• Barbara Kaye

How will COVID-19 affect my real estate transaction in Ontario?

Updated: Mar 19


Doug Ford has declared a State of Emergency. So what does that mean for you and your real estate transaction? Brokerages are shutting down, agents are working from home and private showings have agents wearing gloves and advising prospective buyers to touch as few things as possible.


Whether you are selling, buying or refinancing your home you may be wondering if any of the changes are going to affect you negatively?


Between February, 2020 and the first week of March, 2020 there was a record amount of sales. After speaking with a number of real estate agents in the Peel and Halton area, they confirmed that stacked townhomes and condominiums priced under $600,000.00 have been going into multiple offers with many being sold over asking. Homes in the million-dollar price range are moving a bit slower, but are still moving nonetheless.


How COVID-19 will affect real estate is still undetermined. Given many people are being advised to socially distance themselves and stay at home, there have been predictions that the market will slow down; however, real estate sales during the March break period traditionally see a 15% to 30% decline as a result of people ether being out of the country or at home with children. If there is a downturn in the market, it may be difficult to assess whether it is a direct result of COVID-19 because of the time period. The only way to accurately track its impact is to wait and see.


For those individuals who have purchased a new build home, some of these construction sites have been stopped. How that may affect their real estate transaction is dependent on when their occupancy date is and how long these sites are closed for.


We are seeing a good number of refinances in the office, but refinancing is also something that is typically done at this time of year. Upon speaking with a few mortgage brokers, it is clear banks are worried about future losses as people facing temporary layoffs or the need to isolate without pay due to COVID-19 may start drawing on their credit without the ability to pay that debt if the pandemic continues. As a result, fixed rates are rising significantly and discounts on variable rates have been removed by some of the larger banks in Canada.


Ultimately, what is certain right now is that nothing is certain.


At KPA Lawyers, we want to reduce your anxiety and uncertainty around your real estate transaction in light of the COVID-19 pandemic. Here are a list of questions you might have for us.


1. Is your firm still operational?

Yes. Our firm is still operational; however, in light of the government’s request that Canadians practice social distancing and self-isolate in the event they display symptoms or have been exposed to someone displaying symptoms, we are reducing our in-person contact to a minimum. All consultations and meetings that can be done over the phone will be done over the phone.


2. Will your firm be able to close transactions in the near future?

KPA Lawyers will be able to close transactions provided banks and Teranet remain operational.


3. What happens if the government orders you to work remotely?

Real estate lawyers owe a duty to act in their clients’ best interest. Provided your real estate lawyer is not mandated to self-isolate, we will endeavour to provide you with the best experience possible given the circumstances. This may likely mean you meet with your real estate lawyer at your home or a location safe and convenient for both parties to sign documents and communicate via email or over the phone rather than in person.


4. How will funds be transferred and received if couriers shut down?

KPA Lawyers deposits funds directly into a lawyer’s trust account at their financial institution. We do not use couriers for this purpose.


5. Will KPA Lawyers receive deposits on transactions so the real estate agent does not need to meet with a client to pick up a cheque?

Yes, provided the Agreement of Purchase and Sale lists KPA Lawyers Professional Corporation, in Trust as the entity receiving the deposit and a certified cheque is provided to the firm. If the firm is required to work remotely, contact the named Real Estate Lawyer to coordinate a time and place for the client and lawyer to meet.


6. How will I sign my real estate closing documents?

If you have an upcoming closing and are required to sign documents, your real estate lawyer will still be able to meet with you provided you are not displaying symptoms or have been exposed to someone displaying symptoms. This health requirement is also true for your real estate lawyer.


If health becomes an issue, contact your real estate lawyer to discuss setting up a video conference call wherein you will review and sign the legal documents with each other digitally.


While you may think organizing a digital signing would be the first option for signing closing documents, there are a number of reasons why lawyers should be with you when signing.


1. Fraud and Identity Theft: Where in-person meetings between the lawyer and the client are reduced or eliminated, there are greater risks of fraud and identity theft. A real estate lawyer is required to look at original identifying documentation to ensure that clients and third parties are who they say they are.


2. Undue Influence: If a party is signing documents virtually with their lawyer, there is a greater risk that undue influence will go undetected. The lawyer may not be able to sufficiently assess whether there are any off-screen influences or other persons coercing the deponent.


3. Reduced level of Client Service: Without safeguards in place, there is a risk that the client is left without copies of documents they have executed virtually. There is also a risk that the client may not feel they have had an adequate opportunity to ask questions or request clarifying information about the documents they are executing, which risk is heightened by the lack of physical proximity.


4. Technological Limitations/Uncertainty: Given varying video quality and network connections, as well as the fact that live streaming video and audio can be manipulated, it may be very difficult for a commissioner to confidently verify the distinct attributes of the document commissioned.


The above reasons for meeting in person are indicative of your lawyer’s role in your real estate transaction. We are here to minimize your legal risks.


Should you have any questions about how you can protect your transaction in the event you wish to execute an Agreement of Purchase and Sale in the near future, do not hesitate to contact us at KPA Lawyers.


We continue to operate and are accepting new clients keeping in mind that the health and well-being of our employees and clients are of utmost importance to us.


Please note that the above information is meant to be for general illustrative purposes, and does not constitute legal advice. If you need advice about your specific circumstances, please contact our offices via telephone. This information may change as the situation develops.


Barbara Kaye is a Real Estate Lawyer at Keeney Pannu Associates. Contact the author at barbara@kpalawyers.ca