Law Times

LAW TIMES / JUNE 16, 2008 FOCUS PAGE 13 took effect, lawyers say everyone is adapting well — but some contend certain groups of practitioners have felt the impact more than others. The recent set of changes de- signed to protect the public came into effect on March 31 and in- clude amendments to the Law Society of Upper Canada's Rules of Professional Conduct, including a rule which requires that there be two lawyers for transactions involv- ing a transfer of title, one for the buyer and one for the vendor. The two lawyers are allowed to practice in the same law firm as long as they observe the general rules on conflicts of interest. In certain limited circumstanc- es one lawyer may represent both the transferor and the transferee. That's, for example, when a transfer is being registered to give effect to a severance of land; a transfer from an estate trustee to a beneficiary; a transfer between related persons or when the lawyer practises in a remote location where there are no other lawyers that the buyer or ven- dor could retain for transfer "with- out undue inconvenience." Part of the government's real es- tate fraud action plan also restricts lawyers from allowing others to use their personalized, specially en- crypted diskette to access the system for the electronic registration of title documents, or from disclosing their personalized e-reg pass phrase to others. Lawyers also have to ensure that non-lawyers with diskettes fol- low the same procedure. Teraview account holders had until the end of March to apply to be able to register documents in the electronic land registration system or their account would have been switched to search-only access. Another rule was also amended to give lawyers complete professional responsibility for documents that they electronically sign using the e-reg system. Real estate lawyers are also now required to have ad- ditional fraud insurance coverage through LAWPro. The change which arguably brought about the most debate when it was under consultation, the two-lawyer rule, has come in with a "whimper" rather than a bang, says Clare Brunetta, chair- man of the real estate issues com- mittee with the County and Dis- trict Law Presidents' Association and a member of the law society's real estate issues working group. "It appears that lawyers are adapting to the two-lawyer rule — it was a matter of great debate, as we know, amongst the members of the real estate bar," he says. Now that the rule has been implemented, Brunetta says most lawyers have accepted the fact that this is the new world that we live in and "seem to be adapting to it," Jeffrey Schwartz, chairman of the real property section of the Ontario Bar Association, says that lawyers are figuring it out but a lot of the changes came quickly, which made it difficult for all. "The changes are being ab- sorbed, the system is, if you don't get it right it stops you, so you have to figure it out," he says. Get Our Environmental w Specialistson Your Team! Get Our Environmental Law Specialists*on Your Team! Our team of environmental lawyers includes 5 Environmental Law Specialists* We help you help your clients. Call us. New two-lawyer rule comes in with 'whimper' T BY HELEN BURNETT Law Times wo months after a num- ber of new changes for Ontario's real estate bar "Lawyers are understanding that in transactions they may have had in the past where one lawyer was involved, they're now having to go and scramble and find another e-reg lawyer to help them along. Incon- veniencing maybe, but it's working, and it's getting done," he says. "The government's trying to bal- ance the rights of the profession or the stakeholders as we're all called, and the consumer," he adds. The rule has still prompted some comments from sole prac- titioners, who it is likely to affect the most, as lawyers in these prac- tices may be faced with situations where two long-standing clients may be transacting business to- gether, says Brunetta. "That's really the greatest im- pact, I think, on sole practitioners, is that from a client-service stand- point, they wind up sending one of their clients away to another lawyer, and the client doesn't really want to go there and the lawyer doesn't re- ally want to send them there, but that's the practical effect. "That's why it's sole practitio- ners who really are being the most affected by this rule, and it's regret- table, because we know from the sole practitioners and small-firms report that the law society did a couple of years ago, that soles are struggling to service the market- place these days, so it's unfortunate that it's soles," he says. Brunetta notes that he has had to send away several clients in the first month of the new rule. "I think it's a situation where we have to say half a loaf is better than none," he says. Under the initial proposal made by the law society and the working group, in discussions with the min- istry, the two-lawyer rule was going to include all transfers, rather than just third-party transfers, he notes. "The fact that we were able to make a compromise and to pre- serve as an exception a one-lawyer signature in situations of interfam- ily transfers, that's a benefit to sole practitioners that just was not on the table at the time that the discus- sions initially began," he says. "We did the best we could. I think those of us that are soles, for March, lawyers were also put in charge of the electronic land regis- tration system, which Brunetta says lawyers welcomed, as a recognition of the important service they do provide in safeguarding the land registration system in Ontario. "The quid pro quo for that was 'I think it's a situation where we have to say half a loaf is better than none,' says Clare Brunetta. the most part, especially in smaller communities, recognize that it's not perfect, but it's better than it could have been," he says. Toronto real estate lawyer Bob Aaron, a law society bencher and member of the working group, says that, while there have been some transition issues, the rule is there and everyone will have to live with it. One problem for sole practitio- ners, notes Aaron, is that it is very difficult to take a holiday, as they have to physically sign the deed. "I don't have a problem with a sole practitioner having a relation- ship with another lawyer and saying to one of the clients, 'Look, you're going to have to get another lawyer on your side of the deal,'" he says. He notes that there are still lots of exceptions to the two-lawyer rule which cover most of the problem areas, in terms of interfamily or re- lated-party transfers, severing joint tenancies or severing land. "There are a lot of situations where the two-lawyer rule doesn't apply, and that is probably good for sole practitioners," he says. Aaron says that he thinks there have been some lawyers who have been caught unaware by the new rules, and the change has been somewhat of a surprise or shock. "The only thing constant about the practice of real estate law is its constant change," he says. Under the changes made in that lawyers then would become responsible for losses occurring by way of fraud in which the lawyer was participating in the transfer, and so that's why we had to have the new insurance system in place, and we're all keeping our fingers crossed that claims experienced will decline and not increase and keep that insurance on an affordable ba- sis for everybody," he says. "Yes, there have been some of my colleagues who have been surprised, and it has been a hard- ship for condominium lawyers for example, who close transactions in bulk, for them to sit there and put their disk in the computer, because they have to do it person- ally, every single time," says Aaron. This could be as many as 300 closings in a day or two, he notes. "That has been a serious prob- lem, and I think the ministry is still working on that," he adds. Aaron notes that he thinks the rule has also affected freelance con- veyancers who do work for lawyers, in terms of the back office process- ing of their transactions. "They can no longer register transfers of land, either as transferor or transferee, without the personal involvement of the lawyer in a hands-on capacity," he says. Ultimately, perhaps the only significant negative to the increase in e-reg, says Schwartz, is that members of the real estate bar have lost some of the camaraderie they used to have from routine meet- ings at the registry office. "We don't see each other dai- ly or at the end of the month as we always used to; now it's, when can we get together on a CLE issue?" he says. "I guess the majority of the deals that I would do today are with law- yers I don't know," he says. LT www.willmsshier.com * Certified by the Law Society of Upper Canada ENVIRONMENT, ENERGY & RESOURCES LAW www.lawtimesnews.com Law Times #MS07-06B – 7-7/8" x 4-7/8" Juli Abouchar 416 862 4836 Doug Petrie 416 862 4835 John Willms 416 862 4821 Donna Shier 416 862 4822 Marc McAree 416 862 4820

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