The Ontario government and The Law Society of Upper Canada (which regulates lawyers) have initiated new rules intended to protect homebuyers and the integrity of Ontario's land registry system.
Until March 31st, 2008, a lawyer was permitted to act for both a buyer and a seller in transferring the title to real property. It may have seemed strange to the public that this was permitted in view of the obvious conflict of interest. Before the introduction of a computerized system for the transfer of title ownership, there was very little fraud or other misdeeds (pun intended) within our registry system. However, the introduction of electronic registration has made it easier for fraudsters to infiltrate the system.
Now, two lawyers are required for the transfer of title, one lawyer for the buyer and one lawyer for the seller. The two lawyers may practice in the same law firm so long as they observe the general rules regarding conflict of interest.
To further protect the public a lawyer is not permitted to have access to the electronic registration system unless they've entered into a written agreement with the Province of Ontario and have obtained the required insurance coverage. This will eliminate lawyers who "dabble" in real estate transactions and require that only lawyers practicing in the real estate field will be allowed to register deeds.
Sole practitioners or law firms without two qualified real estate practitioners will not be able to act on both sides of a real estate transaction.
It has been recognized that there are some circumstances where two lawyers may not be needed to represent the buyer and seller as no real conflict exists. This includes the transfer of title to simply change the "legal tenure" meaning the way in which the title is held, not by whom it is held. If a deed is being registered to give effect to a severance or municipal by-law, or if a deed is registered from an estate to a person designated by a will to receive that property or if the transferor and transferee are related persons and "not at arms length" one lawyer can complete both sides of the transaction.
The Province has also introduced new requirements when a power of attorney is used to complete a real estate transaction. It is now required that the original power of attorney be "scanned in" to the electronic system and that the lawyer certify that the power of attorney is valid after reviewing and discussing the power of attorney with the person appointed. Prior to these changes it was far too simple to claim that a transaction was authorized by a power of attorney when such power either did not exist or had been revoked.
In summary, the changes have been long overdue and should further protect the public without additional costs.
Keith Jones is a partner at the law firm of Cobb & Jones LLP. Should you have any questions for Ask A Lawyer, please direct them to the Simcoe Reformer or ask a lawyer of your choice.