The short answer is, the earlier the better. Pure and simple.
The average person, especially a first time home buyer, is typically not aware of what the lawyer’s role is in a residential real estate purchase or sale transaction. To learn more about our role, read our blog post titled What is the role of a real estate lawyer in a residential transaction?. Unfortunately, this means that most people often leave contacting and retaining a lawyer to complete the transaction to a much later stage of the deal. Usually, by then the agreement of purchase and sale has already been signed and accepted by all parties. This can often lead to problems down the road which could have been avoided had the lawyer been given an opportunity to review the agreement prior to final execution and acceptance. At the very least, the lawyer could have explained any unclear terms to the buyer or seller helping them make well informed decisions.
The irony is that the people who are often seeking to minimize legal fees by avoiding retaining a lawyer until the very last minute can often end up paying more. They will incur additional fees to hire a lawyer to put out any fires which come about because of unclear and poor drafting of the terms in the agreement, not to mention the added time and stress involved.
Too often, I have come across errors in the agreement of purchase and sale which were costly to rectify because the agreement had already been finalized and I was not retained to review it. Simple yet crucial details such as clearly setting out which rental equipment contracts will be assumed, how and when deposits will be paid out, confirming what chattel and appliances are included, confirming the identity of the parties, confirming the correct legal description of the property or confirming the residency status of the parties, can often be missed during the negotiation process as the buyer and seller are too concerned with coming to an agreement on price and can overlook these issues. Having a lawyer take a second look at the offer can save you a tremendous amount of money and stress down the road, and it’s free!
The team at MRK Law reviews a client’s agreement of purchase and sale for free provided the deal closes with our office.
You may be required to pay a nominal fee at the time your agreement is reviewed, but this amount is credited from your final closing fees once the transaction is completed. You are not saving any money by holding off on hiring your lawyer; quite the contrary, you may be unknowingly waiving protections provided to you at no additional cost.
Even if you decide not to proceed with the transaction, the fee for reviewing the agreement is nominal, and you will be grateful that you didn’t just sign the offer blindly if you do end up deciding to terminate the agreement!
For all of the reasons outlined above, parties are encouraged to retain counsel for their purchase or sale as early as possible.
For commercial transactions, the foregoing may be all the more important. It is highly recommended that offers for the purchase of commercial real estate be drafted by a lawyer. To put it bluntly, the OREA form of agreement is not detailed enough and fails to address a number of critical terms of the transaction. There are complex and costly terms that need to be fleshed out between the parties, such as, to name a few: the parameters of any due diligence conditions, particulars regarding any contracts to be assumed (snow removal, utilities, equipment servicing, insurance, and, most importantly, active leases), responsibility for costs of any environmental assessments, representations and warranties regarding building conditions, zoning and work orders, and any easements, encroachments or encumbrances on title.
Your real estate lawyer plays an instrumental role in protecting you and ensuring you get what you paid for. He or she should work with you from the beginning as your trusted advisor. To learn more about the lawyer’s role in a real estate transaction read our blog post titled What is the role of a real estate lawyer in a residential transaction?. To summarize, you should retain a real estate lawyer for your closing as early as possible; preferably, before you’ve finalized the agreement of purchase and sale.
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