real estate law

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Law Society Consultation on Title Insurance 

The Law Society’s Advertising and Fee Arrangements Issues Working Group is examining practices involving the payment of fees and offering of benefits by title insurers to real estate lawyers or their staff and is considering whether additional regulatory measures involving these practices are required.

The Working Group wants to hear from real estate lawyers and other stakeholders with respect to a series of questions as outlined in the Consultation Document. See also the working group’s report to June 2018 Convocation.

FOLA's Response to the LSO's Advertising and Fee Arrangements Issues Working Group

FOLA has filed it's submission to the LSO's Advertising and Fee Arrangements Issues Working Group.

Our conclusion states:

"FOLA believes that the current Rules of Professional Conduct are sufficient to appropriately govern lawyers with respect to their dealings with title insurers. 

The current Rules provide proper protection for the public and there is no evidence of any significant number of complaints or other issues relating to title insurance incentives. 

FOLA was unable to locate any discipline decisions relating to lawyers’ arrangements with title insurers and FSCO notes in its 2015 Report that it continues to receive few complaints about title insurance, and those few complaints relate to claims for issues that were not covered by the title insurance policy or exclusions listed in the policy (on page 3). 

Concerns regarding breaches of the existing Rules of Professional Conduct should be met with stricter enforcement, rather than additional regulation."

You can find our full submission here.

Deadline for Response: October 31, 2018

Your FOLA Executive will be providing a submission to the Law Society of Ontario on this important issue by the October 31st deadline.  It would be very helpful to receive your input and the input of your local members who practice real estate.  

If you would like to make a Submission now, here's the link: https://lawsociety.forms-db.com/view.php?id=87447

Provincial Standard Closing Documents 

FOLA strongly believes that the real estate bar benefits greatly from working with a set of standardized closing documents for residential real estate transactions. At the May 2017 Plenary, a unanimous resolution was passed approving and endorsing the use of the standard closing documents prepared by the Working Group on Real Estate & Lawyers. 

The resolution read as follows: 

BE IT RESOLVED THAT:

The Federation of Ontario Law Associations approves and endorses for use in residential resale transactions in Ontario the following Standard Closing Documents as posted on www.lawyersworkinggroup.com:

a) Vendor’s Closing Certificate;

b) Purchaser’s Undertaking and Direction Re: Title;

c)  Lawyer’s Undertaking;

d) Lawyer’s Direction Re: Funds; and

e) Lawyer’s Delayed Closing Escrow Agreement.

BE IT FURTHER RESOLVED that FOLA and each Local Law Association promote the use of the documents to solicitors in their Association and community. 

BE IT FURTHER RESOLVED that the FOLA Real Estate Committee Chair liaise with OREA and the Working Group on Lawyers and Real Estate on an ongoing basis to amend the recommended documents if required.

The idea is to end the repetitions in the old forms and to eliminate any statements, warranties or declarations that were not required to be provided in the agreement of purchase and sale. Vendors, and their lawyers, should not be delivering anything that is not required under the agreement of purchase and sale, as doing so creates liabilities that are not required under the agreement. In addition, the use of standard closing documents can reduce the time a lawyer spends reviewing, revising and negotiating closing documents. 

The following additional benefits are noted by the Working Group in the Rationale Document for the standard closing documents: 

1. Less paper, no repetition and more efficiencies, as the content of the documents can easily be confirmed as being either unamended or modified;

2. Less time needed to negotiate the content of closing documents; 

3. Adherence to province-wide standards; 

4. Client’s rights and obligations are protected based on the agreement of purchase and sale; 

5. Either party can easily prepare the documents for the other side; and 

6. No need to delete inapplicable paragraphs as they are worded conditionally.

These documents are available in English and French on the Working Group website and are posted below. 

Letters of Support for this initiative from LawPRO and the Director of Titles for the Province were also received. 

Three Party Document Registration Agreement (DRA)

When electronic registration was first introduced in Ontario, an escrow closing procedure was developed to deal with the delivery of purchase funds, keys and off title documents in the form of a standard Document Registration Agreement (DRA) which is posted on the law society website. 

The DRA has routinely been amended for use when there are three or more lawyers involved (when there is a private mortgage or when there is a separate lawyer representing the lender), and FOLA requested that the standard form of Three Party DRA be endorsed and published by the Law Society in the same way the DRA has been.

We are pleased to report that following a review by LawPRO and the other members of the Real Estate Liaison Group, the Law Society has approved a standard form of Three Party DRA and has posted it on its website. http://www.lsuc.on.ca/For-Lawyers/Manage-Your-Practice/Practice-Area/Real-Estate-Law/The-Document-Registration-Agreement-(The-DRA)/ 

New Law Society Advertising Rules for Residential Real Estate 

On September 29, 2017, the Law Society amended the rules regarding residential real estate advertising to “support transparency and ensure consumers may easily compare prices”[1]. 

The new rules require all advertising of prices for residential real estate transactions to be all-inclusive, subject to certain allowable disbursements that can be in addition to the all-inclusive price. Other than these specified disbursements, if you advertise a price, you cannot charge anything more than the advertised price, regardless of what may have transpired during the course of the transaction. 

These new rules do not apply to fee quotes given to a client on a particular transaction, so if a potential client calls you for a fee quote, the quote does not have to be all-inclusive. 

The new rules apply to advertisements available to the public, which includes any mention of fees on your website. If your website has an “input your purchase price and we’ll calculate the fees and estimated disbursements” function – then this falls within the new advertising rules. 

New rule 4.2-2.1 states:

A lawyer may advertise a price to act on a residential real estate transaction if:

a) the price is inclusive of all fees for legal services, disbursements, third party charges and other amounts except for the harmonized sales tax and the following permitted disbursements: land transfer tax, government document registration fees, fees charged by government, Teranet fees, the cost of a condominium status certificate, payment for letters from creditors’ lawyers regarding similar name executions and any title insurance premium;

b)  the advertisement states that harmonized sales tax and the permitted disbursements mentioned in paragraph (a) of this Rule are not included in the price;

c)  the lawyer strictly adheres to the price for every transaction; and

d)  in the case of a purchase transaction, the price includes the price for acting on both the purchase and on one mortgage;

e)  in the case of a sale transaction, the price includes the price of acting on the discharge of the first mortgage.

New commentary to the rule and to rule 3.6 (Reasonable Fees and 

Disbursements) was also approved.

Further details can be found on the Law Society website. 

[1] http://www.lawsocietygazette.ca/your-practice/new-rules-re-advertising-residential-real-estate-services-approved/