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Your Lawyer May Be Overcharging You

Picture this: you’re buying a home or refinancing your mortgage. You hire a lawyer to facilitate the transaction. You decide to go with a mortgage that is NOT through one of the big six banks, like hundreds of thousands of Canadians do every year. Suddenly, you get a call from your lawyer. They want to charge you an additional fee for not choosing TD, CIBC, Scotiabank, RBC, BMO or National Bank.

Is this common? Unfortunately, it’s more common than you think.

Is this legal? You bet it’s legal.

Is this acceptable? That’s for you to decide.

Why Are Lawyers Charging Extra?

I’ve asked quite a few lawyers this question. Some have told me that non-bank mortgages come with more documents to review which requires more of their time. Others have revealed that they are simply more accustomed to working on traditional bank mortgages. 

That’s great and everything, but there are a ton of better mortgage products available from financial institutions that aren’t gigantic banks. What if you decide to go with one of those? Why are these lawyers only set up to assist with a very specific kind of mortgage? Why should you have to pay a premium for being a savvy consumer? In my opinion, applying a surcharge that favours using the big banks sets a dangerous precedent.

What Can I Do About It?

Luckily, not every lawyer has hopped on this disturbing trend. You have every right to shop around and find a lawyer that isn’t going to look for opportunities to upcharge you. Consider getting your legal fees quoted upfront and really scrutinize how they’re broken down. 

A Note To Lawyers

I want to be clear that extra legal fees are obviously not always unwarranted. Take for example commercial mortgages, or alternative lender mortgage products. But to levy an additional fee for dealing with non-bank lenders is unfair. Many of these institutions are highly reputable and offer great quality products. You may eventually find that homeowners who prefer these avenues won’t want to work with a lawyer that isn’t amenable to them.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca

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