Wednesday, September 9, 2009

We Just Need a Deed!

It is especially not uncommon in a rural conveyancer’s practice to encounter situations in which the Parties on both sides of a proposed real estate transaction are related to one another, and in a concerted effort by them both, they seek to reduce the anticipated costs by trivializing the extent or quality of legal services which they consider are required to give them what they want, usually based upon such irrelevant facts as the length of time the property has been in the family (customarily a bad omen, since no one has had a critical look at the property for years) or the vastness of trust which exists between them (a warm and fuzzy feeling which dissipates the instant the money comes into question). Invariably, such aggressive economic efforts are preceded by the word "just", which is meant to convey not only a sense of urgency to the lawyer but also the paucity of work which must be undertaken in the learned view of the Client. To the uninitiated, such reasoning is daunting and tempts one to take up step with the advancing column. For the old lawyer (or should I say, the "seasoned practitioner") such self-serving diminishment of legal services is both misleading, uninformed and ultimately dangerous. Nonetheless, as a facilitator (that is, a "deal maker" rather than a "deal breaker"), courtesy prompts the Solicitor to bridge the gap between negligence and diligence, hopefully providing the Clients with want they want, subject to intelligible and meaningful qualifications. As an aside, it is also common in such family transactions for the lawyer to be urged to act for both Parties (again, as a perceived cost-saving vehicle), even though the standard for non-related Parties is independent representation. The Law Society of Upper Canada does in fact provide an exception to the general rule of independent representation where the Parties qualify as "related persons" within the meaning of the Income Tax Act, Sec. 252 (which broadly includes blood and marriage relations). Where the Parties are obviously imperfectly matched as far as business acumen goes, the decision to opt out for either or both Parties is easier; otherwise, the decision to proceed on behalf of both is made.

Rural property conveyancing is quite unlike the cookie-cutter style of properties in urban environments, where the standard is a lot on a plan of subdivision. Country property, on the other hand, often involves conveyance of part of a lot in a concession, which means anything from two to two hundred acres of land, most of which is unlikely surveyed, some of which can border both water courses (rivers, creeks or streams) and restricted highways or railways, all of which is subject to undisclosed provisions of the original Crown Patent and the over-riding provisions of the very complicated Planning Act (dealing with the authorized severance of interests in land), and qualified by the extensive and varied provisions of applicable Municipal Zoning By-laws (governing the permitted use and location of structures on property). If that were not enough, the small matter of paying for the property in question (normally with the financing assistance of a chartered bank) raises the issue of quality and enforceability of title security which the Clients have somehow considered to be taken as accepted without further enquiry, though certainly the bank has not.

As the Solicitor begins methodically to unravel the details of the proposed transaction, it frequently becomes apparent that the informative level of the Clients is not as great as they had at first suggested or imagined. While it never does to rub another’s nose in it, a gentle reminder that their facts are wrong nicely works to set the stage for a slightly deeper level of investigation. Among the most commonly ignored or overlooked details of a family real estate transaction is the issue of capital gains tax and Goods and Services Tax, the operation of which is often unanticipated either because of general ignorance or because the transaction has been characterized as being below fair market value (usually a smoke screen for under-the-table negotiations). Her Majesty is seldom given the credit she is due, employing that insidious nomenclature "deemed" (to over-rule fact with fiction, inevitably to the credit of the Crown).

In the end, however, it is the duty of the lawyer, and the expectation of the Client, to ensure that things are done right. The judicious application of the metaphorical brakes to the flurry of activity which so often accompanies these family transactions is always worthwhile. In the background there is probably a compelling need for one Party to obtain the money, or the other Property to secure the property. Nowhere other than in the family context is the instinctive element more pronounced, as shrouded as it may be in blood and long-standing relationships. Clouding those relationships further is the distinct possibility that the arrangements being so earnestly pressed upon the Solicitor frequently fly in the face of other non-involved family members, exposing the undertaken at a later date to challenge and allegations of impropriety. A whiff of anything like that prompts me to mandate, if nothing else, a medical report from the elderly Party’s physician that he or she is competent to make decisions. It’s a nice piece of evidence to have on the file.

There are no doubt some practitioners who prefer merely to take instructions from their Clients without contesting the scope or propriety of those instructions. I , however, have learned after almost four decades of practice that it is seldom that a Client’s immediate instructions are either reliable or actually intended. After all, we’re deciding upon considerably more than the cut of one’s hair. In the result, it’s more than just a deed.

No comments:

Post a Comment