawyer that you trust.

For additional information, questions or comments, feel free to contact Scott Lemke at (647) 980-9156 or slemke@lemkelaw.com.