Let’s face it, lawyers are expensive. Most should be able to quote you a flat fee for a typical real estate transaction, and if all goes well, stick with it. If, however, things do not go smoothly, or there is extra work needed that is out of the ordinary, you can bet that additional fees will be coming your way. Here are some tips to avoid issues with your real estate deal, and therefore keep your legal costs at a minimum.
Real Property Reports
Most residential and acreage real estate deals require the seller to provide a Real Property Report (“RPR”) to the buyer on possession. The RPR is a survey of the property showing the location of any permanent structures on the land, and which is reviewed by the municipality to ensure proper permits are in place, and the location of the structures comply with local by-laws. As a seller, you must make sure your RPR is ready to go for possession. If not, this can lead to a number of issues for the lawyer to handle, including:
- Spending time and effort negotiating the terms of how the RPR will be provided to the purchaser after possession, which usually includes determining a portion of the sale proceeds to be held by one of the lawyers in trust;
- Ordering a new RPR or updates to the RPR from the surveyor;
- Dealing directly with the municipality regarding any issues with the RPR; and
- Working with the lawyer for the buyer on any changes to the property needed to bring it into compliance with municipal standards.
Flat fees for real estate transactions are based on your lawyer being able to meet you to sign the transaction documents, in person, and at their office. Purchase and sale documentation usually cannot be signed digitally, and your signature must be witnessed by a lawyer or notary. If it can be avoided, try not to leave the province prior to the completion of your transaction. Most lawyers will charge extra to prepare documents to be signed in another location, and you would also have to pay the extra fees for the lawyer or notary who is witnessing your signature. If they are in another jurisdiction (I have had this experience recently with clients signing in Mexico), it is often difficult to explain to the foreign lawyer how the documents are to be completed. Finally, original documents must be couriered back to your lawyer, which can also be very expensive depending on your location.
Clean Up Your Title
As part of your sale, you will be required to provide “clear title” to the buyer. This means that all debts, mortgages, liens, and other financial charges must be removed either before or immediately after the possession date. It is not uncommon for sellers to have multiple debts on title that need to be paid, or old debts that were paid years ago, but were never discharged from title. When you list your property for sale, be sure to review the title with your realtor, and see if you can eliminate any old items before you see your lawyer. Also have all the information for your various debts ready, so that your lawyer can easily contact and deal with your creditors. The more work the lawyer has to do themselves to track these items down, the higher your legal bill.
In this, the eleventh instalment of our series with Dan Hawkwood, an Associate Lawyer at Beaumont Church LLP in Calgary, Dan discusses how you can save money and avoid issues with your real estate transactions. Dan comes from a long line of farmers and ranchers in the Calgary area and brings the experience of his rural upbringing to his practice.