Notaries public have a legal duty to be honest
Vancouver notary public David Watts likens a home purchase to a relay race. “In the beginning of the process, the buyer spends time with a mortgage broker to secure their financing and figure out how much money they can afford,” Watts told the Georgia Straight in a phone interview.
Then comes the second lap.
“Once they know what they can afford, the baton is passed to the realtor and the realtor goes shopping with the client and they figure out, ‘Okay, this is what our budget is. What can we buy?’ ” Watts explained.
The third and final lap follows after the conclusion of a contract to purchase.
“With the subjects removed on the property and the mortgage commitment in place, the baton is passed to the notary,” Watts noted.
What proceeds is a series of steps, starting with the notary’s review of the title of the property.
The final step involves the delivery of a copy of what is called a “state of title certificate” to the buyer, now the new registered owner of the property.
In between the start and finish, notaries check whether or not a seller has any outstanding financial obligations to settle, like liens.
Also, funds involved in the home purchase get transferred into a notary’s trust account.
“We’re the only ones involved in paying out money in the transaction, so our role is critical in confirming the amounts are paid out and the parties who are owing in a transaction receive their funds,” Watts said.
These payouts include commissions for realtors.
“We complete the deal with the clients and bring them to the finish line,” Watts said, completing his relay-race analogy.
Notaries are legal professionals, except they do not go to court.
Watts belongs to the board of the Society of Notaries Public of B.C. On its website, the society identifies him as its vice president.
Notaries provide a broad range of legal services. In addition to residential-property transfers, they also prepare wills and certify true copies of documents, among other functions.
The B.C. Notaries Association describes these as “non-contentious services” or, simply, “happy law”.
In a home transaction, the buyer and seller will each have their own notary. “A Member should not ordinarily advise or represent both sides of a transaction,” the association’s code of conduct states.
Notaries also play a role in preventing dirty money from entering the property market.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations (PCMLTFR) covers these legal professionals. Under federal rules, notaries are required to verify the identity of their clients. They have to report suspicious transactions to the country’s financial intelligence unit, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
Lawyers are not subject to FINTRAC reporting, Watts said. “We’re not protected by solicitor-client privilege the way lawyers are.”
Watts confirmed what many economists and real-estate associations have reported about how the property market behaved this year, particularly in light of COVID-19.
According to Watts, the year started strong but turned quiet in April amid the pandemic lockdowns. The market started to pick up in May and continued through the months of June, July, and August. “Right now, our volumes are quite strong,” he said.
On August 13 this year, the B.C. Real Estate Association (BCREA) reported that 10,090 homes were sold across the province in July, an increase of 26.6 percent from July 2019.
Year to date, B.C. residential sales totalled $32.5 billion, up 8.4 percent compared with the same period in 2019. According to Watts, there were a lot of concerns during the early days of the pandemic, which caused the market to slow down.
Low interest rates helped buoy the market. In March, the Bank of Canada successively slashed the key lending rate down to its lowest level, 0.25 percent.
“People took advantage of that to get into the market, and so we saw a lot of activity in the lower part of the market because people were able to borrow more or have lower payments,” Watts said.
Like most businesses, Watts’s office adopted new practices because of the pandemic. “We insist that everybody who comes into our office wears a mask,” he noted.
His office now features transparent barriers. Clients can also sign documents inside their cars while Watts and his staff witness the process from outside the vehicle.
Watts started as a notary in 2006. He said he likes the work, especially with firsttime home buyers who are thrilled about fulfilling the goal of homeownership.
“What I really enjoy is sharing in that excitement,” Watts said.