Ontario uses an electronic land registration system which requires that transfers be performed by lawyers. As a result, a lawyer must be retained when transferring property. The government has decided to leave this responsibility to lawyers, in part, because of concerns over real estate fraud.

Generally, two lawyers are required, one representing the transferee (buyer) and one representing the transferor (seller). In the following exceptions, two lawyers are not required:

Transfers where the transferor and transferee are the same, and
  • 1. The transfer is to effect a change in legal tenure, e.g. from joint tenants to tenants in common; or
  • 2. The transfer is to effect a severance of land prior to a certain expiry date;
  • 3. Transfers from an estate trustee, executor or administrator to a person who is beneficially entitled;
4. Interfamily transfers, related party transfers and transfers occurring in remote communities.

In these circumstances, one lawyer may sign a statement stating that he/she is signing for both the transferor and transferee and that the transfer is being completed in accordance with the lawyer’s professional standards. The Law Society of Upper Canada (the body that regulates lawyers in Ontario) has
Rules of Professional Conduct to address this situation.

When would I retain a Lawyer?

Generally speaking, there are two points when a buyer should consider retaining a real estate lawyer:
    It is necessary to retain a lawyer to close a real estate deal (b.), but not prior to making an offer (a.).

    Why retain a lawyer prior to making an offer?

    Once an offer is made and accepted, it becomes a legally binding contract. A real estate lawyer can help you understand the terms of the offer (which can be heavy on legalese) and draft the needed conditions. Conditions are important parts of an offer that tailor the deal to the requirements of both parties. For example, if a buyer needs to sell an existing property to obtain the funds necessary for the new home, he/she may wish to include a condition stating that the deal is conditional on selling the existing home. A lawyer can ensure that this and other conditions are properly drafted.

    A properly drafted offer and conditions should not leave room for interpretation. A lawyer can assist by ensuring that the Agreement of Purchase and Sale is not ambiguous.

    What does a lawyer do prior to closing?

    A lawyer’s most important responsibility is ensuring that the buyer takes valid title to the property.

    This involves ensuring that the property is described correctly in each document and ensuring that any liens or other claims against the property are discovered and cleared before title is transferred. To do this, a lawyer must search the databases where liens and other claims would be registered. If a defect in title is identified, the lawyer must advise the buyer on how to best address the problem. Typically, the buyer's or seller's lawyer will propose a method of correcting the defect so that the problem is resolved before closing.

    The buyer's lawyer will also arrange title insurance for the purchaser (and lender). Title insurance is not mandatory, but will protect a homeowner and lender from potential fraudulent claims on title and other title defects. Moreover, many banks require that the borrower obtain title insurance as a condition of the mortgage.

    A buyer’s lawyer is sometimes responsible for:
    • 1. Investigating whether municipal taxes are owing,
    • 2. Advising on and drafting conditions,
    • 3. Preparing mortgage documents,
    • 4. Contacting utility companies to have final meter readings done on the day of closing,
    • 5. Transferring utility accounts to buyer,
    • 6. Confirming that property taxes are paid up-to-date,
    • 7. Ensuring that zoning and building restrictions are being complied with,
    • 8. Confirming that there are no outstanding liens on appliances that are included,
    • 9. Ensuring that the buyer signs closing documents one or two days before closing.

    What does a lawyer do on Closing Day?

    Typically, on the day of closing, the buyer’s lawyer will exchange documents, keys and cheques with the seller’s lawyer, then register the deed and mortgage.

    After closing, the buyer's lawyer will ensure that the seller's lawyer has discharged any mortgages that were previously registered against the property.

    For more information, please contact us.