With or after acceptance of an offer to purchase you have to
submit a depositcheque, which will be held in trust by the listing
broker if the offer is accepted. The cheque is usually between
1% to 10% of the sale price or more depending on the
circumstances, cities, and closing date. The cheque is
usually certified and deposited the day after acceptance.
Some lenders will ask to have a recent survey showing
all property lines, fences and building dimention with cost
range from $500 to $1000.
An alternative to an up-to-date survey is title insurance. There are a
variety of insurers that provide this product including the Buyer's
lawyer. The cost of title insurance is based on a sliding scale
depending on the value of your purchase.Typically, costs are
between $300 and $500. A note of caution: title insurance
doesnot correct title problems. It merely compensates the Buyer
as a result of negative impact resulting from a title defect.
Purchasers of real estate in Ontario are required to pay provinvial
Land Transfer Tax on closing. It is paid directly to the Province of
Ontario. It is based on the following formula:
- 0.5% is paid on the first $55,000 of property value;
- 1% is paid on the next $195,000 of property value;
- 1.5% is paid on the next $150,000 of property value
- 2% paid on any value in excess of $400,000
Tepically $4,475 in provincial Land Transfer tax is owed on the first
$400,000.00 with 2% payable on any value in excess of that amount.
First time Buyers may be eligible for rebates up to $4000 under the
provincial Land Transfer Tax. Legal advice should be sought as to
You will require the services of an Ontario lawyer to act on your
behalf to close your house purchase.
Your lawyer will charge you for services, including title searching,
and for his/her expenses (disbursements).
Before hiring a lawyer, you should ask him/her for a complete
breakdown of fees, disbursements( photocopies, tax certificates,
zoning clearance and work orders, couriers, registering of the
deed and mortgages, searching executions, mortgage schedules,
status certificates for (condominiums) and other incidentals. and
mortgage work. Most legal work for home purchases exceeds
$1,000 and can be much higher under certain circumstances.
Balance due on closing - basically the balance due on
closing is the difference between the sale price and the
amount of your deposit that was presented with the offer.
However, there are certain other items that will be adjusted
at the time of closing.
- if the Seller has paid taxes for
the full year, the Buyer will be responsible for his/her portion
from time of closing until the end of the year.
- if the property is heated by oil, then the tank will be
filled by the Seller on closing, and the Buyer will be charged
on the adjustment with a full tank of oil (usually 200 gallons).
- all utilities and gas that are metered will be read
on closing and the seller will be responsible for them up to
the date of closing.These are normal adjustments. Particular
attention should be paid to new construction transactions,
especially condominiums. There are numerous additional
adjustments in these purchases. These adjustments, including
the Ontario New Home Warranty Fee, could amount to $3,000
This is usually around $300 and up. The cost will vary
with the size of the home being purchased and the
inspection company used.
This varies. Minimally, costs start at $500/Year, 1st mortgage must
be noted on policy.
(Home insurance has become a serious closing issue. See details below.)
These vary from $75 per hour and up, depending on the company
and the number of movers. It will also depend on the size of the
vehicle and the time of the month and year you are moving.
Interest adjustment - This is something most Buyers do not
understand. Basically, if you are arranging a new first
mortgage, your lawyer will receive the mortgage monies
from the mortgage company on the morning of the closing
date. However, most mortgage companies use the 1st or
the 15th of the month as a payment date. Therefore, if you
are closing a deal on, say August 10th, the mortgage company
will deduct from the mortgage monies interest from date of
closing (10th) to the first of the following month (i.e. September 1st) -
interest adjustment date - and your first payment will then
commence the 1st day of the following month (i.e.October 1st), and
continue on a monthly basis thereafter. Example: on a $100,000
mortgage at 5.5% interest from the 10th to the 1st of the
following month, interest would amount to approximately $316
and instead of getting $100,000 from the mortgage company
on closing, you will receive only $99,684.(Interest adjustment
costs will not affect every mortgage, as some will have payment
commencing one month after closing.) Loan processing or bank
appraisal fee - Usually about $300. High ratio mortgages will
demand a higher processing fee. A high ratio mortgage is one
in which the Buyer is seeking financing in excess of 80% of
the purchase price, or in some cases the approved value
of the property.
Usually require the payment of additional legal fees, appraisal and
brokerage fees. These vary dramatically, depending on the
transaction and the risk as perceived by the lender.
Re-sales - although most used residential re-sales are exempt from
HST, almost all services involved with the transaction will be subject
to HST, e.g.: real estate commissions, lawyer's fees, appraisals,
processing fees, home inspections, insurance, moving cost, etc.
Substantially renovated houses - are subject to HST if
purchased from the builder/renovator.
Commercial properties - are subject to HST. This is a complex
area and individuals should seek advice from a specialist, e.g.
accountant, tax lawyer.
New housing - is subject to HST. It is also a complex topic. Often
the HST will be included in the purchase price. There are also H.S.T.
rebates available in a number of instances.
Vacant land - this is a very complex HST area. Vacant land attracts
HST in most, but not all cases. As a cautionary note assume that it
does until the nature of the land, its use and its ownership can be
clarified by a specialist.
Just a note at this point about the procedure on the actual closing
date. It will be necessary for your lawyer to obtain the money from
the mortgage company on the day of closing.
Lawyers often have many deals closing on busy days, and it
is often difficult for them to arrange a closing time until later
in the day. It is probably not adviseable to plan for an early
morning move into your new home. Please discuss this with
your lawyer. Your lawyer should be in touch with you within the
week prior to closing to arrange an appointment to sign and bring
in the necessary closing money (appointment
probably day prior to closing).
A number of insurance concerns have developed in the real
estate industry that could have a financial impact for a Buyer
on closing. Although an exhaustive explanation is not possible
here, Buyers should be aware of the following:
This is an older form of ungrounded wiring that some insurers may
not cover or may only do so at greatly inflated premiums. In some
cases buyers may be denied insurance altogether or until such time
as the house has been rewired. These costs could easily exceed
Insurance companies are refusing to insure properties with
60-amp service and homes with fuse panels instead of breakers.
As in the case of knob and tube wiring, hydro service may have
to be increased to at least 100-amp service before insurance
can be obtained.
3. Oil Tanks
Insurance companies are refusing to insure homes with oil tanks
that have not been certified by a Technical Standards and
Safety Association (TSSA) technician. This is particularly true
for oil tanks that are older than 25 years. In addition, fuel oil
companies will no longer provide fuel oil to homes with tanks
that have not been certified. Cost of a new fuel oil tank can be
in the range of $2,000. Underground fuel oil tanks are now subject
to strict regulation and in most cases must be removed.
Seek advice before buying a property with an underground tank.
4. Other Issues
Generally, insurance companies have been shedding risky
(in their opinion) policies. In some parts of the country the age
and type of structure have also become issues. In Ontario,
galvanized steel plumbing is becoming an insurance concern
as is in sulbrick siding in some cases. Properties owned by
absentee owners/landlords may also raise concerns.