Legal Fees and Closing Costs!
This blog is dedicated to legal fees and closing costs! We’re going to simplify the unknown and make this stage of your new home purchase totally transparent. Check out the following topics to ensure you’re well prepared for your new home purchase and possession!
Legal Fees
Your legal fees are simply just the items you pay your lawyer to overlook and manage, it’s basically paying for paperwork! You absolutely need a lawyer as purchasing a home is a legal transaction. If you choose to hire your own lawyer, be sure you know exactly what they’re charging you for! These items may include courier fees, admin fees and mortgage registration.
Last Minute Upgrades & Cash at Closing
If you go over your design allowance and you do not include the extra upgrade costs in your mortgage, you will have to pay for the additional upgrades with cash at closing! Additionally, if you choose to change something about the design or interior selections during the middle of construction, you may be responsible to pay for the difference in material and potential admin fees!
B Lender Fees
Most mortgages are lent through Canada's Big Six Banks: RBC, TD, Scotiabank, BMO, CIBC, and National Bank. These “A Lenders” have relatively strict criteria for prospective mortgage applicants. This can include requiring a strong credit score and a stable income. You can turn to B Lenders as an alternative to the big banks, however your standard legal fees are expected to be higher when closing time comes. Talk with your lawyer to assess how much hire these fees are.1
Title Insurance
Title insurance costs approximately anywhere from $250 - $300 at closing. Title insurance is an insurance policy that protects you against challenges to the ownership of your home or from problems related to the title to your home. The policy provides coverage against losses due to title defects, even if the defects existed before you purchased your home. A title defect is a problem with the title which prevents free and clear ownership.2
Property Tax + Condo Fees
Depending on when you take possession, you may be responsible to reimburse Landmark Homes for your property taxes and condo fees. Alternatively, you may be reimbursed yourself and credited back a prorated amount! Property taxes are typically paid on June 30th for the outstanding year, whether your possession date is before or after this date will determine outstanding fees. This is determined on a case-by-case scenario!
Moving Expenses
Depending on the contents and distance of your move, this cost varies significantly between different household scenarios. We suggest calling around for the best moving rates and ensure you have insurance too!
Property Insurance
This costs anywhere from $700 – $1,000 at closing, and then annually. Your mortgage provider usually requires you to have insurance to cover the replacement value of your home and its contents.3 If you move into one of our condo or townhome developments with condo fees, you will only need to purchase content insurance, as your condo fee includes building insurance already!
Utility Service Charges
This typically costs $35 – $50 per utility, and is depends on your lifestyle and the number of people living in your home! Check with your utility providers to find out what your exact moving fees will be.3
Late Closing + Tenancy at Will
Tenancy at will is when we let you take possession of your home without paying for it. If this happens and you’re at fault, you’re charged a daily fee which is set out in your contract. Therefore, it’s extremely important to visit the lawyer’s office ahead of time! We suggest going to finalize all your paperwork and dealing with any outstanding items at the lawyer’s office 3 weeks prior to your possession date to avoid tenancy at will.
Beyond asking a lawyer outright about their fees before you hire them, there is a fairly consistent ballpark range for a lawyer’s services in the transfer of a land title. You can expect to pay the lawyer’s fee as well as the lawyer’s disbursements, which are costs (such as courier fees, office administration fees, and land title and mortgage registration) that the lawyer cannot avoid incurring on your behalf. In Alberta, a real estate lawyer’s fee typically ranges from $600 to $1200 (plus GST), while disbursements might total $400 or $500. All in all, you should be budgeting between $1500 to $1700. Title insurance costs vary depending on the property value and insurance provider.4
References:
1. “B Lender Mortgages Canada: All You Need to Know.” Wowa Leads, wowa.ca/b-lender-mortgages.
2. “Protect the Ownership of Your Home with Title Insurance.” RBC Royal Bank, www.rbcroyalbank.com/mortgages/title-insurance.html.
3. ATB Financial. “The True Cost of Buying a Home in Alberta.” ATB Financial, www.atb.com/personal/good-advice/home-buying-and-mortgages/the-true-cost-of-buying-a-home-in-alberta/.
4. ATB Financial. “Do I Need a Lawyer to Buy a House in Alberta?” ATB Financial, www.atb.com/personal/good-advice/home-buying-and-mortgages/do-i-need-a-lawyer-to-buy-a-house-in-alberta/.