The role of a notary in real estate transactions
Last updated on November 28, 2024
Notaries play a key role in real estate transactions to ensure the legal certainty of a sale, protect the interests of all parties involved and guarantee compliance with regulations currently in effect. Responsible for validating deeds, they provide impartial advice, help prevent disputes and secure a transaction. Let’s review the various duties these specialists carry out during a real estate sale, as well as legal and tax implications they need to keep in mind.
In Quebec, a notary is required to conclude any residential real estate transaction. It’s up to a buyer to pick a notary.
Overview:
- What is the role of a notary in real estate?
- Offer to purchase: review and advise
- Completing a deed of sale with a notary in 5 steps
- Who pays what?
- FAQ
What is the role of a notary in real estate?
A notary has essential responsibilities during a real estate transaction. Their duties include drafting, authenticating and registering notarial deeds (which guarantees their legal certainty). Other responsibilities include advising parties on legal and tax aspects, verifying a property’s legal status and ensuring proper management of funds related to a sale.
As a trusted third party, a notary guarantees the legal certainty of transactions and is also available to intervene when it comes to estate planning or the settlement of real estate disputes.
Offer to purchase: review and advise
A notary can advise a buyer in a real estate transaction but their role is governed by strict ethical rules. As a public official, they must maintain their impartiality and consequently refrain from taking a position in favour of one particular party (buyer or seller). However, a notary may advise a buyer about the legal aspects of an offer to purchase and the scope of their commitments.
In this context, a notary’s main roles include:
- Legal advice A notary can explain the terms of an offer to purchase and outline the legal consequences for a buyer (for example, suspensive conditions, rescission period, etc.).
- Reviewing an offer to purchase Once the parties have an agreement-in-principle, a notary can get involved to draft or revise an offer to purchase before it’s accepted by both parties. This ensures the document complies with the law.
To sum up, a notary may advise a buyer on any legal aspects about an offer to purchase but doesn’t draft an offer exclusively for them: both parties have to be involved. Remember that a jurist must remain impartial and fair.
“Therefore, it is recommended to enlist the services of a notary before signing an offer to purchase,” explains Elena Maria Bejan, notary with DuProprio. “This public official goes through the document with a seller or buyer. They can then make some recommendations.”
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Completing a deed of sale with a notary in 5 steps
1. Examine old title deeds
A notary reviews previous title deeds by searching on the Registre foncier du Québec in order to prove that a seller is in fact the legitimate owner and a property is free of encumbrances or disputes. They analyze old deeds (sales, mortgages, servitudes) to verify a title deed is valid and ensure there are no claims or restrictions waiting in the wings to impede a sale.
They also verify a certificate of localization to confirm that a property’s limits match information contained in legal documents and double check there are no undeclared encroachments or servitudes. A notary also ensures that any outstanding disputes or claims are settled before moving ahead with a deed of sale.
2. Verify home insurance coverage
Although not responsible for directly verifying home insurance, a notary does act to ensure a buyer has adequate home insurance before signing a deed of sale. They usually ask for proof of insurance to confirm there is enough coverage to protect a property upon transfer of title.
3. Draft a deed of sale
A notary drafts a deed of sale in a real estate transaction by gathering all required information (title deeds, offer to purchase, other relevant legal documents, etc.). A legal deed clearly states any terms of a transaction and a notary’s role is to ensure that all conditions are met before signing.
4. File a deed of sale
A notary registers a deed of sale on the Registre foncier du Québec public proof about a legal property transfer. After completing a registration online, they provide the parties with certified copies of the copy of the Building Index without any adverse entry.
5. Release funds
A notary gives the green light for funds to be released after confirming that all payments have been settled (sale price, bank loan, etc.), deducting any sale-related charges (mortgage, notary fees, taxes, etc.), then sending remaining funds to a seller via electronic transfer or cheque.
Who pays what?
A notary performs work for both parties during a real estate transaction and they both assume whatever fees have been changed for verifications and payments made on their behalf.
Expenses a buyer can expect
A buyer should budget for several expenses that come into play when purchasing a property, like home insurance and property transfer duties (a.k.a. the welcome tax). They are also responsible for notary fees, which cover the drafting of a deed of sale and mortgage deed, registering it on the Registre foncier du Québec and issuing certified copies.
Expenses a seller can expect
Mortgage cancellation is a seller’s responsibility. If a mortgage has an unpaid balance remaining, a notary pays off this debt using the proceeds of a sale, which paves the way for mortgage cancellation. A seller also covers any fees associated with this process.
It’s also up to a seller to verify and pay municipal and school taxes, plus any outstanding balances. A notary may charge for this verification and settle any amounts owning.
Some fees a seller should expect to pay:
- Obtaining a mortgage statement and reimbursing any remaining balance.
- Verifying taxes and expenses, including for condos.
- Title insurance and publication costs payable to the Registre foncier du Québec.
- Funds transfer, power of attorney and trust fund management fees.
- Various administrative and document fees (deeds, courier, etc.).
FAQ
What services does a notary provide?
This legal specialist drafts and authenticates important legal documents, including marriage contracts, wills, real estate sales, donations, divorce decrees or succession documents. They also help set up companies, manage assets, draft contracts and formalize transactions. Their role is to guarantee the legality and certainty of all documents they draft and to provide advice and legal expertise.
What are a notary’s responsibilities toward clients?
A notary has several obligations to clients: provide clear and impartial guidance, guarantee the legal certainty of deeds, respect their privacy, act with integrity and diligence, and be transparent about fees. They also have to ensure the rights of all parties are balanced and all documents comply with the law.
Need help filling out a Seller’s Declaration or understanding the clauses in an offer to purchase? DuProprio notaries are specialists in real estate law and are prepared to answer all your legal questions throughout the sales process. There is no limit to the number of calls you can make and they are available 6 days out of 7. 1
