Previously this column addressed the issue of purchasing a real property whether for personal use or for rental. I have attempted to explain some of the risks associated with purchasing without proper legal advice. I have also cautioned that making a wrong choice between the terms Joint Tenants and Tenants in Common when registering a title without proper consideration can prove to be harmful in the long term. This column will provide additional insight into a lawyer’s role and how you can save legal fees and costs by taking a proactive approach to understanding the intricacies of a legal purchase of real estate and taking charge of your transaction.

The real work for the lawyer begins once he receives the Interim Agreement/Real Estate Purchase Contract. The solicitor will carefully examine the document and clarify any ambiguity with the real estate agent or with you as the client, if necessary. The solicitor may also check with you to make sure of the purchase price, the method of payment, how any of the special conditions are to be satisfied, closing/completion date, possession and adjustment date and if any new financing is being arranged.

As soon as the solicitor has obtained a Copy of Title from the Land Titles Office, he or she examines the document to see how many encumbrances are registered on the title. After examining encumbrances, the lawyer may advise you of non-permissible encumbrances and may seek your acceptance of them or instructions to further deal with them if you have an objection to any of them being on the title. As a purchaser you would not want charges on the title that ought not to be there. You would want them discharged by the vendor before you take over the property.

The solicitor also sees if there are any conditional dates, which need to be complied with. So it is important for you to also bring to the solicitor’s attention special concerns about any special issues well before the conditions are waived and seek advice if you need to before you waive your conditions.

If you are seeking new financing, have made an application and are awaiting response from the bank, please inform your solicitor so that he is aware of where the funding will come from. If your solicitor is going to be working on your mortgage documents as well, he or she needs to know which bank you are dealing with and you need to make sure that documents are sent to the lawyer as promptly as possible.

You may also want to start making notes of what you need to do with respect to the house you are purchasing such as arranging for utilities and fire insurance with regards to loss payable. It will also be of help to the solicitor if you advise your solicitor as to when you will be available to execute documentation when they are ready. This will make it easier to organize the process to completion. If you are signing on behalf of someone using their Power of Attorney, make sure that your solicitor has taken a look at the Power of Attorney to see if the form used by your principal is acceptable for registration of land at the Land Titles Office.

Your solicitor will request the seller’s lawyer to provide a Real Property Report. An acceptable version of a report shows a certificate from the City confirming that the property complies with the City of Calgary bylaws. Do look at this document when you receive it to see if there are any encroachments; i.e. your building’s encroaching on the neighbour’s land or the neighbour’s building is encroaching on your land. If the property you are purchasing is non-conforming, your solicitor will advise you as to the risks in acquiring the property.

This means that the property has an illegal non-conforming use. Or, it could be a situation where a standard form of the encroachment agreement is registered on the title indicating that the illegal encroachment has met the approval of the party on whose property the encroachment was made. Read the document to understand if there are any ongoing financial commitments attached to the property. You may also want to speak to your solicitor about any hold back of funds paid in respect thereto, or those required to be paid to protect your interest.

If you are assuming an existing mortgage it is important that you understand the terms and conditions of the mortgage. Determine whether or not you will be able to assume the mortgage. With a commercial mortgage a buyer may have to requalify for the mortgage and in some cases even provide a personal guarantee.

When your solicitor has completed all the work, they will send you documents for your review and retention. Included in them would be a document to which you want to pay very close attention. That document is referred to by the solicitor as a Statement of Adjustments. The Statement of Adjustments shows you: the original purchase price; the deposit you have made; the mortgage you will be assuming in accordance with the mortgage assumption statement and any adjustment for the property tax that you will either be assuming the responsibility to pay for or a credit you would be giving to the vendor for the property taxes they have paid in respect to the period post the adjustment date.

With your closing documents you will also receive a statement of receipts and payment from the solicitor showing how much money was received and how much was paid out and for what purpose. It is another important statement that you want to look at to make sure that everything that is shown should be the way it was supposed to be.

The Canadian Bar Association has made recommendations to its members to follow a certain practice for the purpose of the real estate conveyance. A few items that I have selected specifically deal with odd situations and are worth noting if they apply to you.

In regard to the senior citizens’ tax adjustment, it is recommended that as the benefit of the senior citizens’ tax adjustment is a personal benefit to the senior citizen, it is not therefore an item to be adjusted at closing, unless otherwise mutually agreed to between the parties. In other words, taxes are to be adjusted without taking into account any senior tax credit. Therefore if the vendor or the purchaser is a senior the property adjustment may be done according to this practice.

If you have purchased a property with a closing date falling on the weekend, the recommendation is that in the absence of offer being silent on how the mechanics of closing are to occur, the purchaser’s lawyer release the funds on the business day preceding the known possession date, even if there is no guarantee that the possession will be available in accordance with the terms of the offer, provided that the purchaser’s lawyer has obtained informed consent from his client. So you may be asked to give consent to a situation if the adjustment date falls on the weekend, or the solicitor may release funds on the business day following the non-business closing and adjustment date and may pay interest from the possession and adjustment date to such next day at the rate stipulated in the offer.

When you are purchasing or selling a condominium, the vendor’s solicitor will normally order, receive and deliver an Estoppel Certificate to purchaser’s solicitor. The certificate is issued effective the adjustment date.

It is quite possible that your solicitor may ask you for a certified cheque for the cash to close as he or she may be required to provide an undertaking to pay the funds to the other side. So be aware it is not unusual to be asked to produce a certified cheque or a bank draft for the cash to close.

If you are purchasing from a vendor who is going to do so, then provide a vendor take back mortgage; that is where the vendor will carry back some of the amounts by way of a first or second mortgage. It is important that you talk to your solicitor about the terms and conditions that would go in the document. There are certain standard provisions that would be used if the agreement has been reached between the buyer and the seller. Unless you have in your contract a specific condition, the recommendation is that the vendor take back mortgage should not include any rights for pre-payment.

The points that I have mentioned in this article are not exhaustive. This should provide you a flavour of what a solicitor does and what type of responsibility he or she assumes when undertaking even the simplest assignment with respect to a real estate purchase.

If you know what your solicitor requires and why, you can help simplify the process by taking a proactive approach rather than waiting for a lawyer to send reminders. You should see an improved benefit in lower legal costs. Each time you get a phone call from a solicitor or their paralegal, the time is added to the file. Learning to use lawyer’s time smartly helps both sides in keeping costs down.

Often complaints arise with respect to real estate transactions. Quite frequently they are the result of miscommunication, lack of cooperation from either side, extensive follow-up by the lawyer to get information and client’s unwillingness to supply what is so essential to the effective closing of a transaction. Parties can make the process simpler if they take the trouble to communicate and cooperate better.

—The author assumes no responsibility whatsoever for any information given above because the purpose of this column is not intended to provide professional advice including, without limitations, investment, financial, legal, accounting or tax advice. For specific advice to your situation please consult your professional advisor specializing in the area of your needs. Esmail Bharwani, MBA, MSc. (Entrepreneurial Studies), FCCA, FCGA, is a Barrister & Solicitor and associate with the firm of Miller Thomson LLP. He can be reached at 298-2418 or 288-3234, or e-mail ebharwani@millerthomson.ca. Esmail’s column appears weekly in the Calgary Real Estate News.