Written by Carole Redmond, Lawyer, Oldham Law

Oldham Law Firm, A Professional Corporation
88 James Street, Parry Sound 705-746-8852 and 178 Ontario Street, Burk’s Falls 705-382-3730

The average person is usually not aware of the lawyer’s role in the purchase or sale of ahome or cottage, which typically has three stages:

i. The Agreement: which involves negotiating, drafting, and signing the agreement

of purchase and sale (the “agreement”);

ii. Due Diligence: which involves title-related searches, arranging title insurance,

and ensuring all conditions and terms to the agreement are satisfied; and,

iii. Closing: successfully transferring title, exchanging documents and keys, and

transferring funds.

Agreement of Purchase and Sale

At the very early stage, a buyer and a seller should have a lawyer prepare or review the

agreement of purchase and sale. The lawyer will ensure that the parties have a valid

agreement and that the terms reflect the parties’ intentions and nothing crucial is missing

or likely to cause risks or problems for either party.

The lawyer’s role for the buyer or the seller will differ depending on whom the lawyer

acts for.

The Buyer’s Lawyer

The lawyer will ensure the buyer is receiving good and marketable title to the property,

meaning that legal ownership of the property can be transferred to a new owner without

the likelihood of any claims being made against the property.

The property is subject to certain restrictions that are set out in the agreement that should

not present a problem on closing, so long as the seller can show that the terms of these

restrictions have been complied with to date, such as zoning by-laws and municipal


The buyer’s lawyer will perform title searches to find any claims that would affect the

buyer’s ownership interest. This could include existing mortgages, tax liens, construction

liens, certain easements or restrictive covenants, or court orders on title. The lawyer will

also make sure that the transaction is in compliance with the Planning Act, which has its

own set of rules pertaining to land use. The lawyer may also arrange for title insurance,

which insures against any defects to the title.

The lawyer will send a “Requisition Letter” to the seller’s lawyer requesting compliance

with the terms of the agreement, such as the delivery of keys, compliance with easements

and municipal agreements, and by-laws and rules, discharge of previous mortgages, and

deletion of any competing interests in the property. The lawyer will also prepare and

review closing documents to be signed by the seller to ensure the buyer’s rights are

protected and the documents reflect the terms of the agreement.

If the buyer will be receiving a mortgage, the lawyer will also prepare the documents

required by the mortgage lender. The lawyer will deliver the funds to the seller, pay for

disbursements, land-transfer tax, and title-insurance, and complete the registration of the

deed and any mortgage(s), and follow-up on any post-closing matters such as holdbacks

for renovations and discharge of any previous mortgages.

The Seller’s Lawyer

The seller’s lawyer ensures that the seller complies with the requirements of the

agreement to avoid a possible breach of any terms. This includes reviewing all documents

to be signed by the seller to make sure that the seller’s exposure for any representations

and warranties after closing is limited to only what is required under the agreement.

The lawyer will also obtain information of any mortgages that the seller has on title, and

confirm that the property taxes and utilities are not in arrears. The lawyer will also make

sure conditions in the agreement are complied with before closing, such as completing

renovations, removing all belongings and garbage, paying out outstanding taxes or

utilities, and so on.

The lawyer will respond accordingly to the buyer’s Requisition Letter, depending on the

nature of the requests made. The lawyer will then obtain payout statements for mortgages

registered on title and provide an “undertaking” (a promise) to ensure discharge of all

mortgages on or soon after closing.

The lawyer will prepare a Statement of Adjustments and receive funds in escrow, which

will be released in accordance with the terms of the escrow arrangement. The lawyer will

then release the deed for registration. On closing, the lawyer will payout the seller’s

mortgage(s), realtor commissions, and deliver sale proceeds to the seller. Finally, the

lawyer will report to the seller, notify the municipality of the change in ownership, and

follow-up with the previous mortgage lender to ensure timely discharge of the seller’s

mortgage (if any).

Whether you are buying or selling, a real-estate lawyer offers peace of mind and ensures

your interests are protected.

Leave a Reply

Your email address will not be published. Required fields are marked *