The OBA Real Property Law Executive would like to take this opportunity to share information on a relatively recent development in real estate transactions that could have serious and long-lasting impact on the profession.
As reported in a recent Toronto Star article by Bob Aaron, and as outlined in a paper by Sidney Troister,[1] new business ventures in Ontario are seeking to act as escrow agents for all of the money involved in a real estate transaction, including all closing funds. These services are offered on a fee for service basis, and may require lawyers to sign a contract outlining the obligations (and limiting the liability) of the service provider.
Before engaging a third-party to perform this function, we strongly recommend that all members of the profession, and the real estate bar in particular, consider their professional responsibilities, and the questions about the service raised in Mr. Aaron’s article relating to:
…money safeguards, delay, timing of funds transfer, identifying funds when multiple transactions are closing at the same time, discharging prior mortgages and liens out of closing funds, sequential transactions when money from a sale is being used by the seller on a subsequent purchase, unnecessary additional costs to clients without any value added to the transaction, confidentiality, security of funds, and lawyers’ ability to comply with Law Society record-keeping requirements.
As always, we encourage our members to contribute to the discussion on this, and any other matter facing the profession. Members should feel free to post comments or questions in comments section below, or contact us directly at advocacy@oba.org by including “Real Property Law Section” in the subject line.
[1] Originally prepared for The Law Society of Upper Canada's Continuing Professional Development Program titled “13th Annual Real Estate Law Summit”, held on April 20 and 21, 2016.