All posts for the month January, 2014

Q&AQuestion: Can you further explain the role of a closing lawyer during a real estate transaction? What do they really do from A to Z and why they charge a lot? – Ethelyn C.

Answer:  A lawyer reviews your Agreement of Purchase and Sale, Status Certificate (for condominiums) and provides advice on these documents.

In addition, the lawyer can advice you on the ultimate price you would have to pay including all closing costs such as: land transfer tax, document registration fees, search fees, legal fees and adjustments to purchase price that you will thave to pay the vendor such as pre-paid utilities.

The buyer’s lawyer will complete a series of legal inquiries such as searching title for encumbrances, searching the owner’s name for executions in order to ensure that the seller has the right to sell the home and provide a good title and that the property’s present use is in legal conformance to all legislations.

In order to ensure that you are acquiring good title of the property, your lawyer will do an extensive background check on the sellers of the property, search the title of the property to ensure that the property has good marketable title, consider survey related issues such as whether there are any property enroachments on neigbouring properties, contact the municipality to ensure there are no work orders against the property, whether there are any easements that allow organizations/corporations to access or install additions to your property and determine whether there are any unpaid utilities or tax bills that must be corrected. Your lawyer will take steps to ensure that you are getting a good and marketable title and to correct any problems.

In addition, your lawyer will prepare and check mortgage documents, prepare and check registration documents, check the statement of adjustments , advise a buyer on the different ways of owning property, advise a buyer on title insurance and any other concerns you may have with purchasing or selling your home. Your lawyer will explain and sign various documents to effect the transfer of property closer to the closing date.

As the closing date draws near, the vendor’s lawyer will cause to deliver the keys to the home to the buyer’s lawyer. The buyer’s lawyer will register the transfer of property and provide the keys to the buyer right after the home is properly registered.

As for the costs, The legal costs for a lawyer ranges depending on the lawyer. The range is approximately $499 to $800.00. Remember that this is just the “legal fees” and does not cover disbursements (amounts paid by the lawyer to a third party on your behalf). The ultimate price you pay to a lawyer including disbursements can range from $1,100 to $1,800 approximately.

Other closing costs include Land Transfer tax paid to the municipality of Toronto or the Province of Ontario, Title Insurance paid to an insurance company and pre-paid utilities.


Q&AQuestion: When buyer buys a house or when home seller sell a house and both parties have lawyers what kind of legal problem can you run into when both parties have lawyers to protect them? – Mr. T.

Answer:  Mr. T. thanks for the question!

First, let me dispell the myth about closing attorney being use during a real estate transaction. Their job is to ensure a smooth transition of ownership title from the seller to the buyer. That’s all! Some of the things they may do includes the following:

• Payoff and discharge of mortgages
• Payment and allocation of real estate taxes and utilities
• Payment of realtor commissions
• Disclosure and payment of lender fees and closing costs
• Funding of mortgage escrow account
• Payment of transfer taxes and recording fees
• Payment of pre-paid interest
• Distribution of sale proceeds

On the other hand a prudent realtor’s job is to ensure a buyer or seller does not run into legal problems during the transaction. How can you get sued during a transaction?

A seller made a significant modification on their property including altering the foundation of the house. A realtor’s job is to ask question what has been done to the property to date. If the seller kept this hidden and failed to dislcosed it to the buyer and a year later after the transaction was closed the buyer found out that there is a structural damage to the property due to the previous owner modification of the house, the buyer could sue the seller for the damages on the property even after a year has passed. A realtor’s job is educate seller of this scenario’s!

A buyer is looking to purchased a property with the intension of having an extra rental income for renting out a basement. A realtor showed and sold a property with a finished basement but failed to checked the zoning and rental bylaw. Sometime later after the buyer moved in, the next door neighbour complained to the city about illegal apartment and the owner was ordered to ceased the rental operation which caused a rental income loss. A realtor can be sued for not doing a due diligence!

As you can well imagine you can easily run into legal problems without having a proper advice.

Q&AQuestion: Why do you guys Realtor charge a lot for commission I mean 5% is a lot don’t you think for putting a sign and signing papers I know you guys went to school to be a Realtor but come on anybody can post a for sale sign and sell house! – Sarah

Answer:  I totally agree with you a 5% commission seems a lot when selling a house but let me justify it by answering your question.

First, to become a full pledged real estate agent in Ontario you have to successfully complete a rigorous training 6 exams in total. For more information please visit

Second, a realtor/borker who only erect for sale sign and only sign papers is not worth 5% commission not even a 1% commission. I personally would not pay somebody a 1% commission to only erect for sale sign and only sign papers when selling my house. Yes you are right I could do that myself! That we both could agree with!

Let me ask you question…what do you think would be a proper compensation to pay somebody to market your home if they have to do the following:

1. Do one on one initial consultation – to determine your needs and wants to get to the bottom of your true motivation for selling your home so you can save time and effectively market it on timely manner?

2. Provide you advice when it comes to real estate transaction to protect you from a potential legal problem that may arise BEFORE, DURING and AFTER the transaction?

3. Spend time, money and resources to properly market your home including advertising it in hybrid fashion? Live virtual tour with a specific URL that matches with your address so passerby can view your home 24/7 online.

4. Put their real estate licensed on the line exposing themselves to potential legal problems such as lawsuit that do happen when unforseen unfortunate circumstances occur.

See as you can imagine realtor job is not only to erect sign but to take full LEGAL responsibility of you when you sign a contract with them. Let me put this way and I will make a high emphasis on number 4. You are a liability to a realtor when you sign a contract with them just like driving a car you will never know when the accident will happen!

I can’t speak about others you and I know in any industry there are bad apples and good apples a competent and incompetent ones but when a realtor do the 1 2 3 4 and sold your home within given time frame I think they are worth every penny of the 5% commission and most of it goes to number 2 & 4.

Q&AAnswer: A credit beacon score of above 700+ above is good anything above is excellent.

However, I want to point out that it’s not only the credit score that gets you qualify for mortgage it’s a combination of your GDS/TDS ratio along with your credit score that determine your credit worthiness.

Rule of thumb the less liability you have against your credit the more likely that you will be approve for a mortgage. Bank or lending institution have their own criteria when pre-qualifying for mortgage some are strict the others may be linead so make sure you shop around!

Q&AAnswer: In Ontario it can be a case by case basis. Some lender say YES and some may say NO. Although you may be able to acquire home with zero down you also have to remember that monthly payment for that mortgage will be significantly higher than if you were to put a regular down payment.

Bill 55Last spring, Minister Tracy MacCharles introduced Bill 55, Stronger Protection for Ontario Consumers Act, 2013 in the legislature. Bill 55 sought to strengthen consumer protection in the areas of door-to-door sales, debt settlement services and real estate transactions.

The original bill presented by the government proposed two changes to the Real Estate and Business Brokers Act (REBBA), 2002. First, the bill called for more flexible remuneration of fees and/or commissions payable to real estate brokers. Under the old Act, consumers could pay either commission or an agreed upon fee, but not both.

What has changed? December 12, 2013 this restriction has been removed, so brokerage now have to option to make fee arrangements that could include a blend of flat fee and a percentage of a sales price.