Real estate lawyers: worth it for "normal" homebuying? (Ontario, Canada)
January 14, 2015 6:33 AM   Subscribe

My wife and I are actively looking to buy a house in Kingston, Ontario and have been working with a real estate agent that we're quite happy with. What would the advantage of having a real estate lawyer in the mix be? We're considering modestly priced single-family homes, possibly with an added apartment, and not sure what value we'd get by adding about $1,000 in legal fees to the proceedings.

It seems like there's a fair bit of redundancy between real estate lawyers and agents in terms of explaining negotiations and fees, walking us through the purchase process, looking out for hidden costs, etc. The advantage of the real estate agent, as a buyer, is that it seems that he would get paid as a partial percentage of the sale, so no money out of pocket for us.

We've got a good relationship with the agent, who came highly recommended by several people I trust and so far seems to be actively looking out for our best interests. My wife's been making some inquiries with local real estate lawyers and getting quotes that average around $1K for services related to a house purchase.

At the same time, we're looking at both pretty straightforward places -- newly renovated spaces with updated electric, heating, etc. -- but also places with "character" that will involve some tougher negotiations with the sellers re. getting them to adjust cost or absorb the cost of updating wiring, plumbing stacks, etc.

Is this a worthwhile investment or is it a little redundant if you have a good real estate agent helping you understand the paperwork and negotiate terms?
posted by Shepherd to Work & Money (11 answers total) 1 user marked this as a favorite
Best answer: You definitely don't need a lawyer during the pre-sale process. There's not a lot of overlap between what the agents do and what the lawyers do. The lawyers, in Ontario at least, are typically involved just to finalize the sale and are only brought in after the agreement to purchase (and all negotiations) is complete. The agent does all that with you as well as your house inspectors, etc.... Agents typically get paid 2.5% to 3% of the sale value, with both buyer's and seller's agents getting paid in Ontario.

However, the seller must have a lawyer involved for the last step, the title clearance, disbursements, and key hand-over . A buyer may want a lawyer on their side to look over the paper work. The couple times I've done it needed only a half-hour or so with the lawyers and a visit or two to drop off or pick stuff up. Lawyers are fee for service, a flat rate based on services provided and hours worked. When I sold a place about six years ago, the lawyer fees were also in the 1k range. As a buyer, it was quite a lot cheaper.
posted by bonehead at 6:45 AM on January 14, 2015 [4 favorites]

Best answer: Just to add, even with a fairly simple sale, one thing both buyer's and seller's lawyer have helped me with in the past is negotiating property tax requirements. When I bought my first house, my lawyer caught an issue which might have left me on the hook for a few hundred extra in property tax.
posted by bonehead at 6:54 AM on January 14, 2015 [1 favorite]

Best answer: The only person who is 100% on your side in a real estate matter is the one that is paid out of your pocket with your money.

If your agent is paid from the proceeds of the sale, he/she is not being paid out of YOUR pocket.
posted by Lucinda at 7:44 AM on January 14, 2015 [4 favorites]

Best answer: My real estate agent was a moron (friend of a friend, naturally), so I was very relieved to have had a good lawyer to fix the problems in the contract that the agent used. It was also comforting to know that someone was representing my interests, solely, in the transaction.
posted by hwyengr at 8:17 AM on January 14, 2015 [1 favorite]

Best answer: In addition to concerns about having someone represent only you and your interests in the transaction -- after the purchase agreement has been finalized, you may have trouble finding a mortgage lender who doesn't require a lawyer to prepare the mortgage, register it on title, and receive the mortgage funds to disburse appropriately, and the seller('s lawyer) may not be willing to send the title transfer document to anyone other than a lawyer, with conditions attached for its use. It is unlikely that the realtor could do any of this for you.
posted by bewilderbeast at 9:13 AM on January 14, 2015

Also, we found ourselves in the unfortunate situation of discovering, 2 days before closing, that the seller had not performed certain repairs that were described (in agonizing detail) in our agreement of sale. She was in total breach of contract, yet still somehow believed that she had more legal acuity on this matter than, you know, an actual lawyer. Our lawyer was critical in resolving this and was working around the clock on our behalf. It was a horrible time, and I was so glad to have very competent legal help at this point.
posted by Mrs. Rattery at 10:15 AM on January 14, 2015 [1 favorite]

Best answer: In Ontario you don't have a choice, you'll have to get your own lawyer to complete the purchase. You can see if your agent can recommend any lawyers to you as they will likely know a few. You should probably ask your agent to go over the entire purchase process with you as well just to make sure you are clear on timelines, costs and who will be involved and at what times (home inspectors, mortgage brokers, lawyers, insurance agents, etc.).
posted by any portmanteau in a storm at 11:40 AM on January 14, 2015

I'm in Toronto and both times I've bought a house our lawyer has caught significant issues (liens, grandfathered encroachments, etc.) that could have been really annoying had we not settled them up front. The rules are good in this case. I wouldn't go with an agent-recommended inspector or lawyer, I would use your network to find good ones. The agent wants his or her commission...they want you happy as well but mostly, they want their money. So they will lean towards anything that will complete the sale.
posted by warriorqueen at 1:02 PM on January 14, 2015

Best answer: Purchasing property in Ontario is buyer beware. So beware!

Here is a brochure from the Ontario Bar Association describing some of the services that a lawyer provides you when you're buying a house.

Here's another guide to services and cost breakdowns. The $1K-range quotes you've been getting seem to be fairly standard.

Note that your real estate agent is not able to provide most, if not all, of these services. The agent is great for everything right up until you sight the purchase agreement with the seller, then they very much take a step back and the lawyers guide the rest of the process.

(And I don't think you can do it yourself. At the very least, in Ontario, if you want to submit new land titles/documents to the Ontario Land Registry, you have to be certified to do so by the government. So if you're not deterred by this simple application guideline and getting a police background check (even before you begin to figure out how to actually do title searches and submissions), then you can knock yourself out trying. But a thousand dollar lawyer is still easier, and better value.)

Don't forget you're making a quarter-of-a-million-dollar+ purchase. The biggest thing you've ever bought. $1K is a drop in the bucket to make sure you're protected from any surprises.
posted by Kabanos at 1:03 PM on January 14, 2015 [1 favorite]

Yeah I realized that when I was buying for the first time my post wouldn't have explained it clearly enough for not-yet-owner me, so just to expand a bit...our first house was a century home in Scarborough and:

- had an old outbuilding 4 inches on city property, which required us to carry an extra million in liability insurance
- was not enough feet set back from the middle of the road by the new city laws, so we could have had to take down the porch, but our lawyer got affidavits from neighbours that it had been there before the bylaw came in
- had a $3k lien on it we would have had to pay the day of sale

And something else I can't even remember. Our lawyer's insistence that we find a survey really helped.
posted by warriorqueen at 1:07 PM on January 14, 2015

Response by poster: Thanks to all for the answers and the reality check; special bonus thanks to Kabanos for pointing me at those resources.
posted by Shepherd at 1:06 PM on January 15, 2015

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