TL;DR: you need a lawyer to close a real estate transaction and it costs about $1,500
4 minute read
When you buy a home you will need to hire a real estate lawyer. Your lawyer will ensure the paperwork is done correctly, your rights are protected and that the purchase is completed.
What will the lawyer take care of?
Your lawyer and their paralegals and assistants will do a title search on the property you are buying, obtain title insurance, register the home with the land titles office, and handle the large sums of money moving between your lender, your lawyer, and the seller of the home you are buying (and their lawyer). All of the money moves through their trust accounts, which have special laws around how those funds are stored and accessed. The lawyer acting for the seller will prepare the statement of adjustments, which your lawyer will review and present to you, along with a trust ledger statement, which outlines all of the other expenses, and how much cash you need in order to complete the purchase.
When selling, your lawyer will also do a title search on the property you are selling to make sure there are no defects that might cause delays later on. They will also create a statement of adjustments to ensure you are reimbursed for things like prepaid property taxes. Just as with buying, your lawyer will handle all of the money coming in from the buyer, and will directly take care of paying off the old mortgage if there is one, paying the realtors, paying themselves, and cutting you a cheque for the remainder.
Just like buying and selling, a title search is done to make sure it is in good shape. They will also register the new mortgage amount and mange the rest of the financial transaction.
When do I get a lawyer?
Generally most people hire their real estate lawyer once the offer to purchase is completed and all conditions of the offer have been satisfied. Whether buying, selling, or refinancing, your lawyer will require at least 1 week, ideally 2 weeks, to receive mortgage instructions from the lender and to prepare the necessary paperwork for you to sign. Once the paperwork is completed, they will book an appointment with you to visit their office to sign everything, and to give them any outstanding amount which may be needed to complete the transaction (usually only for a purchase transaction). This appointment usually happens about 1 week before the closing date.
What qualities should a good real estate lawyer have?
At a minimum, your real estate lawyer should:
- specialize in real estate
- charge affordable fees
- have experience with the type of property you are buying
- be local, if possible
How much does a lawyer cost?
Expect to pay about $1,250 in legal fees for a purchase transaction, about $1,000 for a sale transaction, and about $750 for a refinance transaction. Sales taxes and disbursements are charged separately; budget another $250 or so for these.
What are disbursements?
Legal fees are the fees charged by the lawyer for the work they and their team perform on your behalf. The legal fees are compensation for a service provided. Disbursements are other expenses a lawyer requires during their work with you and usually covers things like faxing, photocopying, courier fees, and any searches they need to conduct such as title searches.