BUYING A HOUSE - THE LEGAL SIDE & CLOSING COSTS

Don’t Get Caught by Surprise!
 
This summary is intended to alert you to most of the possible closing costs you will face in buying your home. Most people have carefully budgeted to acquire a home and don't like surprises at the last minute. Therefore, you should research your closing costs and find a lawyer 1) who you feel comfortable with, and 2) who can review your particular transaction and provide you with an all inclusive and COMPLETE estimate of your closing costs to avoid scrambling for funds at closing.

1. Legal Fees - normally flat rated on a real estate transaction and should include all necessary steps to complete the same with the exception of rectifying major conflicts or title defects. No legal fees should be added above and beyond the quoted amount unless clearly reviewed with the purchaser prior to closing. The average legal fees for a standard Purchase and Mortgage transaction is in the range of $600.00 to $1000.00 plus HST.

2. Disbursements - includes photocopies, faxes, postage, mileage and courier. Often a good idea to have these costs flat rated as well to avoid surprises as some banks require more paperwork than others. You should budget between $50.00 and $125.00 plus HST unless the amount is flat rated.

3. Title Search - a minimum 40 year search is required by law on a property. Title search fees can range between $100.00 and $500.00. It is therefore a good idea to have this cost flat rated as well at between $150.00 and $200.00 plus HST. If the property is under the Land Titles system, only a sub-search is required instead of a complete search which normally costs around $80.00 plus HST (plus $35.00 for a Certificate of Registered Ownership if not provided by the Vendor.) Note: Service New Brunswick charges $82.00/PID for Land Titles Conversion.

4. Registration - plan for a government fee of $85.00 for each document on each PID (parcel of land). An average transaction involves one piece of land with a Transfer and Mortgage, thus $170.00 to register in total. If there is more than one parcel of land, your lawyer may be able to consolidate them into one parcel at no additional legal cost to you. Note: Service New Brunswick charges $100.00 for consolidation of PIDs.

5. Transfer Tax - this is another government fee which is currently calculated as 1/2 of 1% of the higher of either the purchase price or tax assessed value. However, as of April 1, 2016 this amount will change to 1% of the purchase price or tax assessed value; i.e. A house which is tax-assessed at $96,000.00 and purchased for $100,000.00 (prior to April 1, 2016) will be charged a $500.00 transfer tax.

6. Title Insurance/Survey - most banks require an accurate survey plan which is no more than 10 years old, verified by an affidavit sworn by the purchaser that the same is accurate. If the vendor has an accurate survey, the purchaser need not pay anything. In the absence of a vendor's survey, the purchaser will have to get a new survey. The cost is around $700.00 to $1,000.00 plus HST or Title Insurance can usually be secured by your lawyer at $279.00 or lower. Ask the realtor if a survey is available and review it before signing.

7. Property Tax - The purchaser is required to reimburse the vendor for the purchasers share of the property tax for the year which is calculated by taking the current tax levy for the year, dividing it by 365 and multiplying it by the number of days left in the year following the closing date; i.e. If taxes are $400/year and the closing date is June 30, then the purchaser will pay $200.00 to the vendor for property tax. If the closing date is prior to tax being assessed for the current year, then it is the vendor who will reduce the purchase price according to the vendor's share of taxes for the year as it is the purchaser who will be required to pay the taxes in full once they are assessed. Properties that are non-owner occupied or have rental units pay a higher premium of property tax. Where the purchaser intends to occupy a property which is non-owner occupied, they will still have to adjust taxes according to the current, higher rate. Following the closing, the purchaser will be able to apply for a credit in relation to a portion of the adjustment paid.

8. Property Adjustments - Adjustments will be paid by the purchaser for items such as water, sewer cost and oil, if applicable. Water & Sewer is only adjusted in areas where rates are paid in advance; i.e. Oromocto and New Maryland. Where there is an oil tank, the Vendor normally arranges to have the tank filled on the closing day and the purchaser pays for one full tank of oil (even if it is in the summer).

9. Ancillary Documents - some banks may require additional certificates; i.e. Sheriff Certificate $20.00, or a Tax Certificate $20.00 etc. These should be discussed with your lawyer when obtaining a quote.

Review - An example of typical closing costs on an average transaction for a 1 unit dwelling of $100,000.00. Note: you should try to insist on an all inclusive and "exact" quote when consulting with a solicitor and ask around to help determine which solicitor will complete your purchase smoothly and at a reasonable rate. Note: all numbers are based on figures used by the law firm which prepared this summary and does not reflect fees and levies levied by all law firms.
 

 
In the event that you are selling one property and buying another at the same time, be sure to mention this fact to the solicitor giving you a quote as you may receive a "multiple transaction discount"

 
CONGRATULATIONS ON YOUR NEW HOME!!