Legal Brief for July, 2011

Real Estate Transaction Expenses

There are three components to legal costs in a real estate purchase or sale.  The 1st is the legal fees charged by your lawyer.  These will vary from lawyer to lawyer or law firm.  There is no set rate that is applicable.  The 2nd component is the expenses (also referred to as "disbursements") that your lawyer or law firm incurs as they handle your transaction.  These are paid by the lawyer as the matter proceeds, and then they are billed to you when purchase or sale is completed.  The 3rd component is the GST, which applies to the legal fees, and to some, but not all, of the expenses.  I will review in this Brief the typical expenses incurred on both a sale and purchase transaction.

For a sale, your lawyer is required to obtain some preliminary information (known as "searches") prior to meeting with you to sign the documents.  These include both a title search and a tax search, the total costs of which are generally about $25.00.  If you are selling a condo, the lawyer will also need to obtain what is known as an Estoppel Certificate from the property manager, the charge for which is usually in the range of $100.00 to $150.00.  If you do not have a Real Property Report (survey) for your property, then your lawyer may also be required to obtain that for you as well.  The cost of a Real Property Report will be in a range of $450.00 to $600.00 for a standard residential property.  There will also be some courier charges, for sending the transfer documents to the other lawyer, and also to payout your mortgage, if you have a mortgage loan owing on the property.

On a purchase, your lawyer will also be doing the same preliminary searches as the seller's lawyer will be.  If there are any documents registered against the Certificate of Title, your lawyer will need to obtain copies of them for review also.  The Land Titles Office currently charges $10.00 per document.  There will also be the registration fees charged by the Land Titles Office.  The current fee for registration of the Transfer of Land is a base fee of $50.00, plus an additional fee of $1.00 for each $5,000.00 of the purchase price.  The same fees apply for the registration of a Mortgage.  The Land Titles Office also charges $10.00 for issuance of a copy of the new Certificate of Title.  There will also be a number of courier charges incurred as well.

The GST generally applies to all expenses incurred on a sale transaction (the only exceptions being on any registration fees charged by the Land Titles Office in respect of a pre-closing Caveat that may be registered by your lawyer or for the discharge of a Mortgage).  On a purchase, the GST does not apply to any of the Land Titles Office registration costs (there are considered as "exempt" from GST), but it does apply to all other items, such as the preliminary searches, courier charges and the like.