Working with a Lawyer when you buy a home

Protecting that investment is important to you. You need to know that all of the legal issues involved in buying your home are properly handled. You want to feel secure about the fact that you own your home. You may also need advice about who should officially own the property, what kind of mortgage you should get, and many other decisions that have to be made when buying a home.

Your lawyer is there to help guide you through this pocess, and to protect your interests at every step of the way.

This page explains how your lawyer ill work with you when you buy a home. It also explains the 3 different ways in which your lawyer could protect your ownership interest in your home. This is only a guide. You should talk to your lawyer directly to find out which method he will be using or to tell him which one you would like him or her to use for your home purchase.

Before you sign an offer to purchase.

An offer to purchase is a contract that is binding on both you, the buyer, and on the vendor. Seeing a lawyer before you sign that offer can help avoid difficulties later on, and ensures you that your best interests are protected.

Some Realtor will protect their client buy putting in an escape Clause conditional to a Lawyer reviewing and being satisfied with the offer of purchase.

For example, your lawyer can advise you to:

include escape clauses that will allow you to cancel your offer if you cannot proceed with the purchase. For instance, you may want to cancel your offer if you discover that the property is not what you thought it was, you were not able to arrounge the mortgage you need, or you were unable to sell your present home;

request a warranty that the property conforms to all municipal by-laws, zoning regulations and housing standards;

include an exact listing of the accessories that you expect to buy with the home;

requires that the vendor produce an up-to-date survey;

request that your deposit be held in a bank account that will pay you interest.

Your lawyer can also help you determine exactly how much it will cost to buy the house. You need to plan for extra costs such as land transfer tax, document registration fees, search fees, your lawyer's fees, and monies that you will have to pay the vendor for any pre-paid utility bills and taxes -- none of which are included in the purchase price.

After the vendor accepts your offer to purchase.

The offer to purchase is only the beginning of the complex process of buying a home.

Once the vendor has accepted your offer, your lawyer starts to work on many fronts. You can expect your lawyer to ask you many questions about the specific property you plan to purchase and how you intend to use it. Over the following weeks, your lawyer will complete a series of legal inquires, searches of records and extensive fact-checking, to make sure that, on closing, you really own the home and that you will be allowed to live there (in other words, confirming that the present use of the propterty is legal).

If you purchase the property through a Realtor, ask the realtor to provide you with the property information sheet. You can give this to your lawyer.

PROVIDING ADVICE AND FACT-CHECKING

Among many responsibilities, your real estate lawyer acts as your trusted advisor. It is your lawyer's job to check various details and advise you on a wide range of matters.

For example, your lawyer usually will:

prepare and check mortgage documents and explain the terms of your mortgage;

explain the different ways in which you can own the property if you are buying it with someone else, and the difference between bein joint tenants and tenants-in-common;

check the statement of adjustments to ensure that you are paying only your share of the taxes, utility and fuel bills, and other costs that have been pre-paid by the vendor;

explain the purposes of the documents that you have to sign;

FACILITATING THE BUYING PROCESS

To help make the transfer of ownership from vendor to you, the buyer, as smooth as possible, your lawyer may also:

arrange with utility companies to have hydro, water and fuel meters read on the day of closing, and to have all future bills addressed to you;

endusre that you have home insurance in place as of the closing date;

hold in trust your closing funds and those provided by the mortgage lender, and transfer them to the vendor to ensure the home purchase closes; and

arrange for you to receive the keys to your home as soon as possible after closing.

ASSURING YOU OF GOOD TITLE

One of the more important parts of your lawyer's job is to make sure that you have good title to the property that you are buying.

Why is good title important? Good title ensures that you really own the property, that it is correctly described in official documents and properly registered, and that no one else has a claim or a lien to it that you do not know about.

For expample, morgage holders, contractors, tenants and the spouse of the person selling the home may all have rights to the property that need to be resolved before the sale can proceed.

Good title is essential for you to be able to sell your home in the future.

As part of title-related responsibilities, your lawyer usually will:

check that the person who is selling you the home has a right to sell the property, and that no one else has a claim to i or a lien on it;

cosider survey-related issues such as whether anything on your property encroaches (intrudes) on neighbouring properties, or if neighbours are in fact using a part of your property;

contact the municipality to make sure that there are no work orders against the property which you could be forced to comply with after your home purchase has closed;

determine if any other organizations have interests in your property that could restrict your use of it. For example, there may be easements that give utilities the right to install and access hydro or gas lines. As well, if some or all of the home is being rented, tenants have rights that could affect your ownership;

contact local utilites and the municipality to find out if there are liens against the property because of unpaid utility or tax bills.

If there are problems that could affect title to your property, your lawyer could take steps to fix the matter (often working with the vendor's lawyer). If the problem cannot be corrected, your lawyer will explain to you the risks of taking title without resolving the problem.

Assuring you of good title: Three options to choose from

There are three different approaches that your lawyer can take to assure you of good title. It's up to you and your lawyer to decide which one of the three options is most appropriate in your situation.

With any of the options described below, your lawyer will conduct searches and inquires to find out if there are any title-related problems with the home you plan to buy. Your lawyer will try to resolve most of these problems, and will advise you of how best to deal with any situations that cannot be resolved.

OPTION 1: LAWYER'S OPINION ON TITLE

If you select this iotion, your lawyer will provide you with a Letter of Opinion which states your lawyer's view of whether or not you have good and morketable title to your property. As well , your lawyer will provide you with a description of the results of the searches and inquires conducted on your behalf, and will inform you in writing of any outstandig issues that may affect your title to the property in the future.

If a problem is identified after you have closed, you can only seek compensation from your lawyer if you can prove that he or she failed to do something that was legally required or provided egal services that did not meet the standards set by the legal profession. You may have to hire another lawyer to help you sue your first lawyer and get compensation from the lawyer's malpractice insurance plan.

OPTION 2: TITLE INSURANCE

Title insurance is an isurance policy that you can buy to protect your investment in your property if there is a problem with title. For example, you may find out after you have bought your home that someone else has a legitimate claim to it that has to be satisfied, or you may have to pay to move a building that is too close to a neighbour's property line.

The title insurance policy protects you against the loss that you suffer because of many title-related problems. Most title policies also cover your legal costs if your title is challenged.

OPTION 3: TitlePLUS

TitlePlus is offered by the Lawyers' Professional Indemity Company (LPIC), which is owned by The Law Society of Upper Canada. The Law Society is the governing body of the legal profession in Ontario. To practice law, your lawyer must be a member of The Law Society; your lawyer also is obliged to follow the Rules Of Professional Conduct set by The Law Society.

TitlePLUS is a system that includes both an insurance policy and an electronic process that collects information from lawyers who apply for a TitlePLUS policy as they proceed through the steps in a residential real estate transaction.

The TitlePLUS insurance policy provides protection for both the title-related aspects of buying a home and the legal services provided by your lawyer. It also automatically provides both you and the lender with coverage.

If you opt to use TitlePLUS, your lawyer will ask you to sign an Acknowledgement and Direction just before your home purchase actually closes. This document confirms your instructions to your lawyer and that your lawyer has provided you with specific information about your purchase.

Tips on title insurance & TitlePLUS

Read your insurance policy in full to understand the insurance protection that you are buying. Your lawyer can provide you with a draft of the policy.

Ask your lawyer about any items that are not covered by the title insurance or TitlePLUS policy before you make any decisions.

Provide your lawyer with as much information about the property as you know. For example, make sure your lawyer knows that your home contains a separate apartment that is rented, or that there is a swimming pool in the backyard that does not show up on the survey. You must provide your lawyer with accurate and complete information to ensure that your insurance coverage is valid if there is a dispute later on.

Your lawyer will have to disclose some information about your purchase to the company provideing title insurance or TitlePLUS, assuming you choose one of these options. This is standard procedure when buying many types of insurance.

Your lawyer will always be bound by professional rules that require him or here to act in your best interests.