If You’re Getting a Mortgage or Have an Existing Mortgage, Then You Need a Lawyer to Buy or Sell a Home in Alberta.

The legal requirements surrounding mortgages in Alberta demand a lawyer, but an attorney protects your interests and manages many important details in a real estate transaction. Once you have a Purchase Contract, it’s time to get a lawyer, however it can help to have one much earlier in the process to make sure things go smoothly. Below is a list of all the things that my Edmonton law firm, Field Law, takes care of so that our clients can focus on getting ready to change homes. As you’ll see, there’s a lot to do, which is why the process takes time. Buying and selling are bit different, but they both take time. The end of this blog post also has a bunch of frequently asked questions.

Selling a Home:
The Role of Alberta Real Estate Lawyers and Realtors.

1. The realtor sends the Real Estate Instructions, including a copy of the Purchase Contract and all amendments, to both the seller’s lawyer (Field Law, acting for the seller) and the buyer’s lawyer.
   1. If there’s no realtor involved, you’ll need to get us the paperwork.
2. Here at Field, we open a new file in your name and start our due diligence on your behalf.
3. We email you a checklist so you can easily provide the info we need.
4. We contact your lender for a payout statement of your existing mortgage (if any) effective for the completion date.
5. We contact the buyer’s lawyer asking for the proper names of the buyers for insertion in the transfer documentation.
6. The Statement of Adjustments is prepared. This document, once approved by you, will be sent to the buyer’s lawyer and sets out the purchase price, less deposits already paid by the buyer, and notes debits and credits to buyer or seller for municipal taxes, homeowners association fees, condominium fees, etc.
7. Now it’s time to sign your paperwork. We contact you to arrange a convenient appointment. Make sure to bring in your picture ID as it is now required for all real estate transactions!
8. Your appointment to sign paperwork takes between 30–60 minutes. We will carefully review with you the Statement of Adjustments, then get your approval to pay out various items on closing such as your old mortgage, outstanding taxes (if any), condominium fees (if any), and any other item that it is your responsibility to pay. We will also get your instructions on how to pay you (Direction to Pay) the net sale proceeds in a manner convenient to you.
9. We send all your paperwork to the buyer’s lawyer on trust conditions that if they use the documentation, they must pay us all the money that the buyer still owes you, plus adjustments.
10. On completion (possession) day, once we receive funds from the buyer’s lawyer, we call your realtor (or you if there’s no realtor) to authorize release of keys.
11. As soon as we receive the sale proceeds, we start making authorized payouts in anticipation of getting you your net sale proceeds as quickly as possible.
12. Lastly, we get you a full report as quickly as possible with enclosures such as a Statement of Receipts and Disbursements showing all monies received and paid out, the Statement of Adjustments, copies of lender payout statements, and our paid statement of account.

 

Buying a Home:
The Role of Alberta Real Estate Lawyers, Realtors, & Lenders.

1. Your realtor immediately tells your bank that your contract is now unconditional, and then your bank sends mortgage paperwork to us here at Field Law (we are the buyer’s lawyer).
   1. If there’s no realtor involved, you’ll need to notify the bank yourself.
2. The seller’s realtor sends the Real Estate Instructions, including a copy of the contract and all amendments, to both the seller’s lawyer and the buyer’s lawyer (Field).
   1. If there’s no realtor involved, you’ll need to get us the paperwork.
3. Here at Field Law, we open a new file in your name and start our due diligence on your behalf.
4. We email you a checklist so you can easily provide the info we need.
5. We start preparing the mortgage and related paperwork.
6. We contact the seller’s lawyer, give them your proper legal names and sort out any obvious issues.
7. We go over paperwork from the seller’s lawyer with a fine-toothed comb.
8. Financial calculations are prepared and sent to you. The financial calculations tell you, bottom line, how much money you still need to come up with (balance of funds required). These calculations take into account the deposit(s) you have already paid, your projected legal account, and all other costs we are aware of.
9. Home insurance memo is prepared and sent to you. The memorandum is for you to give to your insurance agent. It tells them exactly what kind of insurance your bank requires.
10. Now it’s time to sign your paperwork. We contact you to arrange a convenient appointment.
11. Your appointment to sign paperwork takes between 30–60 Minutes. We will carefully review with you the seller’s paperwork and the bank’s paperwork.
12. Usually at your signing appointment, you also bring us a bank draft for the balance of funds required as set out in our financial calculations. Make you bring identification, too!
13. We send all your paperwork to the Land Titles Office to register the title to your new home in your name(s).
14. In cooperation with your bank, we organize getting your mortgage funds deposited to our trust account.
15. On your closing (possession) day, we send the seller’s lawyer the balance of funds required to finish paying for your new home. And, very importantly, we ask the seller’s lawyer to authorize release of keys.
16. The seller’s lawyer authorizes the seller’s realtor to release keys. Your realtor gets those keys and puts them in your eager hand. Congratulations, you now can take possession of your new home!

 

FAQ: Buying and Selling Alberta Real Estate

Even with the summary above, you probably still have lots of concerns. Below are some of the frequently asked questions (FAQ):

Do I Really Need a Real Estate Lawyer?

Sellers:
Practically speaking, yes you do. You might be comfortable preparing a Transfer Of Land and moving through the other steps as set out above. But if you have an existing mortgage, no buyer’s lawyer will send you the sale proceeds in trust that you use them to pay out your existing mortgage. Buyer’s lawyers can impose trust conditions on us that we use the sale proceeds to pay out in existing mortgage but they cannot impose trust conditions on you. Therefore, if you have a mortgage, in almost all cases you need a real estate lawyer.

Buyers:
Yes, you do. Most people buying a new home are also getting a new mortgage, and lenders demand that their paperwork be prepared by a lawyer. Typically, on residential purchases, the same lawyer acts for both the bank and the buyer. Besides, a real estate lawyer protects your interests, so it’s the smart move even if you’re paying cash with no mortgage.

 

When Does the Lawyer Get Involved?

At Field Law, we would love to hear from you as soon as you are reasonably serious about a sale or purchase. For straightforward real estate sales and if you have none of the issues discussed earlier, you may not need to talk to a lawyer until you actually have an unconditional contract. Either way, it’s never a problem; we can often solve issues or give you some comfort at any point in the selling process. So, please shoot me an email. I really do enjoy speaking with first-timers or really any seller/buyer and am glad to help with any questions.

Realtors are professionals trained to represent your interests, so a lawyer isn’t usually required in the negotiation phase. In most cases, the lawyer gets involved soon after you remove all conditions from the contract. On the other hand, if you have a strange situation or a question your realtor can’t answer, then, by all means, my colleagues and I at Field Law can help. Your realtor is assisted by today’s standard real purchase contract. The standard contract has been revised and improved. It does a good job of protecting the seller and buyer so that lawyers are most often not involved in the negotiations, but it doesn’t hurt to get in touch with us early, just in case.

 

How Does a Real Estate Lawyer Help?

Here’s how it works. The listing realtor’s office sends full copies of the paperwork to both the buyer’s lawyer and seller’s lawyer. That is the first direct involvement your lawyer will usually have.

The lawyer’s job is to protect you, to ensure that your sale or purchase proceeds smoothly, and to close on time according to the details in your signed contract. To do this, your lawyer and their staff analyze the paperwork from the realtor. That paperwork is generally a covering letter, a real estate purchase contract, and all amendments to that contract, along with the documents from the bank. On receipt of these documents, Field Law opens the file in your name. We then start doing ‘diligence’ or ‘searches’ on your behalf. We start with getting a copy of the legal title or deed to the property from the Alberta Land Titles Office. We also search the taxes to see whether they have been paid or not. The contract may lead us to do other searches. The searches are done to protect you and ensure your sale or purchase proceeds correctly.

Next, we will contact you, advising you that the contract has been received. Naturally, lawyers must ask you for personal data and the contact information required to properly set up the file and stay in touch with you. We will discuss any issues that have arisen from analysis of the contract and mortgage payout statement, if any. Then we direct our helpful and experienced staff to prepare all of the required documentation. For sellers, that includes the Statement of Adjustments and net sale proceeds calculations to ensure their sufficient funds from the net sale proceeds to pay out everything that is your obligation to pay. For buyers, that means mortgages and other lender requirements.

 

How to Choose an Alberta Real Estate Lawyer?

As you work your way through buying or selling your home and finalizing your contract, your realtor and/or lender will ask you, “who’s your lawyer?” If you don’t already have a lawyer, your realtor might be able to recommend one, but I’d suggest thinking critically about their suggestions relative to your needs.

1. You’re best off with a full-time real estate lawyer.
2. Do not use your family lawyer just because they are the family lawyer.
3. Especially don’t pick a lawyer who is in court all day long!

The Field Law real estate department is made up of dedicated professionals who focus on helping people like you buy and sell real estate in Alberta. We are more than happy to help you at any stage of your new Alberta real estate purchase, and we have the experience to make the process easy for you.

 

Buyers: How to do Final Real Estate Financial Calculations?

Financial calculations are prepared advising how much money you still have to bring in. Typically, those financial calculations include the balance of money required to purchase the property along with closing costs. This is the part of the money not coming from your new mortgage. Those financial calculations are sent to you and an appointment is arranged to sign the paperwork.

 

What Are Real Estate Closing Costs?

Sellers:
Closing costs consist of adjustments for taxes, condominium fees, if any, legal fees, and perhaps other costs. At my Edmonton real estate law firm, we recommend that you discuss closing costs with us, as each sale property is unique.

Buyers:
Closing costs are all the money it takes to buy a new home over and above the purchase price. First, you have to account for the balance of the purchase price, less the amount of the mortgage and any deposits paid, which is commonly referred to as the cash to close. Apart from these monies, closing costs typically include legal fees, possibly CMHC fees, tax adjustments, property inspection, insurance, appraisal, utility deposits, and perhaps other costs. At my Edmonton real estate law firm, we recommend that you budget between $2000 and $2500 for closing costs.

 

Buyers: When Do We Bring the Money to Close?

First, your lawyer sends you detailed financial calculations. Then, one week before the closing date, you will pay the balance of cash to close, plus closing costs. A bank draft for the balance of cash is typically used to expedite the process, and you bring it when you come in to sign your documentation.

 

Buyers: When Do We Sign Paperwork?

In our law office, we like you to come in one to two weeks before the closing date. You must bring in proper identification. There are many new government rules for realtors, lenders, and lawyers—all aimed at protecting Canadian society from mortgage fraud, terrorism, and money laundering. Along with your identification, you will bring the balance of money required (consisting of cash to close plus closing costs), as set out in the financial calculations you have already received.

You then sit down with the real estate lawyer, not an assistant, to review and sign the paperwork, including: mortgage, statement of disclosure, life insurance app/waiver, commitment letter, assignment of rents if it’s an investment property. Then affidavit of value attached to the transfer of land. Then, in-house things like statement of adjustments, conflict letter, various statutory declarations re down payment and whether the buyer is living in the property or not, whether they are renting out any part of it or not, whether there have been any changes to an older real property report, whether they are ‘politically exposed’ persons, down payment verification.

It’s always a big stack of things to sign, but we make sure that everything is taken care of properly and that your real estate transaction is fully documented, protected, and completed.

 

Buyers: What’s Next After Signing the Paperwork?

Once you sign the documentation, the lawyer will have the title changed into your name at the Land Titles Office, pay funds to the seller’s lawyer on your behalf, and request the keys be released so you can take possession of your new home.

After you have possession, and typically within one month of closing, you should get a reporting letter from your lawyer providing copies of all the paperwork and a financial accounting of all funds. Somewhat later, three to six months after closing, you should get a final copy of the title from your lawyer showing that the seller’s mortgage has been discharged and your purchase is complete.

 

When Do the Keys Change Hands?

Not until the sale proceeds are ready for unconditional release! Today’s typical Alberta real estate contract says that you will give to the buyer possession and keys at noon on the completion date. Watch out for setting a completion date that is on a weekend or holiday as that can complicate matters!

 

How Much Are Edmonton Lawyer Legal Fees?

The legal account with your lawyer consists of three parts. There is a legal fee, which is money the lawyer gets paid for doing the work. There are disbursements or out-of-pocket expenses, such as search costs for copies of title and tax information, as well as registration costs at the Alberta Land Titles Office. And, there is always the dreaded GST!

There is no standard legal fee that lawyers charge. Your legal account will vary from law office to law office. Most law firms prepare their legal accounts on the legal fee plus disbursements and GST basis. Because the disbursements are variable numbers, it is sometimes difficult to get an exact quotation for your costs. This can be irritating for buyers, so  we have developed a new model called Homeowner’s Plus.

We simplify the cost of lawyer’s fees by making them flat-rate. Homeowner’s Plus is your full legal account that includes both flat-rate legal fees and disbursements. It’s easy, it’s fast, and you know exactly what to budget for in your legal account. To read more about the cost of lawyer’s legal fees, click here.

 

Can You Do Rush Real Estate Transactions?

We can do quick closings, but quick closings cost more because we have to drop whatever else we’re doing and expedite everything…

 

Affordable Trustworthy Edmonton Real Estate Law Firm

If you’re buying or selling a home or other property in Alberta, choose Field Law for your all your legal needs. Remember, in the law as with everything else in life, the lowest price is not necessarily the best value. Price is what you pay, value is what you get. We make real estate easy; contact us today!

“Justice Law Canada” image by Monam used under CC0 Public Domain Dedication.