Why use a Real Estate Lawyer or Notary? How Much are Closing Costs?
Before you dive into buying Real Estate, take some time to understand all the factors involved in the purchase so you can create a budget that takes every cost into account. If we sit down to discuss your real estate options, we’ll discuss these factors as well, and we’re always free to answer any of your questions, just send us a message! Some of the costs you’ll encounter when you’re selling a home in East Van (whether a house, condo or townhome) are the Legal Costs and Closing Costs involved in the legal side of the transaction (Read about the difference between Lawyers and Notaries).
Legal fees are necessary in every Real Estate transaction, even if you choose not to use a Lawyer (sidenote: we ALWAYS recommend that you use a Lawyer).
Real Estate Legal Costs for Sellers
For Home Sellers, legal fees hover around $750, and include the costs to discharge the mortgage, order the land title, registration fees, prepare the statement of adjustments and more.
The costs to perform these tasks with the help of a Lawyer of Notary are a few hundred dollars higher, but you also get the benefit of having professional representation in a large transaction. Talk to a few different legal professionals to inquire about quotes and services offered before choosing your representation.
As I said before – we always recommend using a Lawyer or Notary in a real estate transaction. The cost to use a professional is money well spent since they will make the process smooth and can explain everything in detail. Also, if something unexpected happens, you already have a relationship with this person and they’ll be much more prepared to help.
Real Estate Closing Costs for Buyers
For Home Buyers, legal fees hover around $1000, and include the land title search (to ensure you’re buying the proper property) and registration fees (to have the property listed in your name). The legal fee for using a Lawyer or Notary will range from $600 to $900. Feel free to shop around for professionals to get different quotes and ideas of what services are offered. See my previous post for more information on the difference between a Lawyer and Notary.
Use Legal Representation – they will make the process smooth, and if something unexpected happens with the deal, you already have a relationship with this person and they’ll be much more prepared to help in times of need. Your lawyer or notary will also ensure that you’re receiving all possible benefits you are entitled to (i.e. First Time Home Buyer’s Benefit).
Other costs that vary with purchases, may include a Municipal Tax Certificate (~$40), insurance binder relating to your mortgage (~$50), Form F for Strata Properties detailing history of the unit’s maintenance fees (~$50). Your mortgage lender may require a survey certificate, title insurance or other documents which you would have to pay for as well.
Other Real Estate Closing Costs
One of the tasks that your legal representation does is prepare the Statement of Adjustments – a document that details all the funds you have to pay, and that you might owe. The Statement of Adjustment is slightly different for the Buyer and Seller since they owe different things, however both statements have debits and credits.
For Home Sellers: The Debits will include anything that has to be paid out, i.e. the deposit plus any unpaid property taxes or utilities (covering the days you live in the property). The Credits will include the sale price of the home plus any prepaid property taxes, strata fees, utilities or for tenanted properties, rent & deposits (covering the days the Buyer WILL live in the property). Simply, Credits – Debits = Your Earnings from the sale.
For Home Buyers: The Debits will include anything you have already paid for, i.e. the deposit. The credits will include the purchase price of the home (since you’re buying the property) and any prepaid taxes or utilities you owe the seller (if they already paid for days when you will be living in the property). Simply, Debits – Credits = More you owe to buy the house.
All of these adjustments are set out in documents called the “Statement of Adjustments”. These documents identify what costs need to be attributed to the Buyer and Seller, as well as how the Buyer will be paying for them (either from the initial deposit as stated on the Contract of Purchase, the mortgage funds, or from the money the Seller may possibly owe the Buyer). The amount of money to be paid by the Buyer to complete the transaction will need to be delivered to the Buyers Lawyer, by certified cheque or bank draft, a few days before completion.
If this seems daunting, don’t worry too much about it. As your Realtors, we’ll help you along the process, and the Lawyers will explain the closing process, and will ensure they have all the necessary documents to complete the sale.