Joining us today is Graham Barr, a lawyer with Barr LLP in Edmonton. Today we’re going to be talking all about the law as it relates to real estate transactions.
[0:30] Tell me what your firm does when it comes to real estate transactions.
- Since 2015, we decided to focus on real estate. Our hearts lie with residential homes.
[0:54] Why do you need a lawyer when you’re buying or selling a home?
- We still do contracts by signature, necessitating contracts over handshakes between people.
- The banks prefer a lawyer to be a part of the transaction to reduce liability.
[02:23] What a lot of people don’t realize is that when you’re buying a home, the lawyer represents the buyer and the seller. Tell us more about that.
- Purchasers often don’t realize that when they’re visiting their mortgage broker, part of the process involves hiring a lawyer for the bank and for them.
[03:20] What does a lawyer typically cost these days for a real estate transaction?
- We’re able to find efficiencies to keep our legal fees static.
- A traditional purchase typically costs about $850.
[04:53] If we look at today’s market, interest rates have gone up dramatically. Have you seen an impact in deals going through as a result?
- It’s pretty rare. When you create your original contract, it’s the perfect opportunity to have it reviewed in advance to look specifically at the conditions.
- If you’re not able to obtain the finance necessary to close, you should never be removing your condition of finance.
[7:30] What are some of the issues people run into with condominiums?
- There are certain documents as set out by the corporation that they must have on hand for both owners and prospective purchasers.
- A lot of people don’t realize that when they are buying a condo, they are buying into a business. They are buying shares of a corporation in Alberta.
[10:36] Give us the 411 on title insurance—why lenders want it and why buyers should get it.
- Alberta has a unique land title system. It’s a very transparent title system.
- If it’s your land, that legal description has to reflect all of the applicable registrations.
[15:00] Why else would lenders want title insurance?
- For security. Lenders want to be first on title and first in line, so they obtain priority.
- My recommendation to almost every buyer is to have a title insurance policy.
[18:33] Are you seeing any trends right now in residential real estate in Edmonton?
- There are certain segments that seem to move faster than others.
- Transactions between $300,000-$500,000 make up over 80% of our work right now.
[19:10] One thing I’m seeing is a buyout from one spouse to another. Are you seeing this?
- A lot of couples have multiple properties. There’s a lot of restriction in the rental market.
- Stresses are taking their toll, leading to marital breakdown and thus more purchases.
[20:45] How should people approach buying a place together when they’re not married?
- We are doing away with the term common law—what we have now are adult interdependent partnerships.
- Come to an agreement before you make the purchase.
[25:23] What happens if one person buys and the other person’s significant other is not on title?
- The moment you decide to cohabitate with someone, create an agreement on paper.
[26:19] Wife wants to refinance, husband is advised to get independent legal advice. What’s that about?
- If either spouse has lived in the property since marriage, the other spouse must consent to the transaction.
[29:44] What are some of the crazy scenarios you’ve found yourself in within real estate law?
- What happens if the home burns down while you’re waiting for key release? I’ve had that happen three times in my 15-year career.
- The deal is unwound, and the purchaser is released of their obligations.
[32:48] What are some of the more day-to-day issues that could cause problems?
- When purchasers take possession and the home isn’t in the same condition as when they last saw it.
- There are certain things you will want to turn around and tell your lawyers about right away.
[39:04] A lot of builders tell buyers to use their lawyer. What’s your thought on that?
- I started my career working for a law firm that represented most of the large home builders in the city.
- At the time you go to your builder and they provide you with their contract, do not sign it without legal advice. Their contracts are biased in favour of the builder.
- Once you’ve signed the contract, there’s no reason you shouldn’t work with their lawyer for registration needs.
[20:45] In Alberta, a transaction is supposed to close at 12 PM. Lenders don’t necessarily follow this. What kind of problems does this cause for the buyer and seller?
- Late closing doesn’t mean days, it means hours.
- If your lender isn’t an Alberta lender, there’s a good chance your funds are coming from a Toronto office. Your lawyer can ask for a delay on the same calendar day.
[46:30] Inevitably, people are closing on a Friday. It’s a disaster, right? Multiple days of delayed interest.
- Where we know it is the fault of the bank, we’ve encouraged clients to reach out to their bank, explain the situation, and ask for compensation.
[47:54] The other issue with late lenders is not having your keys by the time the movers arrive.
- Part of our firm’s ethos is you should always see and talk to a lawyer. You’re never going to close at noon. It’s our job to set the expectations for a transaction.
- Do not book third party companies for the day of closing.
[49:40] One potential solution for money showing up late is tenancy at will. Tell me about that.
- When a purchaser has their downpayment, has their cash to close, has signed their documents, and is otherwise ready to close, if their lender or the selling side is not yet ready, they can still ask to move into the property.
[51:50] How should you go about choosing a lawyer?
- The Canadian Bar Association is a membership of all lawyers across Canada. It’s a database of real estate lawyers I can reach out to and ask if they’ll be a lawyer.
- Look for online reputation. Reviews are a great way of deciding who you should trust.