Table of Contents

Costs Related to a Real Estate Transaction

The conveyance of real property results in the payment of certain expenses by the parties involved. Set forth below is a brief summary of these expenses viewed both from the position of the purchaser and from the position of the vendor.
Land Transfer Tax
This tax is paid by the purchaser at the date of final closing to the Minister of Finance pursuant to The Land Transfer Tax Act. The tax is based on the purchase price and the current rates became effective on June 1, 1989.

The rates are as follows for a single family residence:

$ 0 - $ 55,000.00 x .005 less $ 0.00
$ 55,001.00 - $ 250,000.00 x .010 less $ 275.00
$ 250,001.00 - $ 400,000.00 x .015 less $ 1,525.00
$ 400,001.00 and over x .020 less $ 3,525.00
For a real estate transaction of less than $250,000.00 the easiest way to calculate the Land Transfer Tax is to multiply the purchase price by 1% and deduct $275.00. If the purchase price was $245,000.00, the tax would be $2,450.00 - $275.00 = $2,175.00.

First time home buyers on new construction may be exempt from paying the Land Transfer Tax.
HST
The purchase of a resale home does not attract HST. The purchase of a new home from a builder is subject to HST and the buyer is entitled to a rebate of a portion of the HST. This rebate is calculated using a number of variables including the purchase price of the home. Our office can assist you with this calculation once you have an agreed upon purchase price.
Disbursements - Purchase
In addition to the payment of Land Transfer Tax, purchasers are responsible to pay for certain disbursements incurred by their lawyer in respect of various certificates, searches and registrations. Examples of such disbursements are as follows:

Registration of deed $74.72
Registration of mortgage $74.72
Full search of property (varies depending on size) $125.00 - $300.00
Execution searches ($11.50/person - vendors and purchasers) $46.00
Law Society of Upper Canada Levy $65.00
Photocopies, postage, couriers, agent's fees (varies) $200.00
Agent's closing fee $125.00
Hold back
(covers any unexpected expenses; the balance of holdback shall be returned to you 60 to 90 days after closing)
$200.00
Title Insurance
(replaces the necessity of the Law Society Levy and certain Compliance Reports including zoning reports)
$188.75 - $300.00
HST is applicable

These disbursements normally total approximately $1,100.00 to $1,400.00 for a purchase. HST is applicable.
Disbursements - Sale
The vendor in a real estate transaction is not required to pay any Land Transfer Tax. However, the vendor is responsible to pay for certain disbursements incurred by their lawyer such as:

Registration of a discharge of mortgage $74.72
Subsearch of the subject property (price will vary) $35.00 - $80.00
Law Society of Upper Canada Levy $65.00
Photocopies, postage, couriers, agent's fees (varies) $200.00
Hold back
(covers any unexpected expenses balance returned to you 60 to 90 days after closing)
$200.00
HST is applicable

These disbursements normally total approximately $350.00 to $550.00 for a sale. HST is applicable.

If there is to be a mortgage discharged from a financial institution that does not prepare their own discharge documents, an additional fee of $75.00 will be charged for the preparation of these documents.
Adjustments on Closing - Between Vendor and Purchaser
On closing there will be adjustments to the sale price between the vendor and the purchaser. These adjustments will appear on a Statement of Adjustments as credits in favour of the vendor or the purchaser. If the vendor is relying on receiving or if the purchaser is relying on paying a fixed amount on closing, it is unpleasant if these adjustments come as a total surprise.

For example, if taxes for the calendar year are $1,200.00, the deal closes June 30th and the vendor has paid the taxes for the entire calendar year, there will be a credit on closing to the vendor of $600.00. In other words, the vendor receives $600.00 more and the purchaser pays $600.00 more.

Also if there is a fuel tank at the property, the vendor usually fills the tank on closing and sells a full tank to the purchaser. The current adjustment is approximately $1.00 per litre for 909 litres. The vendor receives $909.00 more and the purchaser pays $909.00 more on closing (plus HST where applicable).
Survey
Most financial mortgage institutions now require a purchaser to produce a recent survey for the real property being purchased showing the boundaries of the lands and the location of the dwelling thereon. The requirement for a survey may be waived in the event that the purchaser acquires Title Insurance on their new property. The term "recent" varies from lending institution to lending institution, but as a loose rule a survey 10-15 years old will probably still be acceptable to a lender if accompanied by a Declaration by the vendor saying it is still accurate.

If the purchaser requires a survey for the lender and the vendor does not have one, it is the responsibility and expense of the purchaser
not the vendor to have a new one prepared by an Ontario land surveyor. The approximate cost is $850.00 to $1,200.00 for urban, residential property.
Title Insurance
Title Insurance is an insurance product that protects the owner of property from defects in title such as conflicting interests in ownership of the property, conflicts with Municipal bylaws and zoning or unmarketability of title. Many of these interests are impossible to search or ascertain prior to closing and, consequently, the use of Title Insurance is most highly recommended. Indeed, it is often a requirement of obtaining a mortgage. The cost of Title insurance varies with the value of the property in question. However, as can be seen from the included cost breakdown later in this letter, the costs of the insurance is offset by savings in other expenses that are necessary in the event that the Title Insurance option is waived. In most transactions, title insurance is recommended and required as a condition of financing.

The Title Insurance coverage lasts as long as you own the home. For an excellent review of Title Insurance, it's coverages and functions, please see the Stewart Title Guaranty Company website at: http://www.stewart.ca/purchasers.html.
Legal Fees - Employee Transfer
It is the policy of our firm to accept as our reimbursement for legal fees and disbursements on a residential real estate transaction the normal guidelines of the individual employer.

Experience has shown that employers such as External Affairs, National Defense, Bell Canada and various relocation services have a set schedule of fees and disbursements to be allowed an employee who is being transferred. It is the policy of our firm to accept as our reimbursement for legal fees and disbursements on a residential real estate transaction the normal guidelines of the individual employer.
Legal Fees
We do our very best to provide you with comprehensive service at a reasonable and fixed cost. There are many options to acquire real estate and to finance the transaction. Legal fees will vary according to the degree of complexity associated with a specific transaction.

Below you will find a schedule of fees relating to those specific transactions.

Subject to the above paragraph, our normal fees on a residential real estate transaction in the Regional Municipality of Ottawa-Carleton are as follows:

PURCHASES (no financing required) base fee
Single family dwelling - $400,00.00 or less $800.00
Condomimium (includes review of status cert.) $875.00
New home from builder $800.00
Purchase $400,000.00 to $999,999.99 $950.00
Purchase over $1,000,000.00 $1,500.00
Additional fees for review of purchase and sale agreements
Single family dwelling $185.00
New home from builder $250.00
Additional fees for purchase transactions with financing
One (1) mortage arranged through a major chartered bank $250.00
One (1) mortgage arranged through high risk lender (ie. Home Trust, Maple Trust, ING, PC Financial, ManuLife) $350.00
HST is applicable

Our fees vary with specific lenders. If you are dealing with a mortgage broker, our past experience can show that sometimes these transactions become problematic and therefore our fees quoted above reflect the additional time required to resolve issues that normally arise in these situations.

SALES $400,000.00 or less base fee
Base fee which includes discharge of one mortgage (for which we do not have to prepare discharge) $850.00
Added fee to prepare the discharge in the event that lender does not prepare $75.00
Added fee for each additional mortgage discharged (ie. 2nd, 3rd mortgages and lines of credit secured against property) $125.00
Added fee for any additional documents which must be prepared in order to satisfy title corrections required by purchase $150.00
Added fee for payout of any unsecured debt $50.00/$75.00
Sale transaction over $400,000.00 $950.00
HST is applicable

REFINANCES unrelated to a purchase
Base fee which includes discharge of one mortgage (for which we do not have to prepare discharge) $700.00
Base fee when financing with high risk lender $900.00
Added fee to prepare discharge on behalf of lender $75.00
Added fee for each additional mortgage to be discharged $125.00
Added fee for payout of any unsecured debt $50.00/$75.00
Added fee for any revision to mortgage documents required within 5 days of closing $50.00
On a sale and purchase for the same client where both the sale price and purchase price are $300,000.00 or less, our total fee for all services including discharge of one mortgage on the sale and registration of a mortgage on the purchase $1,450.00
Fees for transactions between $500,000.00 and $1,000,000.00 $1,650.00
Fees for transactions exceeding $1,000,000.00 are negotiable
HST is applicable

Above quoted fees apply to properties that fall within a registered plan of subdivision. Rural properties such as farms and cottage lots often do not fall within such plans and fees relating thereto correspond to the degree of difficulty disclosed by a search of the property and problems that arise relating to a title that are discovered during that process. Purchase fees include all services relating to the purchase including one first mortgage.

Though it is becoming increasingly more rare, the possibility of problems that require remedial action relating the title to either the property you intend to sell or your intended purchase remains a possibility. The most common problems relate to encroachments on another's property (eg: when part of a building or fence line actually sits on either the property in which you have an interest or on your neighbour's property), leins or previous encumbrances on title or difficulties relating to financing.

In the event that such a problem arises, the fee for the resolution of the difficulty is determined by the degree of complexity of the problem and the work required to fix it. These fees shall be determined on an individual basis upon consultation with you and hourly rates shall apply. Our real estate assistants are billed at $135.00 per hour and lawyers at $395.00 per hour.

In the event that we are to be involved in the preparation and negotiation of a purchase and sale agreement, there is a base fee of $250.00. In the event that the purchase and sale agreement involves the negotiation of a vendor take-back mortgage, it is an additional fee based upon an hourly rate of $395.00.

If you would like our firm to act on your behalf on a real estate transaction, please instruct your agent to forward a copy of your purchase and sale agreement to this office. We will be in contact with you immediately after receipt to discuss the matter further.

It is important to note that the services associated with the fees above relate to the preparation, execution and registration of all documentation required to completed the specific transactions enumerated above related.

Often, by accident or design, we find ourselves assisting clients to complete a transaction through services that would normally be performed by a real estate agent, bank staff or a mortgage broker. These can include such tasks as assisting in the negotiation of a purchase and sale agreement, mortgage or mortgage discharge; arranging for appropriate insurance; negotiating and arranging payment to third party creditors; arranging or coordinating movers or utilities.

We are happy to assist in this regard. The fees for these services are billed at $135.00 per hour, payable concurrently with the completion of the transaction.

We have prepared an adjustments work sheet that will allow you to calculate an approximate amount of the funds required to close your transaction.

Fees quoted above are valid until December 31, 2012.
Legal Fees for Purchases and/or Sales Without an Agent
It is becoming increasingly more common that parties to a real estate transaction seek to complete the sale or purchase of their home without an agent. There is much information contained in this material and on the internet to assist you should you choose to complete your own real-estate transaction.

Nevertheless, it is important to note that real estate agents provide a valuable and important service in preparing and amending the purchase and sale agreements, determining appropriate conditions for those agreements and insuring that the conditions are satisfied. They also troubleshoot issues that arise relating to the property such as insurance or zoning questions and often assist in satisfying financing issues. Though you may significantly reduce these costs by acting on your own, it is unrealistic to assume you can eliminate them entirely.

It is common that a purchaser or vendor will request that we complete these services in absence of an agent. In such event, fees shall be billed in addition to the schedule above based on an hourly rate for a real estate assistant of $135.00 per hour and a solicitor of $395.00 per hour.

Depending upon the complexity of the issues involved and the degree to which this firm becomes engaged in the actual negotiations of the transaction, additional fees can range from $300.00 to $2000.00. You shall be kept apprised of additional fees as they are required.

Note: Effective July 1, 2010, fees and most disbursements will be subject to HST, effectively raising the costs by 7% relating to Provincial Sales Tax. Theses fees and disbursements were previously tax exempt.
Cost worksheet:
Approximate Fees and disbursements incurred on an average purchase transaction

Our Fee
Land Transfer Tax: (calculated as in inclosed letter)
Registration of Deed $74.72
Registration of Mortgage $74.72
Search of Title: (average is approximately $150.00) $150.00
Execution/Sheriff Searches: $22.00/person (vendors and purchasers)
Other:
Tax Certificate* $58.00
Hydro Certificate* $10.00
Insurance Levy* $65.00
Gas Certificate* $10.70
Compliance Report (between $100.00 and $300.00)* $200.00
Title Insurance (replaces * above) $300.00
Estoppel Certificate (condominiums only) $100.00
Clerks Closing Fee $35.00
Disbursements:
Photocopies (0.25 per page) - average number of copies made is 100 $25.00
Courier $60.00
Fax charges (0.75 per page) $50.00
HST (13%)
TOTAL

HST is applicable

It is our firm policy to take a $200.00 hold back to cover sundry disbursements after closing. The balance of funds held back are returned to you within sixty (60) to ninety (90) days of closing.

This schedule is provided to you for information purposed only and does not constitute a quote.
Clauses for the Benefit of the Purchaser
The following are suggested specific clauses to be inserted in your purchase and sale agreement. This list is by no means exhaustive, but will provide you with some options to consider that meet your situation:
  1. This offer is conditional upon the purchaser at the purchaser's expense arranging a new first mortgage. Failing which this offer shall become null and void and the purchaser's deposit shall be returned in full without interest. This condition is included for the benefit of the purchaser and may be waived at any time.
  2. This offer is conditional upon the purchaser obtaining a satisfactory building inspection of the above property by the person or persons of his choice at his own expense within 4 banking days of the acceptance of this Offer. Should the purchaser not find the premises to his satisfaction, he shall provide notice in writing to the agent for the vendor and this offer shall become null and void and the purchaser's deposit shall be returned to him in full without interest or penalty.
  3. With acceptance of this offer, the vendor shall deliver a plan of survey to the purchaser acceptable for the purchaser's mortgage financing purposes.
  4. The purchaser will be allowed entry to the premises prior to closing to take measurements of doors, windows, etc.
  5. On written notice to the vendor, the purchaser shall be allowed an extension or extensions of closing not to exceed (eg: 5 days).
  6. The vendor shall register a discharge of all mortgages against the premises on or before closing.
  7. The vendor agrees to provide a certificate from the Regional Health Department stating that the water is potable.
  8. The purchaser and the vendor hereby direct the real estate agent holding the deposit in this transaction to place same into an interest bearing account or term deposit, with the accrued interest to be paid to the purchaser as soon as possible after closing or other termination of this agreement not caused by the purchaser's default.
  9. This offer is conditional upon the sale of the purchaser's property known as * on or before * failing which this offer shall become null and void and the purchaser's deposit shall be returned in full without interest. This condition is for the benefit of the purchaser and may be waived at his sole option.
  10. This offer is conditional on the approval by the purchaser of the current financial statements of the above-mentioned Condominium Corporation on or before *.

Clauses for the Benefit of the Vendor
Where a conditional offer has been made, it is common for the vendor to require the following:

  1. The vendor may continue to offer the real property for sale and, in the event he receives another offer acceptable to him, he may so notify the purchaser in writing. The purchaser shall have 48 hours from the time of receipt of such notice to waive his conditions in writing to the vendor or his agent, failing which the vendor will be at liberty to accept the new offer and purchaser's deposit shall be returned in full without interest.
  2. The purchaser agrees to pay the balance of the purchase price, subject to the usual adjustments, by certified cheque payable to the vendor on closing.
  3. The vendor agrees to take back a second mortgage in the amount of $* with the interest adjustment on the day of closing. Said mortgage shall bear interest at the rate of *% per annum, calculated semi-annually, not in advance for a term of * year(s).
  4. The purchaser agrees to deliver to the vendor on the date of final closing a series of twelve post-dated cheques payable to the benefit of [the condominium corporation], each in the amount required by the condominium corporation for monthly common expenses payable on the first day of each and every month from and including the first day of the month immediately following the date of final closing.

We hope that this information has been of assistance. Should you have further questions or concerns, please do no hesitate to contact us.