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"What is the lawyer's role in my real estate transaction?"
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Having practiced law since 1994 with the same law firm and for most of that time dealing with real estate transactions, I have been asked many questions covering a variety of topics. Some questions are time sensitive (particular government grants, tax relief, mortgage options, etc.) while other questions are more enduring in nature (what is title? how can we hold title? what is a title defect? etc.). While these different types of questions have arisen over the years, there is really just one question which I was asked during my first year of practice and which has remained relevant for the almost 19 years since. That question is, "What is the lawyer's role in my real estate transaction?" While the mechanics of a real estate transaction have changed over time, the lawyer's role has not. This article will seek to explain exactly what the lawyer's role is, or should be. Specifically, I will address the lawyer's role in the context of negotiating an Agreement of Purchase and Sale ("Agreement"). In subsequent articles I will describe the lawyer's role in searching title, registering/discharging mortgages, and closing the transaction.

While an Agreement contains different provisions which impact a particular real estate transaction, the lawyer's obligation to look after the best interests of his or her client does not change nor does the lawyer's obligation to keep all matters related to that transaction confidential and free from any conflicting interest. This is because a lawyer's role is first and foremost a fiduciary one. Specifically, this means that the lawyer has a confidential relationship with his or her client which requires the lawyer to act in the best interests of that particular client. For these reasons, a lawyer cannot act for a Vendor and Purchaser on the same transaction unless both parties are "related" as defined by the Income Tax Act (if individuals…by blood, marriage or common law, or adoption). Even when a lawyer is entitled to act for both the Vendor and Purchaser because they are "related", all parties should be advised that the lawyer is acting for both parties and i) that no communication can remain confidential; and ii) if a conflict arises, both parties must be referred out to independent lawyers who can represent them fully.

Traditionally, the lawyer's relationship with a particular client does not start until after an Agreement has been signed by both Vendor and Purchaser. Given the obligation of the lawyer to act as a fiduciary for his or her client at all times, a lawyer's input may be helpful when negotiating the Agreement. It would not serve any Vendor or Purchaser well to have an agent taking instructions from both a Vendor as well as a Purchaser when drafting the Agreement. However, this type of situation can exist where the real estate agent acting for a Purchaser is employed by the same brokerage as the listing agent for the Vendor. For this reason, the lawyer's responsibility to act for his or her client's interest (independent of everyone else's) may provide the client with a clearer perspective because it does not have to accommodate the concerns and interests of the parties at the same time. A lawyer can not only provide independent advice, but also anticipate potential difficulties before an Agreement is signed. Once an Agreement has been signed, the lawyer's fiduciary obligations are constrained by the terms set out in the Agreement. There is nothing more frustrating than having to tell a client that the terms of the Agreement do not allow me to fully address their concerns. For clarity and protection, a client should consider consulting a lawyer before finalizing any Agreement.

By and large, the real estate agents in London I have dealt with do a good job of looking after their client's interests. My recommendation here is not to replace the agent's role but to support it with a legal review of a proposed Agreement. This can either be done by having a lawyer review it prior to it being presented or, where time does not permit that review, including a short condition (2 or 3 days) to allow for the Buyer's or Seller's lawyer, as the case may be, to satisfy themselves that the Agreement will protect their client to the greatest extent possible.






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