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Closing costs for home buyers
- Parent Category: Areas of Practice
Our Real Estate Lawyers guide for home closing costs.
Congratulations on your decision to purchase a new home in British Columbia. Buying a home should be a fun experience. The good news is that most home buyers can easily hire a real estate agent and a real estate lawyer to provide advice along the way to complete a purchase.
Real estate buyers or investors use a number of professionals during the buying process including some or all of the following: Real Estate agents, Mortgage Brokers, Bankers, Tax consultants, Will and Estate Lawyers, and Real Estate Lawyers or notaries. Most new buyers are unfamiliar with what happens after the Purchase agreement has been signed. This is where a real estate lawyer helps the buyer, their agents, and banks come together to complete the purchase, transfer the properties, and prepare for completion day. There are really 2 lawyers/agents during a purchase - a real estate lawyer for the buyer, and a real estate lawyer for the seller.
From the buyer's perspective, there are several steps that should to be taken before you can complete the transaction and move in to your new home. To begin the property transfer, real estate lawyers complete legal documents, research existing titles and liens on the property, ensure that the legal descriptions are correct, and ensure that the property does not have any liens or charges against it. The lawyer then meets up with the buyer to have the necessary documents reviewed and signed for all parties.
Following the signing, the real estate lawyer will execute various transactions on behalf of the client: transfer necessary funds, make registrations to complete the transfer of property, ensure that outstanding fees are paid, transfer payments to various agents and parties - This is known as Conveyance. The buyer's lawyer also ensures that certain disbursements like strata fees or taxes owing are adjusted and split fairly between the buyer and seller.
Law & Associates are experienced real estate lawyers that have handled thousands of residential and commercial property transfers. This ensures that the buyer's interests are well taken care of and that on the completion day, the property transfer occurs without worry. Below, you will find some more tips and information on the day that property transfers title from seller to buyer.
Purchasing a home?
Prior to Completion Day - What can you do?
1) If you or family member is a First Time Home Buyer, there are a lot of advantages that you may be eligible for. You can consider the Home Buyers Plan and use some of your RRSP as downpayment. You may be eligible for rebates and exemptions on some taxes - check out Law & Associates' calculator for the rebates
2) Finalize the mortgage requirements with your bank or mortgage broker and provide them with a copy of your Contract of Purchase and Sale.
3) After selecting a Lawyer, he/she will need to be provided with the Contract of Purchase and Sale. If there is a Mortgage, further instructions will be provided to the Lawyer by the lending institution.
What will Law & Associates do in order to complete your purchase?
1) The Lawyer takes several steps to prepare all the legal documents for you to sign a few weeks prior to Completion Day.
2) Review the Conditions and Subject Clauses and have the relevant ones removed to satisfy your conditions. Often, this is done by the buyer/seller and their real estate agents but if you have already selected a Lawyer for Conveyance, review with your lawyer.
3) Law & Associates will discuss your situation with you to review names that will go on title. This can be important to you for Wills & Estate planning.
4) On completion date your Lawyers work to coordinate transfer of funds with banks, lenders, strata, and buyer/seller to ensure all the closing costs are accounted for. Registrations are made in land title office and finally, the transfer of property is completed.
5) Law & Associates can help provide you with information on your completion costs. There will be Legal costs plus Taxes and Disbursements. Most people make the mistake of not budgeting for Taxes and Disbursements. Here is a summary of the major items to help you budget accordingly.
6) Closing Costs (Please note that the following is only a guideline. The lawyer/conveyancer will be able to provide you with the actual closing costs when instructions and information from 3rd parties are gathered).
- Realtor commissions: Typically the sellers incorporate this into the purchase price. The lawyer has to pay the commissions on both sides on your behalf. In order to complete this, there may be courier or agent fees.
- Appraisal Fees: If you have a mortgage, your lender will likely require an appraisal of the home. This fee can range from $200 and up.
- Survey Fee: Your bank or lender may request to have an up to date survey of the property. This allows the lender to confirm property dimensions, and encroachments. Sometimes, the lender will accept a recent survey from the seller if one exists. Costs to have a survey completed can range from $150 to $400 and up depending on the size of the property. Typically, the bank instructs your Lawyer to order this on your behalf.
- HST Tax is applicable on new property and some cases of renovation. There are provincial and federal rebates if applicable. Law & Associates has provided a convenient calculator for the rebates.
- PTT (Property Transfer Tax) is remitted to government whenever real estate is purchased or changes usage. If you are a First Time Home Buyer, there are some exemptions. Law & Associates has provided a convenient calculator for the rebates.
- Adjustments. There may be costs that the buyer has to incur to reimburse the seller. For example, if property taxes were prepaid by the seller for the entire year, the buyer will need to reimburse the seller for the remainder of the year prorated by completion date. Other adjustments involve strata fees, utility contracts, and others. If you are buying a condominium or townhome, the strata can charge a move in fee (ranges from $50 to $125)
- Home insurance provides building protection against things like fire. This insurance is a requirement by the lender if you have a mortgage. If you are part of a strata plan, there may already be insurance on your building. Law & Associates will look into this for you.
- Land Title Insurance is a requirement if you have a mortgage. Title insurance can be for lender or the buyer. Buyer title insurance can protect buyer/owner against fraud, liens, errors in surveys, faulty public records, and other items that can effect your ability to sell your property. Title insurance ranges from $200 up depending on the value of the property.
- Mortgage Insurance is required if your mortgage is for more than 80% of the purchase price of your home. You should review this cost with your banker or lending institution.
- Legal fees are lawyers fees to prepare the legal documention, processing of payment transfers, legal registrations, situational fees, etc. Legal fees for an average residential conveyance is typically $750 + disbursements
- Other Examples of Disbursements including the above include: Adjustments, Title Search, Agent fees, Land Title Insurance, Survey fee, Fire Insurance, certification of documents, Document charges from property managers and insurance companies, etc.)
Notice: This guide is meant to provide only basic GENERAL guidelines and does not address all the variations for your specific situation. The information contained above is subject to change at any time due to changes in municipal, provincial and/or federal laws and regulations. You should contact a professional for advice.