Real Estate Law: Choosing a Real Estate Lawyer and Understanding Fees
Often clients will shop around for legal services as if they were a commodity and not a service and therefore the lowest price is the only consideration in their decision. Like almost any good or service, you often get what you pay for!
When looking for a real estate lawyer, one should always ask the following questions:
1) Am I going to be communicating with my lawyer directly or strictly his support staff?
2) How often or timely will my Lawyer address my questions or concerns?
3) Will my Lawyer properly search the history of title to my property, including searching abutting lands, in addition to off-title inquiries?
4) Will my Lawyer order a property tax certificate or rely on title insurance? Leaving me as the new owner to chase any shortfalls from my insurer.
5) Can I trust that my lawyer is a competent real estate lawyer? Is he/she the only real estate lawyer in the firm or office? Is there a real estate team of lawyers, or is there a real estate lawyer with a team of legal secretaries?
Even though it is against the rules of professional conduct, many lawyers will not even review a transaction and will only rely on law clerks and assistants to complete files from beginning to end. Although law clerks and assistants are generally competent, they are not lawyers and are not responsible for any problems that may arise out of the transaction and closing. Further, law clerks and legal assistants cannot give a legal opinion and when a client has an issue with their transaction, the lawyer should be easily accessible and able to give proper advice.
With the advent of email and smart phones, there is absolutely no reason that a lawyer or one of his/her staff cannot respond to their client’s communications even if it’s on a weekend or after hours. In todays fast pace environment, a whole transaction, from the agreement of purchase and sale to the delivery of keys can be completed in one day! (subject of course to any conditions that still need to be met and mortgage instructions that need be completed).
When shopping around for a lawyer, a client will usually get a quotation for the lawyer’s fees plus disbursements and taxes. Disbursements typically include title insurance, title search costs, land registration charges, conveyance software charges, office expenses (such as photocopying, couriers, etc.), off-title inquiries, and sometimes a property tax certificate. These are hard costs that the lawyer will incur and pass along to the client. Sometimes clients will ask for a flat fee quotation inclusive of fees and disbursements, however, a lawyer who does his or her job properly understands that it is difficult to provide such a figure, because at the time a quote is given, not everything about the property will be known. For example a single detached home could be on a part lot improperly severed from that of your neighbor’s, whether an abutting land search has to be made, and if there are other instruments clouding title which need to be examined and dealt with accordingly. A simple condo purchase will most likely have separate property identification numbers and therefore separate parcel registers showing the history of title for each the Condo Dwelling Unit, the Condo Parking Unit and the Condo Locker Unit. During the course of a real estate transaction, it is impossible to predict all the variables and contingencies that may influence the quality of ownership a purchaser seeks to obtain when buying a home. It is up to the lawyer to make sure a purchaser gets clear and marketable title, and that a seller complies with the requisitions to provide same.
Some lawyers’ websites will have an all inclusive fee calculator that will purportedly give the client an all inclusive cost for service. However, most of these fee calculators are illusionary and confusing; showing you bolded numbers as your bottom line and random small numbers that somehow you end up paying but was not part of the bolded bottom line figure. Worst of all there is no indication of what amount is actually the HST. Many people who have used these fee calculators mistaken the fee in bold as the complete cost and will not add the additional fees and taxes which ultimately do get charged. Be wary of flat fees and flat fee calculators, you do not want to compromise a complete and thorough job on the closing of your next real estate sale or purchase.
It is almost standard practice for many lawyers today to not order property tax certificates and just rely on title insurance which may or may not compensate the purchaser for unpaid property taxes. However, it is always preferable for the lawyer to order a property tax certificate on a purchase rather than solely rely on title insurance. Unpaid property taxes are a very common problem that arises and it is much easier to deal with it before the closing. If there are unpaid property taxes after closing, a purchaser’s lawyer will have to correspond with the vendor’s lawyer in order to demand payment and once that fails, the purchaser will have to make a claim through their title insurer. This process can be lengthy and a purchaser could end up waiting several months for a resolution if any. Unpaid property taxes can range from hundreds of dollars to even thousands of dollars incurring interest monthly. In extreme cases, unpaid taxes could result in a tax sale by the municipality of your property.
There are many lawyers who dabble in real estate, again relying on clerks and assistants to complete transactions from start to finish. These lawyers are providing a disservice to their clients because they are not able to understand the intricacies of real estate law in which there are many. Imagine buying a home and being unaware of certain easements, right of ways, an improperly removed oil tank, an sub-serviced septic system, or just not knowing your rights and not having your rights protected when a transaction goes south.
Real estate legal claims against lawyers represents roughly 30% of all lawyer insurance claims . Real estate law could be a minefield for lawyers due to the exposure of liabilities such title and mortgage frauds, conduct during a failed transaction and delivery of defective title.
Buying real estate may very well be the biggest purchase and investment you will ever make, so why would you want to take a risk at the most important part in purchasing property – closing and taking title/ownership as completed by your lawyer.
Choosing the right lawyer is just as important as finding your perfect real estate property and should be done with thoughtful consideration in order to ensure peace of mind through quality service and competent legal advice. Next time you are buying or selling a real estate property, contact one of the lawyers at Levy Zavet to have a free and frank discussion about your transaction.