By David Lucenti, Associate
Recently, a client was in to see me regarding the purchase of a new home. He told me that he was intending to make an offer on a new home, but wanted me to review the Offer his agent prepared prior to signing. I was surprised to hear this, because in most cases today, a lawyer does not see an Offer until it is signed and binding on each party. I told my client that I would be happy to review the Offer and advised him that having a lawyer review the Offer prior to signing can help avoid difficulties later on and ensure that the client’s best interests are protected.
It is important to obtain as much information about the property as you can prior to reviewing the Offer, so that you can properly advise your client. Some of questions a the purchaser’s lawyer might consider asking the client include:
- Is there a swimming pool?
- How is the property heated?
- Does the property have a septic system? Is there a survey?
Once you have a good understanding of the property, you can begin your review of the Offer. Typically, a lawyer will ensure that the property is properly described in the Offer. The lawyer can confirm this by searching the subject property in Teraview.
In addition, a lawyer can include escape clauses that will allow you to terminate the Offer if you are unable to proceed with the purchase. For instance, a client may want to terminate the Offer following an inspection of the subject property or if the client was not able to secure financing for the purchase or unable to sell their present home. By including such escape clauses, the client can protect themself in the event the purchase cannot be completed.
The purchaser’s lawyer can also advise as to what warranties ought to be included in the Offer. For example, warranties regarding the swimming pool in the backyard or septic system are important to include in the Offer. The purchaser’s lawyer may also recommend including a clause requiring the seller to provide an up-to-date survey for the property.
Lastly, the purchaser’s lawyer can advise early on as to some of the closing costs involved in buying that new home i.e. land transfer tax, registration fees, title insurance fees, search fees, real estate fees, utility adjustments and, of course, those pesky legal fees. Often times, a new buyer forgets about such costs and is caught off guard by such fees and finds themselves scrambling on the day of closing to find the necessary funds to close the transaction.
So, for all those purchasers (and vendors) in the market for a new property, I recommend that you call your lawyer prior to signing on the dotted line.