Ontario Real Estate Closing Costs

Closing Costs 

What Will I have to Pay When Closing a Real Estate Transaction

Many of my clients are surprised when they find out just how many additional closing costs there are when purchasing a home.  It’s important to plan ahead and budget for these costs prior to signing the Agreement of Purchase and Sale.

According to the Canadian Mortgage and Housing Corporation, closing costs range from 1.5-4% of the selling price of your home.  This includes the legal and administrative costs you will need to pay when your house closes.

In addition to the agreed upon purchase price, there are additional legal and administrative costs that will have to be paid on the closing of your real estate transaction.

The following is a list of closing costs that are may be incurred when purchasing real estate in Ontario:

  1. Title Insurance –  While it is optional, today, many lenders require title insurance to protect against losses in the event of an ownership dispute.  This is purchased through your lawyer, and costs approximately $150-325 for homes up to $500,000.
  2. Land Transfer Tax –  This is calculated as a percentage of the purchase price of your home, and is payable on closing.  If your property is located in Toronto, Ontario, there is an additional municipal land transfer tax.
  3. Adjustments – You will be required to reimburse the seller of the property for any pre-paid property taxes or utility bills.
  4. Home Insurance – For the protection of your home and contents.
  5. Legal Fees and Disbursements – At Frost Law, we provide a flat fee (legal fees and disbursements) to prepare the legal documentation, with no hidden fees.  This way, you know exactly to expect.  Click Here to obtain a quote, or call us at (905) 224-2077 for a free initial consultation.

Contact your local real estate legal professional at Frost Law, Professional Corporation to discuss what closing costs you can expect for you real estate transaction. 

 

Title Insurance – Do I really need it?

TITLE INSURANCETitle Insurance

Many of our clients still ask what title insurance covers just as we are about to sign the closing papers for their home purchase.

Since the late 1990’s title insurance has gained increasing popularity in Ontario. Today, it is now the most frequently-used method of assuring title to property in home purchase transactions.

What is Title Insurance? 

It is a form of indemnity insurance, that insures against financial loss in relation to undetected or unknown title defects, for as long as you own your home. Even if you are the rightful owner of a home, there are instances such as real estate fraud, when your title can come into question. Title insurance continues to protect your ownership from the day of closing to the day you sell your home. Coverage is also extended to heirs who receive your home in the event of your death.

Don’t have an up to date survey?  Title Insurance protects against various problems that may have been revealed by an up to date survey of the property.

What Does Title Insurance Cover?

  • someone else owns an interest in your title ;
  • existing liens against the title ;
  • violations of municipal zoning by-laws;
  • encroachments onto an adjoining property (other than fences and boundary walls) ;
  • setback violations;
  • realty tax arrears;
  • outstanding municipal utility charges, provided such charges form a lien on title;
  • existing work orders;
  • lack of legal access to the property;
  • unmarketability of the land due to adverse matters that would have been revealed by an up-to-date survey / RPR/ Building Location Certificate ; and
  • fraud, forgery and false impersonation to the extent they affect the validity of title.

Title Insurance generally excludes:

  • environmental hazards; and
  • defects or problems which you agreed to assume or be responsible for when you entered into the purchase contract or which you knew about but failed to disclose to your lawyer or title insurer.

Pros and Cons:

Historically, written lawyer`s opinions on title confirmed that purchasers acquired a good and marketable title.  Title Insurance provides a cost-effective alternative.

The use of title insurance will often lower your closing costs by eliminating some of the costly “off-title” searches. It also allows you to close your transaction sooner because you no longer have to wait for responses for the off-title searches.

There is also a cost savings in that title insurance allows a purchaser to close a transaction without obtaining an up to date building location survey, saving between $1,500.00 – $2,000.00.

That said, title insurance will not necessarily fix any issue that is discovered on title but will often protect an owner from financial loss for issues which may not be discoverable through regular investigations.

Title insurance is a tool to be discussed with your lawyer to provide you added protection and peace of mind when purchasing real estate.

Useful Information:

The Ontario Bar Association has an informative Brochure called “Working With a Lawyer When You Buy a Home“. 

The Financial Services Commission of Ontario also have an excellent brochure called “Understanding Title Insurance“. 

The information in those brochures compares the options available to  and provides useful information .  Feel free click on the links above to read through the information.  We would be pleased to discuss them with you and to answer any questions you may have.

Contact your local real estate legal professional at Frost Law, Professional Corporation to discuss which option is right for you.

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