New Rule on Advertising of Fees for Residential Real Estate Transactions
This is a November 2017 e-bulletin from the Law Society of Upper Canada.
Convocation approved amendments to the Rules of Professional Conduct (“Rules ”) in September 2017 with respect to advertising of fees when acting on residential real estate transactions. The new rule and its commentary provide guidance on the way in which lawyers advertise fees for residential real estate transactions involving the sale, purchase or refinancing of property. Specifically, the rule and its commentary address what fees or other charges must be included in the advertised price, what disbursements may be excluded from the advertised price and how pricing information must be presented to consumers.
This e -Bulletin sets out some questions and answers that may assist lawyers in understanding their professional responsibilities with respect to the new rule. Lawyers should refer to the actual Rules to determine the full extent of their obligations.
Are lawyers required to provide price advertising for residential real estate transactions?
No. The new rule does not require lawyers to advertise, or to advertise on the basis of price. However, where a lawyer choses to advertise a price for the completion of residential real estate transactions, then the lawyer must meet the requirements of the new rule.1
When does this new rule apply?
This rule applies where a lawyer advertises a price for acting on a sale, a purchase or a refinancing of residential real estate (r. 4.2-2.1). The rule applies to all types of advertising, including traditional print media, Internet publications, websites and standardized price lists (r. 4.2-2.1).
In the case of website advertising, the rule applies regardless of whether the price is listed on the site or made available in response to a request made on a webpage (r. 4.2-2.1). However, the rule does not apply where a specific price quotation is provided through a website inquiry based on an actual assessment of the work and disbursements required for the transaction, and the lawyer discloses the anticipated types of disbursements and other charges that the consumer would be required to pay in addition to the quoted price (r. 4.2-2.1).
What are the price advertising requirements for residential real estate transactions?
Lawyers are permitted to advertise a price for acting on residential real estate transactions if
- The advertised price is inclusive of all fees for legal services, disbursements, third party charges and other amounts, except for the Harmonized Sales Tax (HST) and the following permitted disbursements which the lawyer may charge in addition to the advertised price provided that the lawyer complies with the requirements of this rule:
- Land transfer tax, government document registration fees, fees charged by government, Teranet fees, the cost of a condominium status certificate, payment for letters from creditors’ lawyers
- The advertisement clearly states that HST and the permitted disbursements are not included in the price;
- The lawyer strictly adheres to the advertised price for every residential real estate transaction;
In the case of a purchase transaction, the price includes the price for acting on both the purchase and on one mortgage; and
- In the case of a sale transaction, the price includes the price of acting on the discharge of the first mortgage (r. 4.2-2.1(a)–(e)).
The “advertised price” described above is all-inclusive, except for HST and the permitted disbursements. The advertised price is required to include overhead costs, courier costs, bank fees, postage costs, photocopy costs, third party conveyancer’s title and other search or closing fees and all other costs and disbursements that are not permitted disbursements specifically mentioned under the subrule (r. 4.2-2.1).
How should pricing for residential real estate services be advertised?
Lawyers who choose to advertise a price for residential real estate services must ensure that all relevant information is provided to consumers. For example, the permitted disbursements should not be set out in small print or in a separate document or webpage. Particular care should be taken with mass advertising where consumers will not have the opportunity to read and understand all of the details of the price. Lawyers should take into account the general impression conveyed by a representation and not just its literal meaning (r. 4.2-2.1).
Does the lawyer’s advertised price for a residential real estate transaction affect the lawyer’s duty of competence?
No. Regardless of the price charged for legal services in a residential real estate transaction, the lawyer has a duty to perform any legal services undertaken on behalf of the client to the standard of a competent lawyer (r. 3.1-1).
The Law Society’s Residential Real Estate Transactions Practice Guidelines set out some best practices and procedures for lawyers acting in residential real estate transactions.
What supports are available for lawyers who have more questions about advertising residential real estate services?
For assistance interpreting the Rules or understanding other practice management obligations, please contact the Law Society at 416-947-3315 or 1-800-668-7380, ext. 3315, Monday to Friday 9:00 am – 5:00 pm EST and ask to be connected to the Practice Management Helpline.