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Plans to keep real estate bar viable

|Written By Kirsten McMahon
Two working groups on real estate law have big plans in the works to ensure the viability of the real estate bar in Ontario by raising the quality of service and communicating to the public the importance of retaining a lawyer in transactions. 
Raymond Leclair says fee schedules are nothing new but simply fell out of favour for a time.
The Law Society of Upper Canada's working group on real estate issues has drafted best practice guidelines that focus on six areas of a real estate transaction as well as proposed rule changes to help combat mortgage fraud.

The Ontario Bar Association, the County and District Law Presidents' Association, and the Ontario Real Estate Lawyers Association have also formed a working group to draft a suggested fee schedule and have plans for a marketing campaign to promote the use of a lawyer to the public.

Now both groups want the input and advice of the real estate bar in the province, and held two consecutive consultation sessions in Toronto last week to get feedback and comments on the proposed changes.

"We want to know what you think. Will this work? Will it accomplish the objective that we've set out?" asks Zeynep Onen, LSUC director of professional regulation, the acting chairman. "In addition, if you think it won't work we need you to tell us what will work to respond to the issues."

LSUC bencher and real estate lawyer Alan Silverstein explained the specifics of the society's working group draft proposals and explained they were developed over the past year to combat mortgage fraud and address the unevenness in the standards of service.

"As a profession we have to clean up our act," he says. "We know we've lost a lot of business and it took a long time for me to realize why certain title insurance companies were so successful in making deals with lenders and it was at a meeting in January when I was told for the first time that 50 per cent of the mortgagee reports are not being filed within 90 days. That's unbelievable, but that's the truth. Twenty per cent of them aren't being filed within 120 days.

"So what did the title insurers do? They gave lenders the guarantee that we never did and we suffered."

The practice guidelines suggest that these reports should be filed within 30 days as well as all manner of issues relating to due diligence, filing and record-keeping, financial issues, and client-lawyer relationship.

While they may seem onerous at first glance, Silverstein says, "if you're doing your job right, they will not significantly effect the way you do your business."

In the second meeting not involving the LSUC, Raymond Leclair, representing the OBA and CDLPA, explained the proposed fee schedule.

"We are butting against the growing trend to basically get lawyers out of the transaction," he says. "We have a broader solution knowing it's not just the standards, but we also have to address the compensation issue.

"So we looked at it and said 'OK, how do we deal with compensation issues?' We go to a fee schedule. Unheard of? Well, not exactly. It's a very old concept but they kind of went out of favour."

Some of the draft numbers didn't seem to jive with some of the lawyers in attendance, but the working group said it wants feedback in order to get figures that represent an average fee in an average situation.

For example, the draft schedule suggests a fee of $850 on the sale price of property of $100,000 or less, and on the excess over that amount and up to $300,000, approximately one-half of one per cent of the excess.

However, real estate lawyer Stephen Shub stated in a letter to the Competition Bureau of Canada that he's concerned that "the public will be led down a path to believe that a lawyer who fails to charge such a suggested fee is not doing a proper job."

Both working groups will be holding future consultation meetings in Sudbury, Parry Sound, North Bay, Sault Ste. Marie, Timmins, and Windsor.

Real estate lawyers are encouraged to visit www.lawyersworkinggroup.com to view the proposed fee schedule and www.lsuc.on.ca to view the proposed guidelines, rule changes, and upcoming consultation dates.
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