Closing Costs

$$$ Due On Closing

Here’s What to Expect for Typical Closing Costs

Closing costs happen on both sides of the transaction meaning that even the Sellers may be required to cover some costs associated with the sale, but comparatively, the Buyer’s will pay substantially more. It’s good to have a handle on what to expect outside of the Lender’s down payment and mortgage insurance. (Please see Financing tab). Below are the typical cost you’ll be expected to pay upon closing, but certainly not limited to as all purchases can vary somewhat. Always best to consult this area with everyone!

ADJUSTMENTS & LEASED EQUIPMENT

Many properties contain leased equipment such as hot water tanks, oil/propane tanks, and alarm systems to name a few. Buyers can be responsible to take over these leases and also pay for the portion the current owner has already paid such as the oil and propane in the tanks. Most times these tanks are filled at owner’s expense and the buyer will pay for the full tank at closing day pricing at the rate that the tank was last topped up on.

SURVEYS

Surveys used to be mandatory for any financing and strongly recommended for any purchase. With the advent of title insurance, which covers the possibility that the house is not located on the property or that it encroaches on a neighbour’s property, the main danger is no longer there. However, you are insuring over a problem as opposed to actually dealing with any potential issue. A survey is still an essential tool for identifying what you are purchasing and such things as fence lines, easements, etc. The survey would also be essential for any building permit you need to take out. You are right, the cost can be substantial. From my experience, the typical home is closer to the $2,500 for a survey. ~ Geoff Dashwood

LAWYER’S FEES (ON)

Retaining a lawyer to complete the transfer is the final step. For better or worse, you have to retain a lawyer to gain access to the land registry system and complete the transfer. The mortgagee will also require a lawyer be hired. The lawyer will search title and organize the actual closing with the exchange of funds for the deed and keys. Lawyers’ fees are different from province to province and region to region, but typically go from $400 to $1,000. It should be noted that “disbursements” and land transfer tax are always in addition to lawyers’ fees. Disbursements run up from $600 and are typically dependent upon the actual work involved with a standard $500,000 house having disbursements of about $800. Land transfer tax also varies from province to province and region to region. ~ Geoff Dashwood

TITLE INSURANCE (ON)

Title Insurance costs are based on the value of the property and/or mortgage. You might want to quote them $200.00 for a straight-forward $500,000 home, increasing as the value of the home increases. You might want to point out that it covers a number of problems, most notably fraud which extends from pure identity theft to the seller’s failure to pay water arrears. It should be noted that most lawyers will no longer close real estate deals without it and all banks require it. ~ Geoff Dashwood

PROPERTY TAX ADJUSTMENT

Property Tax is another payment you as the Buyer will be paying the Seller for their unused portion of ownership. This is a prorated amount depending on the provincial calculation of the days no longer owned, and your solicitor will determine the dollar amount you either pay to the Seller, or receive IF you are the Seller.

HOME OWNER’S INSURANCE

Insurance is essential for all homeowners and is required by your mortgage company before it will release the funds to close the deal. Premiums vary with the province, city & home. You’ll need to contact a broker but assume $1200+

DEED/LAND TRANSFER TAX*

To be upfront with you, this will be the most expensive of all the closing costs. Please pay attention because if not budgeted properly, you risk the possibility of not fulfilling your duty to purchase.

Halifax is a straight 1.5% of purchase price, while other areas of the Province are between 0 and 1.5 %, depending on the location of the property within a particular municipality.

Toronto has the highest land transfer tax rates in Canada as it levies an additional land transfer tax equal in value to the Ontario land transfer tax, or DOUBLE that of other GTA cities.

Calculating the Ontario rate is more complex than Nova Scotia. Four price points, each with sliding marginal tax rates compound for a final levy.

To provide relief for the high costs of land transfer tax, Ontario does offer a First Time Home Buyers’ Program to refund a portion of the land transfer tax.

*Calculators tab does a decent job of estimating this amount, but I will defer to your solicitor for final dollar amounts!!!!

LAWYER’S FEES (NS)

The lawyer will search title, consult with your lender and prepare mortgage documents, handle title and closing issues, organize the actual closing with the exchange of funds for the deed and keys, and register your deed and mortgage documents. Lawyers’ fees are different from province to province and region to region, but typically go from $750 to $1,000 plus HST. It should be noted that disbursements (fees paid by your lawyer to third parties) are always in addition to lawyers’ fees. Disbursements vary from file to file, but may include: Deed Transfer Tax, registration and recording fees, title insurance, courier fees, software/access fees and fees for tax and zoning certificates, as required. ~ Danielle MacLean

TITLE INSURANCE (NS)

A title insurance policy insures against loss or damage resulting from various risks associated with title to property as well as off-title risks.

Generally, the risks covered by title insurance policies include loss resulting from:

 a defect in the title to the property

 a lien or encumbrance against the title

 problems with your ability to use the land

 survey defects

 noncompliance with zoning

 outstanding property taxes or other charges

 lack of access

 the gap in time between closing and registration of your deed

 title fraud

 overriding interests

 legal expenses associated with you defending an adverse claim

There generally is not coverage for issues of which you are aware prior to closing. This coverage is broader than that provided by a lawyer’s assurance of title. It is also less costly than obtaining up-to-date survey information (which may otherwise be required by your mortgage company), and may be less expensive than obtaining property tax and zoning certificates from a municipal unit. It may also allow for transactions to occur more quickly. Title insurance provides procedural advantages relative to compensation pursuant to the Land Registry system. It is generally faster and easier for you to obtain compensation from the title insurer than from the government or a lawyer’s insurer. Like any insurance policy, there are limitations and exclusions from coverage. Any claim is evaluated based on the particular circumstances. Sometimes money simply cannot resolve an issue to your satisfaction, whereas survey or other investigations may alert you to the problem prior to closing. Title insurance coverage for you is voluntary. However, some mortgage companies require title insurance coverage for their interests and you will incur the cost of that policy. If this applies to you, we recommend that you obtain coverage for you, too.The cost of title insurance can be offset by the savings that result from not making certain inquiries. ~ DCL Law, Halifax, NS