Land Titles Office Delays and Collecting Fees
The Practice Advisors have had several inquiries from real estate lawyers facing financial pressures due to delays in collecting fees on real estate transactions. These delays are a result of the current registration times at the Land Titles Office.
When a lawyer agrees to a flat fee for a service, typically the lawyer can only take payment if they have rendered an account and the file is complete. This is because Rule 119.28(3)(b) of the Rules of the Law Society of Alberta clearly states that trust money may only be withdrawn to pay for a firm’s fees if the billing relates to services actually provided and expenses actually incurred. With the delays at Land Titles currently exceeding three months, lawyers are faced with collecting their fees months after closing.
To avoid this problem, the lawyer and client could enter into a retainer agreement that allows the lawyer to take a portion of the flat fee at a specific point in the file. For example, a lawyer may want to collect 75 per cent of their fee after the closing has been completed and most of the work has been done. The lawyer could then collect the remaining 25 per cent after final reporting is complete. This is simply an example and the lawyer and client can come to a reasonable agreement that works for them. Any agreement should be in writing, signed by the client and kept on the file.
For existing files, a lawyer could also seek written agreement from a client to take a portion of the fees now if closing has already occurred and you are simply waiting for registration. If a change to the original agreement is made midway through the file, the client must agree to the change in writing.
If you have any questions, please do not hesitate to reach out to a Practice Advisor.