Steer Clear of Real Estate Claims by Asking These Five Questions on Every Deal

Author:Dan Pinnington
Date:August 22, 2016
 
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The real estate lawyer’s job is more than just conveying title, and not every matter will be straightforward. Communication errors and inadequate investigation are the biggest causes of real estate claims at LAWPRO, respectively 41 per cent and 26 per cent of claims reported in the past 10 years. Busy, high-volume practices often lead to situations where the lawyer is not taking the time to communicate with the clients properly.

Lawyers need to take the time to speak to clients to ensure they’ve gathered all the relevant information.

Here are five questions lawyers should be asking their clients or themselves on a real estate matter:

  1. Is there a spousal interest in the property? Although only one person may be registered on title, there could be a spousal interest in a matrimonial home. LAWPRO has seen a number of claims where the lawyer did not get the consent of the spouse to change the ownership status or encumber the property with a mortgage. Take the time to discuss the client’s marital status to determine whether the consent of a spouse – or any other person with an unregistered interest.
  2. Even with title insurance, are there more inquiries I should be making? Even if a title insurer waives certain searches or a survey requirement, lawyers still need to ask clients if they want the searches or survey done, and explain what the consequences could be of not doing so. The title insurance policy may rectify a problem to some extent or indemnify the client, but going through the process of dealing with the problem may still not be a situation the client welcomes. Think of a boundary dispute which leads to a hostile relationship with the neighbours, a deck needing to be torn down without the possibility of replacement or grow-op damage that could be harmful to the family’s health: All things that searches might have uncovered depending on the circumstances. The lawyer should also look beyond the searches that are required by the title insurer and apply his or her own knowledge of the particulars of the transaction to determine which searches ought to be considered. For example, is it a property on a ravine that may be under the jurisdiction of a Conservation Authority?
  3. What is the future use of the property? Often the lawyer fails to ask clients about possible future uses of the property that the client might have in mind, and as a result fails to get a title insurance endorsement that would protect the clients (e.g., they planned to build a...

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