November 16th 2020
In your typical real estate transaction, a purchaser is required to deliver to the seller the balance of the purchase price after adjustments in the form of “a bank draft, certified cheque, or wire transfer”. Law offices have traditionally preferred certified cheques for several reasons. First, a certified cheque ensures the funds are available in the account it was issued from. This avoids the recipient's bank’s requirement to hold large sums for several business days before they are cleared. A second reason why certified cheques have been the industry standard is that firms acting on opposite sides of a deal are often close to each other. This meant that on closing day, the lawyers would exchange certified funds and keys directly with the other law office.
Changes to financial and banking institutions and the priority on health since March of this year has resulted in an emphasis upon digital solutions in closing real estate transactions. Many firms are now adopting technology to send wire transfers from their own office computers. Having the ability to send a wire means no individual must attend a bank in person to have a physical cheque certified. Wire transfers may also be delivered extremely fast when prepared correctly. It is not unusual for a wire transfer to clear an account of the selling lawyer within moments from being sent by the purchaser’s lawyer. The efficiency of wires and the ability to social distance with their use means that this technology can be a great asset for small and large offices.
Unfortunately, challenges remain in the uniform adoption of wire transfers. Firms must pay upfront costs to access the commercial platforms that permit them to use the technology. There are also unique features among institutions in how a wire should be sent, including things such as using 12 digits (transit plus the account number) when delivering wires to a Scotiabank account, or using 11 digits (the designation code plus an account number) for TD Canada Trust accounts. These idiosyncrasies can be addressed by the law society and continuing professional development ought to be available for those unfamiliar with the technology. There is also the matter of fees. When receiving a wire, your financial institution will charge you a fee. This is unlike certified cheques, where the recipient has no fee for depositing the cheque. Often, firms will demand that the purchaser compensate the seller for this fee to their account. However, the purchaser has the right to deliver by wire transfer under the contract. Therefore, it has been my position that no such adjustment is contractually required and I refuse to do so.
When it comes time for your real estate deal to close, you should be confident that your lawyer has the right tools to ensure a smooth transaction. Liddiard Law has placed emphasis on leveraging digital technology and has been successful in facilitating numerous transactions during these challenging times. Do not hesitate to reach Liddiard Law to learn more about how smooth your transaction can be.
Michael Craig Liddiard, BA MA JD : Liddiard Law Professional Corporation : michael@liddiardlaw.ca : http://www.liddiardlaw.ca