Purchasing A Property – What Happens at the Lawyer’s Office?
With the spring market of 2023 picking up in real estate, many interested homebuyers are on the hunt for a new home or investment property. Whether it is to start a new chapter, earn rental income or buy one’s first home, buyers in this market are eager to have a smooth closing and a stress-free process as they make one of the biggest investments in their lives.
Whether one has purchased a home before or not, each transaction is unique to the property and sometimes hiccups can occur. To ensure a buyer’s and seller’s interests are protected, it’s recommended to retain a lawyer as early in the process as possible. It is best to start the closing process early on and retain a lawyer once the Agreement of Purchase and Sale is signed (or even prior, if the buyer would like the lawyer to review the Agreement of Purchase and Sale).
As part of retaining the lawyer and to complete the identification and verification process, the buyer will provide their government-issued IDs, review and sign the retainer agreement and then complete the client intake form. Some of the information that the lawyer will collect are, the buyer’s full name, contact information, first-time home buyer status, occupation, employer/business address and phone number, citizenship or permanent residency status, whether they will occupy the property as their principal residence, marital status, mortgage information, etc.
The next step in the process is the title search process. The lawyer will prepare a series of documents called the requisition package. The requisition package consists of the draft documents that the seller is to sign and a letter making requests for additional documents, encumbrances to be removed from title and other pertinent matters. This package is sent to the seller’s lawyer ahead of the title search date, which is noted on the Agreement of Purchase and Sale.
Soon after, the lawyer will then begin to prepare the closing documents related to the transfer of title and the mortgage (if a mortgage is being obtained). To assist the lawyer in ensuring this step is completed on time, the buyer should ensure the lender sends the mortgage instructions to the lawyer in a timely manner.
Once the documents are prepared and the mortgage instructions are received, the lawyer will set up a meeting either virtually or in-person to sign the closing documents. By this time, the lawyer will also have advised you of the remaining closing proceeds (the shortfall) that you will need to be provided to the buyer’s lawyer. Please note: as the mortgage proceeds will not cover your total closings costs, you should always anticipate a shortfall that you must set aside.
Shortly after the meeting with the lawyer, the signed closing documents are exchanged between the seller’s lawyer and the buyer’s lawyer in anticipation of closing the transaction on the closing date.
On closing day, the buyer’s lawyer deposits the balance due on closing into the seller’s lawyer’s trust account. Once the seller’s lawyer has received the funds, they will sign and release the deed for the buyer’s lawyer to register the deed. Once the deed and mortgage are registered, the buyer’s lawyer will advise the buyer of the key pick-up instructions for the new property!
Takeaways for a smooth closing:
1. Ensure you retain your lawyer as soon as possible!
2. Ensure you obtain your financing as soon as possible – provide all required documents to the lender as early as possible in efforts to help expedite the mortgage instructions to the lawyer’s office.
3. Cooperate with the lawyer and provide them with the documents they request in a timely manner.
