How Can You Reduce Your Risk in a Real Estate Transaction?
Without the right real estate lawyer, you could unnecessarily expose yourself to risk in a real estate transaction. Whether you are the buyer or seller, you need to have the services and advice of a Toronto real estate lawyer from the start of any Toronto-area real estate transaction.
Every month, thousands of properties are bought and sold in Ontario. Every real estate transaction involves difficult-to-understand contracts and complicated laws, but by retaining the services of an Ontario real estate lawyer, you can reduce or avoid a great deal of the risk.
How do real estate lawyers protect a client’s rights and interests? Can one lawyer represent both the buyer and seller in an Ontario real estate transaction? Keep reading this brief discussion of your rights in a real estate transaction for these answers and more about Ontario real estate law.
Do You Need a Lawyer When You Buy or Sell Real Estate?
In any real estate transaction, when an issue or a dispute arises involving titles, liens, or other key documents, you must be assisted by the right real estate lawyer. The stakes can be high in a real estate transaction, and the rules, as mentioned previously, are quite complicated.
Even if you are only selling or buying a home, the law in Ontario requires you to have a lawyer’s assistance. Under the Land Registration Reform Act, you are required to have a lawyer make certain statements in the land title deed.
A single real estate transaction may involve owners, buyers, tenants, real estate investors, real estate agents, and insurance companies. A transaction may require comprehensive legal research that takes a considerable amount of time.
Moreover, the courts in Ontario punish real estate misrepresentation and fraud. It is essential to have a Toronto real estate lawyer protect your rights, watch out for your interests, and discuss how the law may apply to particular aspects of your real estate transaction.
Can a Single Lawyer Work for Both Parties in a Transaction?
A buyer and a seller in an Ontario real estate transaction must be represented by two different lawyers, except in limited circumstances.
Those limited circumstances include:
- a transaction where the buyer and seller are the same party and the transaction is made to change legal tenure
- a transaction where the buyer and seller are the same party and the transaction is made for a severance of land
- a transfer from an estate executor, administrator, or trustee to someone who is entitled beneficially to a share of the estate
- a transaction where the buyer or seller is a governmental body such as the Crown in Right of Canada, the Crown in Right of Ontario, an agency, commission, corporation, or board of the Crown, or a municipal corporation
- a transaction that is made to transfer an easement
- a transaction where the buyer and seller are “related persons” as defined by Section 251 of the Income Tax Act. (Related persons include persons connected by a blood relationship, adoption, marriage, or common law partnership.)
- a transaction where the lawyer practices in a remote area where no other lawyer could be retained without substantial inconvenience
May Two Lawyers With the Same Law Firm Handle the Same Transaction?
In the limited circumstances where a single lawyer may represent both the buyer and seller in a real estate transaction, the lawyer must be in compliance with the Rules of Professional Conduct set forth by the Federation of Law Societies of Canada.
Those rules do not prevent a law firm of two or more lawyers from representing or acting for both a buyer and seller in a real estate transaction provided that the parties are represented by different lawyers in the firm and there is no violation of the Rules of Professional Conduct.
What Will Your Real Estate Lawyer Do for You?
Dealing with a title defect is a difficult legal challenge. If you’re buying property in Ontario, and a problem emerges with the title, that problem could prevent you from obtaining the needed financing. Such situations require a real estate lawyer who regularly resolves such matters.
An astute Ontario real estate lawyer will examine each document that is important to the transaction, ensure that the transaction is compliant with the law, and advise against taking any action that may risk your long-term interests.
Very few lawyers in the Toronto area have the experience and skill to resolve real estate disputes, but if you’re on either side of a real estate conflict, you must retain a real estate lawyer who has substantial experience representing clients in these cases.
What Are Your Options When a Real Estate Contract is Breached?
When a property buyer or seller in Ontario breaches a real estate contract, the other party has several legal options available. It is typically the buyer who may have second thoughts about a purchase, but sometimes sellers will decide that they do not actually want to sell.
If a seller contracted to sell a property and backs out of the contract, you will need to have a lawyer scrutinize that contract carefully. If a seller breaches a contract, a buyer may have any deposit returned and then either file a lawsuit for damages or try to compel the property’s sale.
When a buyer breaches a real estate contract, should the seller try to enforce the contract, or should a seller simply keep the deposit and find another buyer? Every situation is unique. You’ll need a real estate lawyer’s personalized advice before you proceed with any legal action.
The potential for the breach of a contract is one of the main reasons why, in most cases, a single lawyer cannot represent both sides in a real estate transaction. If there’s a contract breach, whether you are the buyer or seller, you must have your own real estate lawyer.
What Else Should Real Estate Buyers and Sellers Know?
Legal action is not always needed to settle real estate disputes. Most real estate disputes can be resolved through mediation, arbitration, or private negotiations.
While a private settlement is generally preferable, if a real estate dispute cannot be dealt with privately, a court will settle it, and you’ll need to be represented by a skilled real estate lawyer in the Toronto area.
Whenever you sell or buy real estate in Ontario, you must have a neutral and knowledgeable third party – a good real estate lawyer – review the key documents and protect your rights and interests.