LEGAL CLOSING COSTS FOR A STANDARD PURCHASE TRANSACTION
Closing costs are additional costs over and above the negotiated price of the house. These include the following:
- Provincial Land Transfer Tax. This is a tax payable only by the Buyer, the Seller does not pay any Land Transfer Tax. The amount of tax paid depends on the purchase price, and whether you and your co-buyer and your spouse if you are married, are first time buyers.
- Toronto Municipal Land Transfer Tax. It is similar to Provincial Land Transfer Tax and applicable only on properties in the city of Toronto. It is paid in addition to the Provincial Land Transfer Tax.
- Title Insurance Fee. Title Insurance is a product intended to protect the Buyer and the Lender from problems which may affect the property but are unknown at the time of closing. These problems may include: zoning issues, unmarketability of title, lack of construction permits for previous work done on the property, lack of up-to-date survey, unpaid property taxes and water bills, and post closing title fraud and forgery, meaning, if someone steals your identity and fraudulently sell your property from underneath you or registers a fraudulent mortgage, tile insurance company will pay your legal fees to restore you to the position you were in before the fraud occurred.
- Closing Adjustments. The purchase price is subject to adjustments between the Buyer and the Seller for property taxes and common elements expenses (maintenance fee) if purchasing a condominium. If the Vendor has overpaid or pre-paid any of the services or fees pertaining to the property they will receive a credit on the Statement of Adjustments. Similarly, if any of these have been underpaid the credit will be to the Buyer and the purchase price will be reduced by the amount of the adjustment. Our office will let you know the amount of the closing adjustments after we receive the information from the Seller’s lawyer and complete various searches.
- Provincial Sales Tax (PST) on Mortgage Insurance. In the event that the Buyer has less than 20% down payment the bank will deduct from the mortgage advance the Canada Housing and Mortgage Corporation Insurance premium and PST on the Insurance. The Lender raises your loan amount to cover the CMHC or Genworth mortgage insurance premium but does not pay the PST on the insurance. The PST on the insurance premium will be deducted from the basic loan amount. Some banks also keep a holdback for property taxes if they will be paying property taxes on the subject property.
- Legal Costs and Disbursements. Legal costs depend on the amount of legal work that is necessary to complete your transaction. Disbursements are out of pocket expenses made on your behalf by our office to close your transaction, and may include some or all of the following: title search, execution searches against the Buyer and Seller, conveyancing costs, courier charges, bank wire transit charges, cheque certification charges, and HST on legal fees and disbursements. The amount of legal costs often vary from firm to firm as lawyers charge different amount in legal costs. Our office charges fixed fees for the most common types of purchase transaction allowing us to usually provide you with a written quote well in advance of your purchase.
The good news is that not all the costs listed above apply to all transactions and most of them are one-time costs.
For an accurate assessment of your potential closing costs please contact our office at (416) 292-8277, or via e-mail at email@example.com