The conveyancing process
is required to complete real estate transactions in BC;
however, the process often remains a mystery to many people!
The conveyancing process can be broken down into seven steps:
- Engagement
- Collection of Client Information
- Searches and Due Diligence
- Preparation and Review of Closing Documents
- Client Signing Appointment
- Return of Documents
- Registration and Closing
This article will review each step in the process.
1. Engagement
Engaging a lawyer or notary to represent a buyer or seller in a transaction begins with an initial contact from either the client directly or an introduction from a REALTOR® or mortgage broker. Early engagement of a lawyer or notary is very important to avoid delays and allow time to address any issues that may arise. Once a buyer or seller has confirmed they want to proceed with the services of the lawyer or notary, a client file will be opened, and sometimes a formal engagement letter (also known as a retainer letter) will be sent to the client for review and execution. Not all lawyers or notaries send out formal engagement letters for simple conveyances, however, if they do, this engagement letter will confirm the services they will and will not provide as part of the transaction.
2. Collection of Client Information
The next step involves the collection of information from the client. This information is typically collected electronically by email or fillable web forms. The types of information will vary depending on whether the client is the buyer or seller in the transaction. For all transactions, the lawyer or notary will collect the following information:
- personal information about the client needed to prepare documents and required for client verification purposes. This information includes full legal name, address, birth date, telephone number, and email address;
- request for copies of all contracts and amendments related to the transaction (if the REALTOR® hasn’t already provided them); and
- contact information for the client’s REALTOR®.
When acting for a buyer, the lawyer or notary also needs to collect the following information from the client:
- whether or not the buyer will be obtaining financing, and if so, the name and contact information of their mortgage broker or lender;
- contact information for the client’s insurance advisor; and
- if there is more than one buyer, whether they intend to be registered on title as joint tenants or tenants-in-common.
When acting for a seller, the lawyer or notary must also collect any mortgage or loan reference numbers if there are financial encumbrances to be discharged at closing.
Powers of Attorney
If closing documents will be signed by an attorney appointed by the client through a power of attorney agreement, this needs to be brought to the attention of the lawyer or notary immediately at either step one or two. The lawyer or notary needs to be made aware of this so that they can review the power of attorney agreement and ensure it complies with the requirements of the Land Title Act, and that is can be used for the particular transaction. Additionally, the lawyer or notary needs to register the power of attorney agreement with the Land Title Office as soon as possible. In the past, power of attorney agreements were usually registered just before closing. However, since the Land Title Office requires one to three weeks to review pending filings, there is a chance the power of attorney agreement may be rejected by the Land Title Office. If this rejection or defect notice comes post-closing, it can create significant issues as it will also defect the transfer and mortgage documents filed at closing at the Land Title Office.
3. Searches and Due Diligence
The next step of the conveyancing process involves conducting searches and due diligence. Whether a lawyer or notary acts for a buyer or seller will determine the types of searches and due diligence they perform. Additionally, the location of the property, use of the property, and type of property will also dictate the types of searches and due diligence performed.
When acting for a buyer, the lawyer or notary will collect and perform the following basic searches and due diligence:
- title search and pulling charges from title. Depending on the parameters of the engagement, the lawyer or notary may pull all, some (such as restrictive covenants), or none of the charges on title;
- tax certificate to confirm if there are any property tax arrears or any credits. Depending on the municipality, the tax certificate may also have municipal utility charges, information about the property, and empty homes tax information for properties in the City of Vancouver;
- Strata Form F and Strata Form B (if it is a strata titled property);
corporate searches (if the buyer or seller is a company). If the buyer is a company, the lawyer or notary will also need to contain the corporate record book; - request a copy of the insurance binder from the insurance advisor;
- request mortgage instructions from the lender;
- order title insurance (if required); and
- perform a personal property registration search in the name of the seller.
When acting for a seller, the lawyer or notary will collect and perform the following basic searches and due diligence:
- title search;
- personal property registration search (if needed); and
- request any payout statements required to clear title (such as mortgage payout statements and land tax deferment payout statements).
4. Preparation and Review of Closing Documents
The buyer’s lawyer or notary prepares the buyer’s closing documents (including any security documents needed for financing if it is a residential mortgage with an institutional lender). They also prepare the vendor’s closing documents, including the seller’s statement of adjustments. The seller’s lawyer or notary prepares the seller’s order to pay and the documents needed to clear title, such as the discharges for any mortgages and personal property registrations. The seller’s lawyer or notary will also review the seller’s closing documents (as prepared by the buyer’s lawyer) to ensure they are accurate and reflect the terms of the Contract of Purchase and Sale.
5. Client Signing Appointment
The legal representatives will typically meet with their clients two to five business days prior to the completion date to explain and sign the closing documents.
Out of Town Signings
In most instances, clients are able to sign out of province or overseas if they are unable to make it to their lawyer or notary’s office. Buyers obtaining financing should be cautious and confirm that their lender will allow them to sign the mortgage documents out of province. There are specific closing documents that need to be witnessed by a commissioner for taking affidavits as defined in Section 63 of the Evidence Act of BC. An agent may need to act on behalf of the lawyer or notary to verify the client’s identity. As such, clients will typically need to engage the services of an English-speaking notary where they are located to provide such ID verification and witnessing of documents. If a client will be unavailable to sign documents approximately two to five business days prior to the completion date, this must be flagged to their lawyer or notary immediately so that alternative arrangements can be made.
6. Return Documents
The seller’s lawyer or notary then returns the signed vendor’s closing documents to the buyer’s lawyer or notary. These documents are delivered to the buyer’s lawyer on their undertaking not to make use of the documents, unless they have sufficient funds, when combined with any financing, to complete the transaction. Note the buyer’s lawyer can register the transfer documents before receiving the mortgage funds into their trust account, provided all funding conditions have been met. The undertakings between the buyer’s and seller’s lawyers and notaries follow the standard undertakings set by the Canadian Bar Association of British Columbia.
7. Registration and Closing
Once the buyer’s lawyer is satisfied that all the mortgage funding conditions have been met and they are in possession of the balance to close from the buyer, they will proceed with registering the transfer forms and mortgage documents on the completion date. Following the electronic filing of the transfer forms and mortgage (if applicable) at the Land Title Office, the buyer’s lawyer or notary will make the net sale proceeds available to the seller’s lawyer on their undertaking to discharge any non-permitted encumbrances and clear title. The buyer’s lawyer will then report the closing to their client and the brokerages involved.
Source of text: BCREA (British Columbia Real Estate Association)