When Should You Hire a Real Estate Lawyer?
If you are buying a home, condo, cottage, second residence or vacation property, have you ever considered the benefits of hiring a real estate lawyer to protect your financial interests? After all, the purchase of real estate is one of the largest financial investments a Canadian will ever make.
Should you hire a real estate attorney early in the purchase process, or wait until after the purchase agreement is signed? There are a number of Canadians who would prefer to hire a real estate lawyer just to perform a title search, register the deed and transfer the funds after their purchase agreement has been signed. The reasoning is to save a few dollars on legal fees.
As many have discovered, hiring a qualified real estate attorney was one of the best investment decisions they made and actually saved them from potential financial risk and additional expenses.
Agreement of Purchase and Sale Legalese
Unless one has a working knowledge of real estate law in Ontario, the legalese contained within real estate documents can be very perplexing. To compound the matter, every Agreement of Purchase and Sale could differ in their legal terminology. One should recognize that these agreements are iron-clad and it is the responsibility of the buyer to understand exactly what they are purchasing.
You may be advised to include the phrase, ‘conditional on financing’ to your purchase agreement. It is a recommendation that you place a condition on your offer to purchase. As a result, acceptance would be subject to you obtaining a financing commitment from a mortgage lender.
Acceptance under ‘Conditional on Financing”
Should financing be offered at a rate of 6.5%, rather than a preferred rate of 3.75%, you would not be in a position to pull out of your agreement. You could also be at risk of losing your deposit. By accepting the higher financing rate, you would end up pay thousands of dollars more per year in mortgage payments.
A real estate lawyer could have helped avoid such a shortfall by writing, ‘conditional on financing agreeable to the buyer.” Phrasing the condition in this manner would allow the buyer to pull out of the purchase agreement given that the financing offered was not agreeable to the purchaser.
‘Easement,’ vs. ‘Encroachment’
If within the purchase agreement, you discover that the seller wrote the word ‘easement,’ rather than the word ‘encroachment,’ you could find yourself paying substantially to correct a problem. You could be presented with additional legal fees.
Real estate lawyers are well-known to be invaluable advisors when it comes to examining the dozens of legal pages contained in a condominium purchase agreement.
Since a majority of Canadians who purchase a new condo will invest most of their savings as down-payment, there is no room for an unexpected surprise that would require additional monies at the time of closing.
Numerous builders will add the cost of the Tarion warranty home enrolment fee, plus, any ‘adjustments’ your contract states you will pay on top of the purchase price on closing.
Agreement of Purchase and Sale contracts, and the adjustment clauses contained within, are drafted by the builder’s real estate lawyer. Since contract language is not limited to and may include phrases such as “more or less” and “subject to change without notice,” it cannot be understated how important it is to have your condo purchase agreement reviewed by a competent real estate lawyer.
These additional adjustments could add anywhere from a few thousand dollars up to $20,000 to the purchase price of your condo closing costs.
Your real estate attorney may advise you that capping the closing costs would be advisable. In many cases your lawyer may be able to negotiate a cap on any potential increases from builders. Since lawyers are consistently involved in numerous real estate transactions, they have come to understand the need of developers to reach their condo sales targets. Sales targets are important for developers to reach if they are looking to acquire bank financing.
Words, writing, and language differences in Agreement of Purchase and Sale documents do make a difference.
Real estate lawyers are experienced in what to look for in all Agreement of Purchase and Sale documents. They will advise you in what you can and cannot do should you choose to live in the condominium complex before you accept any limitations the condo agreement may impose?
Residential resale condominiums do not have similar costs associated with your purchase.