Clients purchasing and selling a property are asked by their real estate agent, “Who will you be using as your lawyer?” In Ontario real estate clients generally know that they are expected to have a lawyer, but from my experience most of them don’t know why they need a lawyer to help with their real estate transaction.
Most clients understand that a lawyer makes sure there are no mortgages or liens on the property. This is part of what a lawyer does, but it’s only a small aspect of the service they are performing.
A lawyer’s job for a home buyer is to ensure that the buyer is purchasing a property free and clear of all encumbrances. Encumbrances could be in the form of interests that are registered against the property such as mortgages or liens or physical such as a fence or neighbour’s garage that crosses the property line.
If there are interests that are registered against the property the lawyers for both sides of the transaction work to either have them removed or inform the buyer the reason that the encumbrance will remain registered against the property.
In order to ensure that a purchaser will not have to pay for issues with the physical title to the property, the purchaser has two options. One of these options must be chosen in every real estate transaction.
Option 1
To have a licensed surveyor attend at the property and prepare a survey of the property. The survey will show the property lines along with the buildings and other objects such as fences on the property. Your lawyer will review the survey and will give their opinion as to whether the property is free and clear of encumbrances. In most cases the buildings and other objects are all within the property lines. If they are not, the buyer’s lawyer will request that steps be taken by the seller to remedy the problem.
Option 2
This is for the buyer to purchase a title insurance policy. Title insurance is currently used on the vast majority of residential real estate transactions in Ontario. This option does not require a survey to be prepared thereby saving the client hundreds of dollars. The title insurance policy works in a manner that if a problem is discovered in the future with the title to the property, the insurance provider pays for whatever remedy is necessary to rectify the problem.
The lawyers at George Murray Shipley Bell LLP have years of experience ensuring smooth real estate transactions for our clients. If you have any questions regarding your real estate transaction, do not hesitate to contact Tyler at 519-336-8770.
