Steps for Buying a Home - Lawyer's Guide

Dated: April 3 2024

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What does a Real Estate Lawyer go through when processing the sale from the Buyer's perspective?

Whether you have done the process before or it is your first time buying a home, understanding when and how the process works when the Real Estate Lawyer gets involved is important.  Being based in Edmonton Alberta, this information is specific to Edmonton and Alberta, but I assume the process will be similar in other areas as well.

Before I get started, I want to share a personal story. I decided I would process my own title change when I bought my own property. At that point I did not need a lender and the seller was family so I thought it would be a good learning experience.  There are many things that a lawyer protects you from but in this case the title was supposed to be clear, and the seller assured me it was clear. But, in the end, it wasn't and later when I went to get a line of credit I had to go through a long, frustrating experience trying to get a lien removed from my title. I would not have had to do that if I had gone through a lawyer. On top of that there was a small error on the paperwork I submitted, and the titles office sent this back to me through regular mail. I didn't check my post box and the deadline passed.  Luckily the ladies at the Edmonton titles office were very nice and I just needed to make the small correction and bring it back downtown to resubmit it, but it could have been worse. The other point was that even though I processed my own title transfer I still needed a lawyer to sign the documents in front of, and I also needed to pay the titles office as well, so it wasn't as big of a savings that I had originally thought. I guess the point is that just because you have the right to process things like this yourself, you may not want to.

Let's dive into the process with the lawyer that you go through when you are buying.

The first point is that conditions should be removed before the lawyer would get involved.  Generally, conditions would include options like having an inspection, confirming with the bank that they will give you a mortgage, and in the case of a condo often buyers will want to have a professional review the condo documents. Basically, these are steps that if you don't like what you see (or cannot get the financing) then the buyer can decide to not go through with the purchase of the home.

Conditions have dates attached to them. Two weeks would be a normal amount of time that a buyer would take to confirm and 'waive" these conditions.

So, conditions are waived/removed.  In realtor terms, the home is now SOLD! Yeah!

Then the Lawyer gets involved.

The Lawyer gets a copy of the (Offer to Purchase) contract.

When an offer is made on a property it includes all of the details and timing of the purchase including things like the amount, the date the buyer would take possession/move in, what is included, all of the property details, etc.

Also, any other relevant documents like Dower Rights documents (when a spouse has lived in the property but is not an owner on the title).

The lawyer must also receive any mortgage instructions

If the buyer is using financing to buy the property, then this should be confirmed. In the case the money is coming from a bank then the lawyer would confirm the details with the bank.

The lawyer needs the actual formal instructions, so they know how to prepare the mortgage paperwork.

Next the Lawyer will do their initial searches and inquires, then prepare the documents for signing and have the buyer come to their office to sign. Generally, this happens 4 to 5 days before the closing date.

In the case there is a mortgage involved the buyer would still have a down-payment that needs to be paid. The balance of the downpayment would be the full down-payment amount (what ever the buyer is not getting finances for) minus the deposit that they would have made earlier when they made the offer (or shortly after).

There are also other costs. The legal fee and disbursements, which is often $1,500 to $1,600 which needs to be brought in together to the lawyer with the balance of the down-payment.

Also, there is a tax adjustment that is done. Taxes for the year are due on June 30th. So, depending on what has been paid already by the seller, the buyer will either receive money from the seller (and be responsible for paying it) or they need to pay back money to the seller if the seller has paid more than their share of the taxes for the year.

Often since the amounts are higher, Lawyers will not accept cash and the buyer needs to get a certified check or bank draft and bring that to the lawyer. Of course, the lawyer will let the buyer know the amount and breakdown of what needs to be paid before they go to their office.

Funds received must go into the trust account. Which is a separate bank account that cannot be mixed with other payments and is only for holding deposits. These accounts are government regulated on how they must be used to keep the money safe.

When there is a mortgage involved the Buyer's Lawyer needs to send an interim report to the lender. From there the lender will let the Lawyer know if there are any missing documents or any outstanding conditions.  

Next, the Buyer's lawyer notifies the seller's lawyer that they are ready to close.

The Seller's lawyer needs to hand documents to the buyer's lawyer, which includes a signed transfer of land. They are delivered between lawyers on the basis of a number of formal conditions called trust conditions restricting the buyer's lawyer, at the risk of losing their license, only being able to use those documents if they are ready to pay the balance of the purchase price on the closing date.

Then the Buyer's lawyer is able to take the documents and submit the application to the Edmonton land titles office (so that they can process transferring the land ownership to the new buyer(s). For Alberta, there are two land titles offices. One is located in Edmonton which handles the northern area, and one is located in Calgary handling the southern area of Alberta. 

Once the Buyer's lawyer gets the updated title back from the land titles office then they can issue their final report.

Generally, the lawyer will make sure the payment is made to the seller's lawyer by noon on the closing/possession date. Once funds have been received and everything is complete the Seller's Lawyer will contact the buyer's realtor and let them know that the keys can be released.

From there the Buyer would get the keys to their new home.

And that is the simple, yet not simple, process. Of course, there can be issues along the way the lawyer, and real estate agents like myself, would support and help.

If you have any questions, comments or have any suggestions on how we can explain this process a little more clearly, please comment below or contact me.

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Derek Keet

Think RE/MAX Elite, think Derek Keet. With over 20 years of personal experience in residential, commercial, and rural transactions, Derek is an accomplished international business leader who brings ....

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