exactly does a lawyer do during a home purchase transaction?
There are two aspects to the lawyer's function in a home purchase transaction, one is related to the product, the other is related to the process. Let me explain what I mean by this.
When someone buys a home and hires a lawyer to assist him or her with the transaction, it is the job of the lawyer to ensure that the client gets good marketable title to the property so that when the client sells the property in the future they won't have any problems completing the sale. Essentially the lawyer is ensuring that there are no liens against the property and that there are no defects in title which would render the property unmarketable. That is the product aspect of the transaction, the product being a home against which no one else has a claim and which can be sold in the future without any problems. In order to provide this service, the lawyer will conduct a number of searches, either at the registry office, online through Terraview or by letter to the appropriate authority.
The principal search is the title search. This will disclose outstanding mortgagees, construction liens or other encumbrances or title defects relating to the property. At the same time the lawyer will determine whether there are any judgments against the vendor because outstanding judgments attach to the property.
The other searches are letter searches to determine whether there are tax or water arrears which could become a lien against the property, or work orders against the property or in some cases whether there are historical site issues, conservation area issues, septic system issues or other legal issues which could affect the property.
Also, in most cases, the purchasers will require a mortgage to assist them in purchasing the property. The lawyer will be in contact with the bank in order to get mortgage instructions so that the actual mortgage documents are prepared properly, and will arrange to get the mortgage funds from the bank on the date of closing. The lawyer will also want to ensure that there are no outstanding judgments against the purchasers because if there are, the mortgage funds cannot be released and the deal will not close.
The lawyer will also advise the purchasers of the requirement to obtain fire insurance prior to closing and will discuss how the purchasers are going to take title where there is more than one purchaser. There are a number of issues that arise when deciding how to take title, including financial issues and estate planning issues.
Closer to closing the lawyer will advise the clients how much money they must bring in to complete the transaction and will meet with them to sign all the closing documents. Arrangements will be made at that time for the clients to get keys to the property after closing. Finally, the lawyer will submit a report to the client and the mortgage lender in due course after closing.
This is an overview of the minimum service that must be provided by every real estate lawyer in order to deliver the required product, that is, ownership of the property.
The process aspect relates to the client's experience from the time that the agreement of purchase and sale is drafted until the sale has closed and the client takes possession of the property. It has often been said that buying a home is the biggest single investment most of us will ever make. Needless to say most purchasers experience some level of stress and anxiety during the buying process. They have never been through the process before, they don't know what to expect, they don't know who they are dealing with, they worry about what might go wrong, they don't know how they are going to get money to the vendors on closing, etc.
In order to assist the clients and to keep stress levels to a minimum, I believe that the real estate lawyer should be meeting with all his or her clients as soon as possible in order to go over the details of the transaction with the client, to explain what he or she as the lawyer will be doing, to advise the clients of the things that they must take care of i.e. arranging the mortgage and insurance, and answering any questions that the clients may have about the transaction.
From my own experience I have found that this attention to the process is not only extremely helpful to the client, it is extremely valuable for the development of my business. If I can help my client have a positive experience during what could otherwise be a very stressful time, I know that not only will they come back when they need legal work in the future, but they will recommend me to family and friends because they know they will be treated well.