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PAGE 10 FOCUS June 14, 2010 • Law Times Lawyers cautious as economy recovers HST sparks apprehension as condos, new home purchases affected BY DARYL-LYNN CARLSON For Law Times pact on the real estate market as lawyers focusing on that area saw a decline in business. But in the past six months or T so, the market recovery has been fuelling a resurgence in transac- tions that has left practitioners noticeably busy. To some extent, they've been overwhelmed. Ross Talarico of Talarico and Schwisberg Law Offices LLP in Ottawa attests that during the past several months, business has been booming. "There was definitely a lull in the market as a result of the international credit crisis," says Talarico. "But we noticed that things started to pick up in about March of last year. Then in February, he recent downturn in the economy obviously resulted in some im- March, and April this year, they have been the busiest months I've ever had." As a result of the cred- it crunch in late 2008 and throughout 2009, the buyers' market became stymied. De- velopers, in turn, put a hold on building projects. The primary deterrent stemmed from lending practices during the economic downturn, which forced developers to de- lay their projects until buyers could access financing. Still, Talarico notes the har- monized sales tax has also been a factor. "With clients there has been, in part, a fear of rising in- terest rates but also for some, the cost of the HST," he says. In particular, condominium corporations will be pressed to comply with their reserve-fund requirements while paying more for maintenance services and property management Despite increasingly complex transactions, lawyers haven't nec- essarily been able to charge high- er fees, says Jeffrey Schwartz. firms due to the HST. As well, purchases of newly built homes will be subject to the new tax, which prospective buy- ers view as a possible deterrent. "There are some fears regard- ing the HST," says Talarico. Jeffrey Schwartz of Schwartz & Schwartz Professional Corp. and chairman of the Ontario Bar Association's real prop- erty section agrees that lawyers practising in the area have some significant challenges. "Obviously, when people buy and sell, lawyers have lots of business," Schwartz notes. "The bank rates have been sta- ble, so the better the times, the more clients and work lawyers will have to do." Schwartz says he considers himself a general practitioner whose scope goes beyond real estate. He notes that lawyers whose focus is exclusively on real estate are particularly vul- nerable to the ebbs and flows of the economy. "General practitioners tend to sustain themselves doing more than real estate even though real estate may be their core focus. Lawyers whose fo- cus is on real estate only may have been affected more." But at the same time, Schwartz says real estate trans- actions are definitely not as sim- ple as they used to be. Besides considering complexities such as the implications of the HST, Schwartz says lawyers have had to perform a much higher level of due diligence in every basic real estate transaction, whether it involves a commercial prop- erty or a residential purchase. Nevertheless, lawyers gener- ally aren't able to charge higher fees for the additional work. "The level of due diligence that we're having to do now on a ba- sic level is higher than it used to be, although the fees haven't re- ally translated to reflect the work that is done," Schwartz says. He suggests real estate prac- titioners, especially those who have general practices and want to do their best to facili- tate property transactions to the benefit of clients, do their due diligence first by accessing materials available through the OBA or attending continuing education programs. "I think lawyers could learn #1 Software application for Real Estate Law Offices in Canada. Used by over 6,000 professionals in 2,500 law firms. The Conveyancer is the centerpiece of a data and services network connecting law firms to valuable information, title insurance companies, mortgage instructing platforms and other law firms. a lot about developments" in case law, legislation, and tri- bunal decisions involving real estate matters that could af- fect how they provide advice to their clients, says Schwartz. LT Enjoy FREE Support and our 30 Day No Risk Trial Offer*! 1 866.367.7648 I freetrial@doprocess.com *Our free support and 30 Day trial limited time offer only applies for new customers. This offer is valid for one time only, per company and can't be combine with any other offer. Please quote the promotional code 2010FT. ©2010 Do Process Software Ltd. The Conveyancer is a registered trademark of Do Process Software Ltd. All rights reserved. Untitled-2 1 www.lawtimesnews.com 6/7/10 9:41:48 AM