Your legal fees can start from $900 to $1100 for an uncomplicated sale, so you must set aside enough funds to cover the costs of preparing and filing all of the paperwork necessary in the purchase of a home.
What will this cover? Financing fees, insurance fees and legal fees and disbursements are among the basics.
In most circumstances, the lender will pay the brokerage fee if you use a mortgage broker. But, if you’ve hit financial hard times in the past, you may be required to pay this fee yourself, which can be 2% of the total mortgage. It’s best that you ask the cost up front so there are no surprises. You may also have to pay an application fee when you apply for a mortgage, although these fees can be waived, so ask your lender if this may be the case.
Mortgage insurance may be required if you have a high-ratio mortgage, which can range between 0.5 and 3.75% of the total mortgage. Often, you can roll this amount into your monthly mortgage payments. And, don’t forget about the application fee you will have to pay to secure this mortgage insurance, which can be anywhere from $75 to $235 if an appraisal is needed.
Legal fees and disbursements
There is a lot of paperwork for your lawyer to review, including conducting the title search, any mortgage documents to be drawn up and any details in the closing of the sale.
How do you know how much property tax you will have to pay? Your Toronto real estate lawyer will outline everything for you, i.e. the calculation of the property tax based on your home’s assessed value and local property tax rates. He will also discover if the previous owners had paid any property taxes in advance. If so, your real estate lawyer will divulge how much property taxes will be repaid to the seller, pro-rated to the closing date.
It’s your lawyer’s responsibility to search the title of the property and certify its status before purchasing title insurance for their clients. They will look for any possible liens against the house, including construction liens, unpaid balances on utility services and, in the case of a townhouse or condominium unit, they will research the health of the property management company, looking at the company’s yearly budget and just how much is in the reserve at the time of purchase. A reserve will cover any scheduled maintenance like roofing, balcony repair and window and replacements, as well as any unforeseen maintenance and repair costs.
Once your real estate lawyer searches the title and title status, they will purchase the title insurance for you, their client, making sure the title insurance is transferred to the new owners after the purchase is complete. Title insurance protects the owners and the mortgage lender from any defects noted in an updated survey, including survey errors or the illegibility of the survey, contraventions of municipal zoning bylaws, encroachments, title defects, any liens, fraud or forgery and any unpaid property taxes or utility bills, to name a few. Your lawyer will outline everything covered in the title insurance policy.
That’s when the real fun begins and reality sinks in. After signing all of the necessary paperwork – and there is a lot – your lawyer’s final duty is to hand over the keys to your new property… or is it?
It is if all goes well and the previous owners have left the house to you in relatively good shape with all of their personal items (not to mention garbage) taken out of the house and the items like washer and dryer, refrigerator or window coverings outlined in the purchase agreement in their place, then this is where you will part ways. If the sellers have broken the agreement or left possessions behind for you to dispose of, then it’s your lawyer’s right to step in on your behalf.