When you are buying or selling real estate, there are costs to be paid when the transaction is completed and the title is transferred. To help buyers and sellers to budget properly and avoid unexpected bills, we've itemized the possible expenses and categorized them as being associated with buying, mortgage financing, selling, and property tax adjustments.

The costs we are mentioning here are approximate only, as all lawyers, surveyors, lenders and appraisers may charge differently. Their fees may also vary based on the size and nature of the transaction.

Any one of the realtors at J. Ross Real Estate can estimate all these costs for you BEFORE you are committed to the deal, so you won't encounter any surprises.

Legal Fees:
Out of the money the buyer will pay to their lawyer, only a portion of it is the lawyer's fee. This fee is for executing the title transfer and attending to all the details regarding the purchase. These fees typically range from $300 to $500, depending on the size and complexity of the transaction.
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Disbursements:
In the course of handling the purchase, the lawyer will incur miscellaneous expenses on behalf of the buyer, for which they will have to be reimbursed. These miscellaneous items are called "disbursements" and may include courier costs, long distance charges, and Land Titles charges (the biggest expense is usually the fee paid to the Land Titles Office to register the title in your name). Total disbursements for buying may range from $75 to $150.

If a buyer is arranging a new mortgage, there are costs in addition to those described under "Buying". The following costs will not apply if the buyer assumes a mortgage or pays cash.

Legal Fees:
The buyer's lawyer will prepare mortgage documents and ensure that the mortgage is registered against the title before the lender will advance the money. These fees may vary from $300 to $400 depending on the size and complexity of the transaction.

Disbursements:
Your lawyer will incur some expenses in arranging your mortgage. These miscellaneous expenses, including fees charged by the Land Titles Office, usually range from $50 - $75.

Appraisal:
Occasionally, the lender will require an appraisal report to ensure that the property is worth what the buyer is paying. Standard single-family residential appraisals typically range from $250 to $275, but appraisals for other types of property can be substantially higher. Frequently, though, is not required

Real Property Report (RPR):
This is sometimes referred to as a "survey" and is usually required by the lender. Once the RPR has been completed, it will be forwarded to the Town or MD Office, where it will be given a stamp of compliance if it conforms to all requirements in the applicable zoning by-laws. The RPR is a safeguard for lenders, as it will show if any buildings are not entirely on the property. Even if you do not require an RPR for financing, many lawyers will recommend that you get one for your own protection. Usually the RPR is provided by the seller, but if not it will cost the buyer approximately $350, plus $50 - $100 for the compliance stamp.

Financing over 75%:
In Canada , the Bank Act requires that mortgages of more than 75% of the purchase price be insured. This means that the lender is insured against any loss if the borrower defaults on the loan. The insurer is either Canada Mortgage and Housing Corporation (CMHC) or GE Capital. For a one-time premium paid when the loan is advanced, they will cover any loss the lender might incur on the mortgage. The premium is paid by the borrower, usually by adding it to the mortgage. The amount of the premium is a percentage of the loan, based on a sliding scale:

% of Financing	Amount of Premium
Up to and including 65%	0.50%
Up to and including 75%	0.65%
Up to and including 80%	1.00%
Up to and including 85%	1.75%
Up to and including 90%	2.00%
Up to and including 95%
Traditional Down Payment Flex Down	2.75% 2.90%

Although the buyer will not actually pay the premium at the time of closing (unless they choose to), it will be added to the mortgage, reducing the equity, so it is a real cost. The buyer will also pay the insurer an application fee between $75 and $235.

Mortgage Broker's Fee:
If a mortgage broker is helping arrange the financing, there will be a fee for their services. Sometimes the broker's fee is paid by the lender, but if the buyer has poor credit, or if it is difficult to find a lender, the fee will be paid by the borrower. Fees Vary.

Assuming an Existing Mortgage

The only closing costs associated with assuming a mortgage are a mortgage tax account adjustment. Accordingly, there are considerable savings if a buyer is able to assume a suitable mortgage.

Mortgage Tax Account:
If a buyer is assuming a mortgage which has property taxes included in the payment, another cash adjustment is required. In these cases, the lender maintains a separate tax account into which a portion of every payment goes, and from which the taxes are paid. The balance in this account is completely separate from the mortgage balance the buyer assumes. The buyer must reimburse the seller for the money which has accumulated in the tax account, as the credit balance becomes the buyer's on the possession date. Obviously, this applies ONLY when a buyer assumes a mortgage, and then ONLY if taxes are included in the payment. This adjustment is independent of the municipal tax adjustment.

Sellers are sometimes under the impression that they will not incur any closing costs. While the seller obviously won't be paying to arrange a mortgage, there will be some costs, although they are usually less than those incurred by the buyer.

Legal Fees:
The seller will have to pay a lawyer to prepare a transfer of title and handle the proceeds from the sale. Depending on the transaction, the lawyer's fees may range from $300 to $500.

Disbursements:
There will likely be some miscellaneous expenses, but the seller generally does not have any Land Title fees. The total may be $30 to $50.

Real Property Report (RPR):
The seller will likely provide an RPR and compliance stamp. If so, the cost will be approximately $350 for the report plus $50 - $100 for the compliance stamp.

The standard offer to purchase requires a seller to provide an RPR and compliance, but regardless of this requirement, it is advisable for the seller to have it done in advance and provide it to the buyers to ensure that they have no liability resulting from selling a property that does not conform to the zoning by-laws. If there is an existing RPR that shows all the improvements on the property, it will probably not be necessary to get a new one.

Mortgage Tax Account:
If a buyer is assuming a mortgage as part of the purchase agreement, and if taxes are collected with the mortgage payment, the seller will be credited with the amount that has accumulated in the mortgage tax account.

Mortgage Payout Penalty:
If the property has a mortgage which is being paid out, there is often a prepayment penalty. The amount will depend on the terms of the mortgage.

Condominium Documents:
If you are selling a condominium you will probably be asked to provide the buyer with condominium documents. Usually the condominium manager will charge a fee for providing these.

When selling a condo, you will always be required to provide an Estoppel certificate, which the condo manager will also charge a fee to prepare.

Property Tax Adjustment

Depending on the possession date, the buyer will either reimburse the seller, or vice versa, for a portion of the annual taxes. This adjustment seems to be the most misunderstood, so we'll explain it with an example.

In the Town of High River, property taxes for the calendar year are due at the end of June. If the buyer were to take possession on August 1st, they would be responsible for taxes from that date forward, however, the seller will have already paid the taxes up to the end of the year. To compensate the seller for the taxes paid in advance, the lawyers will collect five months worth of taxes from the buyer and credit that amount to the seller.

Alternately, if the buyer were to take possession on June 1st, the buyer will receive the annual property tax bill and will be responsible to pay it by the end of June (even though he did not own the property prior to June 1st). To adjust for this, the lawyer will ensure that the buyer is credited with five months worth of taxes and his/her closing costs would be reduced accordingly.