Purchasing or selling a home will be one of the most significant decisions of many people’s lives. It is important to have an experienced real estate lawyer on your side early in the sale or acquisition process. This will reduce risk, save you time, money and our talented real estate lawyers can give you the peace of mind to confidently move through this chapter.

As you reach the end of your purchasing or selling process, expenses known as closing costs will arise. These costs will vary depending on if you are buying or selling a property. It is always best to reach out to a real estate lawyer to get a quote for your specific circumstance.

What Closing Costs Must Be Paid When You Buy a Home?

We have outlined several closing costs you may expect to pay when you buy a home:

Land Transfer Tax

• Land transfer tax is payable on every conveyance of land tendered for registration and every unregistered disposition of a beneficial interest in land, unless specifically exempt under the Land Transfer Tax Act or regulations. This is to say that this is a tax you will pay based on the amount you paid for the property. This tax will represent the majority owed in your closing costs.
• There is also the first-time home buyer rebate for land transfer tax, which allows buyers to receive a maximum of $4000 towards the land transfer tax if they have never owned a property in the world.
• You can also use our Land Transfer Tax calculator on our website, found here: https://www.barristonlaw.com/land-transfer-tax-calculator/

Property Tax Adjustments

• When you purchase a home, you may have to pay a portion of the property taxes for the year of the transaction.

Title Insurance Premium

• Title insurance helps to simplify the closing process, it is an insurance policy that protects property owners and their lender against losses related to the property’s title or ownership.
• Title insurance is a one-time fee and may provide protection from:
  • Unknown title defects that impact your ownership of the property.
  • Title-fraud, and any title issue that may impact your ability to mortgage, sell or lease your property in the future.
• Information on Title insurance can be found on the Financial Services Regulatory Authority of Ontario (FSRA) website: https://www.fsrao.ca/consumers/property-and-other-insurance/understanding-title-insurance

Legal Fees and Disbursements

• Legal fees are what our lawyers charge for handling your file, disbursements are additional expenses we will cover on your behalf to facilitate the transaction.
• Common disbursements include title search fees.

Other Items to Consider

Home Inspection Fee

• This is an optional cost but is highly recommended. Making your purchase offer conditional on a positive home inspection will provide you with more knowledge on the property. For example, things such as whether there is a propane tank and a propane rental at the property that will be offset for closing.

Appraisal for the Mortgage

• A home appraisal is needed if you require a mortgage to buy a home in Ontario. It is important to note the difference between a home appraisal and a home inspection. An inspection looks at the roof, windows, makes sure your new home will be in good working order. Whereas an appraisal is conducted to determine a property’s market value. Depending on your property an appraisal can cost anywhere between $300 to upwards of $1000. Our real estate lawyers will be able to provide a more accurate number once they have specific information about your property.

First-Time Home Buyers

• If you are a first-time home buyer in Simcoe County, you may qualify for the Investment in Affordable Housing Program which provides down payment assistance of up to 10% (to a maximum of $50,000), of the purchase price for eligible homes of qualified applicants. More information on this program can be found here: https://simcoe.ca/residents/housing/affordable-housing-programs/. Review the requirements at the link to see if you might be eligible to apply.

What Closing Costs Must be Paid When You Sell a Home?

When you sell your home in Ontario, on average, sellers typically pay between 4% to 7% of the sale price in closing costs. Our real estate lawyers at Barriston can arrange for these costs to be paid directly from the sale proceeds, giving you the peace of mind of not having to worry about these payments. Our real estate lawyers will also ensure that any mortgage(s) on title to the property have been paid out in full and will be taken off of title to the property.

The largest expense when selling you home will usually be the real estate commission which is typically 4% to 5% of the sale price, plus HST. There will also be legal fees and disbursements that arise.

On the opposite end of the buyer home inspection fee, you as a seller, must be prepared that the buyer may request repairs or financial concessions after an inspection. As a seller you must also ensure that you have settled any outstanding utility or property tax bills before closing, this will create a much smoother closing process.

Closing costs are an unavoidable part of purchasing or selling your home, it is important to understand what they are so that you can be prepared and confident throughout the process. Our Barriston real estate lawyers can provide you with personalized advice and expertise to guide you through this exciting chapter in your life.

Written by Maclain Sinton and Heather Dixon