Representing Clients when Dealing with New Home Builders

Commonly, lawyers will act on both sides of residential real estate transactions.   Sometimes it is a necessity in smaller centres where there may only be one or two local lawyers.  Other times, it is because there are a few lawyers who do a high volumes of residential real estate and they will be referred from both ends of the transaction.  There are pros and cons to being represented by the same lawyer on both sides, and those would better be left to another post.

 

However, there is one exception to this: working with new home builders.  New home builders and new home purchasers need to be represented by separate lawyers when closing a real estate transaction.  Our code of conduct requires that separation.  For more information, please check out this post by the Law Society of Saskatchewan: http://www.lawsociety.sk.ca/for-the-public/do-i-have-a-complaint/common-concerns/conflict-of-interest/real-estate-representation.aspx

 

The rationale is that there are too many potential areas of conflict through the home building process that require lawyers on opposite side to advise the parties. The transactions can be very different from builder to builder. Their contracts deal with similar issues, but take different approaches. For example. possession date may be firm with one builder, completely open with the next, and fixed with some limited flexibility with the last.
 

From contract formation, to mortgage draws, to hold backs and possessions, there is always the potential for a deal to go sideways. At those point, is helpful for your Realtors and lawyers to work through the problems with you. All that being said, I have had numerous deals where the process has been problem free, and our role has been limited to the technical administration of the transaction.

 

While builders and purchasers should be represented by separate lawyers, it is also common that vendor builders will refer specific lawyers for their purchaser clients, sometimes with incentives to the clients. The vendors will prefer to work with these lawyers on the opposite side of the transaction as they are familiar with each other and the processes that they have.  However, the lawyer who is representing your interests should ONLY be receiving instructions from you.  The lawyers involved in these arrangement should be more than willing to explain what the details are of the arrangement, and how their independence from the other party is maintained.