LEGAL HELP: SELLING A HOUSE OR OTHER REAL ESTATE
WHAT IS THE LAWYER'S FUNCTION? (Or... If I already have a realtor, what do I need a lawyer for too?)
The "Legal Help" series is brought to you by:
The Professional Corporation of the Law Office of Robert A. Dinnen
4 Government Road East, Kirkland Lake, Ontario P2N 1A2
Telephone (705) 567-7979 - Fax (705) 567-7980
41 Third Street, P.O. Box 907, Englehart, Ontario P0J 1H0
Telephone (705) 544-8878 - Fax (705) 544-8444
Email [email protected]
WHERE DOES A LAWYER COME IN TO THE PICTURE DURING THE SALE PROCESS?
Negotiating the Agreement of Purchase and Sale
- If you have a realtor looking after the sale for you, the commission you have agreed to pay, which is mainly for his skills in selling the property, also includes the preparation and signing of the agreement, so normally you don't need to ask a lawyer to look over the agreement prepared by your realtor before signing it.
- If, however, you don't have a realtor, the purchaser's lawyer will draw up the offer and you would be wise to obtain independent legal advice prior to signing it.
- Remember that it is usually best, in the long run, to disclose from the start of negotiations any problems with the property that you are aware of, such as encroachments, title qualifications, possible ground contamination and any other significant latent physical defects like rotten timber, leaks, or other structural problems that aren't noticeable on cursory inspection. If you wait till later to disclose a defect, the deal might abort. If you never mention it, you may be sued.
- A significant deposit paid on delivery of the offer is customary and strongly recommended. The purpose of a deposit is to help defray some of your losses if you and the proposed purchaser make a binding agreement, but then subsequently the purchaser wrongly fails to complete.
- When you are negotiating a sale, if it is indicated to you that the purchaser requires financing and therefore needs to wait for his loan application to be approved before making a firm commitment to complete the deal, consider making sure that the agreement also provides that you may continue to offer the property for sale to others in the meantime and that it contains a mechanism for handling the legal situation if another offer is received.
After You Have a Binding Agreement
- You need a lawyer to help you to satisfy your end of the bargain and to answer the purchaser's lawyer's requisitions. The purchaser's lawyer cannot act for you.
- Once you have retained a lawyer to represent you in the transaction, it is a good idea to inform him about anything that you know will have to be paid off in order to complete the transaction. He will then be able to request the payout requirements from the claimants and present them to you in a timely fashion so as to give you an opportunity to either approve the amounts or raise any dispute you wish to raise directly with a claimant.
- You will want to notify your electrical utility and natural gas company to read the meters, so you don't end up paying for the purchaser's usage. Also notify your water tank rental company and insurance company. If you are in the country, arrange to fill your propane or oil tanks on the closing date. Your lawyer will ensure that you receive proper credit from the purchaser in his calculation of the amount required to be paid on closing. If the tanks aren't full, it won't be possible to accurately calculate the credit owed to you because there would be no way of knowing exactly how much fuel is in a tank that isn't full.
- Arrange to vacate the property before the closing date, bearing in mind that the purchaser is entitled to have vacant possession that day and you will be asked to turn your keys in to your lawyer's office in the morning. He will need them in order to close the transaction. On the other hand, the proceeds of sale cannot be released to you until after the closing is completed, which means that, although you have to forfeit your keys early, you probably won't get your money till later.
- Make an appointment to meet with your lawyer before the closing date to execute the sale papers and review the adjustments to the purchase price as between vendor and purchaser set out in the statement of adjustments and the payments that have to be made out of the closing funds set out in the funds summary. Payouts typically include the realtor's commission, which is paid by your lawyer directly to your realtor, and any arrears of taxes or water rates, as well as the amounts required to discharge mortgages or other liens on title and legal fees and disbursements. If you are a resident of Canada, it will normally be your, not the conveyancer's, responsibility to report and pay tax on any taxable portion of the proceeds... but special rules apply to non-residents.
- Be sure your lawyer knows how to get hold of you throughout the day of closing, in case issues arise at the last minute. In any event, you will probably wish to be notified as soon as the net sale proceeds have been deposited to your account or are available for pick-up.
We know you probably hate moving, but at least we can make the rest of it relatively painless for you.
The "Legal Help" series is brought to you by:
The Professional Corporation of the Law Office of Robert A. Dinnen
4 Government Road East, Kirkland Lake, Ontario P2N 1A2
Telephone (705) 567-7979 - Fax (705) 567-7980
41 Third Street, P.O. Box 907, Englehart, Ontario P0J 1H0
Telephone (705) 544-8878 - Fax (705) 544-8444
Email [email protected]