Real Estate

Lawyer fee - "out of pocket expenses"

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  • Jul 26th, 2019 3:35 pm
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[OP]
Newbie
Mar 24, 2018
50 posts
42 upvotes

Lawyer fee - "out of pocket expenses"

I have a quick question about whether this experienced board considers this reasonable.

I was purchasing a new custom home build in Edmonton for about $850K.

The real estate lawyer quoted us $1495 + "out of pocket expenses". This suggested to me an "all-in" price except for some odd incidentals.

We basically signed off on the deal and agreed to almost all terms except holdback clauses when he got involved so I don't think there was much work actually done on the project. All of the paperwork we've dealt with up until now has been through our real estate agent with him just making a few minor suggestions about clauses which he subsequently actually forgot about it and we had to remind him of their existence on 2 different occasions. We've actually not met him yet with closing date just a week away.

Anyhow, now that the deal is basically wrapped up he has revealed that on top of the $1495 fee (which I thought was excessive but wife wanted to sign him because she knew him from before) he wants to charge $1300 + GST for "Disbursements". There is no actual breakdown of any of these costs.

Do these "out of pocket expsenses" sound reasonable. What could they represent.

Thanks for any advice that you have on this matter.
18 replies
Member
Oct 21, 2013
200 posts
76 upvotes
waterloo, on
Basically hes charging you 1495 base price and then other costs on top. Any lawyer can close that for 650 base. If you can, find another lawyer.
Royal LePage Realtor
Serving Kitchener/Waterloo/Cambridge/Elmira/Guelph and surrounding cities
[OP]
Newbie
Mar 24, 2018
50 posts
42 upvotes
Is that possible - he's already technically done some work on the project - mostly irritating emails and asking for a clause about holdbacks which he subsequently forgot about.

I assume there would be some costs for this in the end.

Closing date is July 30th and I'm gone out of town from July 25-29.

We didn't sign any sort of contract per se but there is a written agreement about the 1495 fee over text messages.
Sr. Member
Jun 7, 2017
754 posts
547 upvotes
BC
SleepyFunds wrote:
Jul 23rd, 2019 11:03 pm
I was purchasing a new custom home build in Edmonton for about $850K.
Custom built for you? You do not need a lawyer. Expenses are zero.

OR

Custom built for someone else, and so just a regular pre-owned? *Total* RE lawyer fee in backwoods Edm should be no more than $1k.
[OP]
Newbie
Mar 24, 2018
50 posts
42 upvotes
It was basically an infill in a mature neighbourhood. We bought it after the house was completed but landscaping and garage were not yet done. The time from closing on the deal to taking possession was only 40 days.
Sr. Member
Mar 9, 2014
650 posts
657 upvotes
Ottawa
The amount seems high. He should be disclosing the breakdown of disbursements. It could include Title Insurance, which is several hundred dollars.
Sr. Member
Jun 7, 2017
754 posts
547 upvotes
BC
SleepyFunds wrote:
Jul 24th, 2019 12:09 am
It was basically an infill in a mature neighbourhood. We bought it after the house was completed but landscaping and garage were not yet done. The time from closing on the deal to taking possession was only 40 days.
Alright, so not custom built for you, so your comment “a new custom home build” is bogus.
Is the builder the seller?
[OP]
Newbie
Mar 24, 2018
50 posts
42 upvotes
Yes, the builder of the home was selling it through his real estate agent.

What I meant by "custom built" was that it's not like a new subdivision where a small group of builders put up lots of similar houses but with different colour schemes. There are no houses in the neighbourhood similar to it.
[OP]
Newbie
Mar 24, 2018
50 posts
42 upvotes
huntclub wrote:
Jul 24th, 2019 12:40 am
The amount seems high. He should be disclosing the breakdown of disbursements. It could include Title Insurance, which is several hundred dollars.
Yes but a lot of you on these forums talk about getting the whole deal done in the $1000-1500 range. This is what I thought I was getting outside of some incidental costs. He didn't lay out at all what his fee included and what the other costs may be when we agreed over text message to let him do the deal with us.
Deal Guru
User avatar
Sep 21, 2010
11960 posts
2839 upvotes
Montréal
Man, why didn't you ask before committing? Kinda hard to pull out now and you're right, it's very questionable these disbursements, almost equal to the fees! Insane actually and w/o more details, ripping you off.

You should ALWAYS ask for a lump sum quote where feasible. Anything else is just irresponsible and not too astute.
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>
Deal Addict
Nov 22, 2015
4979 posts
4147 upvotes
tranquility922 wrote:
Jul 24th, 2019 1:44 am
Man, why didn't you ask before committing? Kinda hard to pull out now and you're right, it's very questionable these disbursements, almost equal to the fees! Insane actually and w/o more details, ripping you off.

You should ALWAYS ask for a lump sum quote where feasible. Anything else is just irresponsible and not too astute.
What makes you say that the disbursements are questionable??

As far as I know, disbursements are collected by the lawyer and disbursed to the relevant parties... These are fees and charges collected on the behalf of third parties - could be pro-rated property tax, seller's lawyer fees (Mattamy charged us $300), Title Insurance, etc.

Your lawyer doesn't typically get to keep any of the disbursements, unless he's lumped in his "out-of-pocket expenses" in the disbursements (not sure if that's even possible?)

When you go sign the documents, you should have a detailed breakdown of each disbursement item.

Not sure this is something easily explained over text message or phone.
Sr. Member
Mar 24, 2016
562 posts
497 upvotes
scarborough
My lawyer charged us a fee as well as out of pocket expenses. I cant recall the cost of the out of pocket expenses without going in my files but they were all listed for everything that was expensed
Deal Guru
User avatar
Sep 21, 2010
11960 posts
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Montréal
superfresh89 wrote:
Jul 24th, 2019 2:19 am
What makes you say that the disbursements are questionable??

As far as I know, disbursements are collected by the lawyer and disbursed to the relevant parties... These are fees and charges collected on the behalf of third parties - could be pro-rated property tax, seller's lawyer fees (Mattamy charged us $300), Title Insurance, etc.

Your lawyer doesn't typically get to keep any of the disbursements, unless he's lumped in his "out-of-pocket expenses" in the disbursements (not sure if that's even possible?)

When you go sign the documents, you should have a detailed breakdown of each disbursement item.

Not sure this is something easily explained over text message or phone.
They are literally questionable as your lawyer didn't account for how they came to be. Anyway, depends if you accept it as face value or want to dig deeper. Looks suspicious to me, that's all.
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>
Deal Addict
Nov 22, 2015
4979 posts
4147 upvotes
tranquility922 wrote:
Jul 24th, 2019 3:32 pm
They are literally questionable as your lawyer didn't account for how they came to be. Anyway, depends if you accept it as face value or want to dig deeper. Looks suspicious to me, that's all.
Disbursements are not "suspicious" as it's fees charged by other parties. These should be the same fees regardless of who the lawyer is.

Now $1300 worth of "out of pocket expenses" would indeed be suspicious.
Deal Guru
User avatar
Sep 21, 2010
11960 posts
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Montréal
superfresh89 wrote:
Jul 24th, 2019 3:37 pm
Disbursements are not "suspicious" as it's fees charged by other parties. These should be the same fees regardless of who the lawyer is.

Now $1300 worth of "out of pocket expenses" would indeed be suspicious.
Yes, cmon, I know that (read again my 1st sentence), I'm referring to your 2nd part obviously, in which the disbursements were not itemized, hence the suspicion.
The richest 1% of this country owns half our country’s wealth, 5 trillion dollars, one-third of that comes from hard work, two-thirds comes from inheritance, interest on interest accumulating to widows and idiot sons, and what I do.. <find the rest>

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