Common Real Estate Adjustments and Closing Costs
Buying, selling or refinancing? Costs can add up. Don’t let your finances be a surprise – make sure to factor in these common adjustments and closing costs.
(Note: this list does not cover moving costs like hiring moving companies and packers; instead this article is focused on closing costs associated with expenses related to legal title changes).
Property Sale
“Seller’s Closing Costs BC Edition”: below is a list of commonly incurred fees & costs for the sale of a property in British Columbia, Canada.
• Realtor Commissions:
Usually based on a percentage of the sale price. For example, 7% on the first $100,000 (of the sale price) and 2.5% on the balance.
• GST on Realtor Commission:
5% on top of the total commission
• Legal Fees (Notary or Lawyer):
Cost can vary depending on the transaction details. For example, a “clear title” sale costs less than a sale involving a mortgage discharge.
Tip: when asking for quotes, make sure to inquire about the total cost for legal fees, taxes (PST and GST on legal fees) and disbursements, including conveyancing software fees.
Range: $1,300 – $1,800
• Mortgage:
The balance owing on your mortgage – including principal, interest and prepayment penalty – and, possibly your line of credit, if it is secured against your home.
Tip: your lender may charge a “prepayment penalty” if you are breaking your term by paying off the mortgage early; the penalty is usually the higher of (a) three-month’s interest or (b) the interest rate differential (IRD) — this can range quite drastically ($1,000 – $30,000) depending on your mortgage amount, interest rate and remaining term. Contact your lender to obtain a quote for your penalty; explore porting options to reduce or waive the penalty.
• Deferred Property Taxes:
If you applied to defer your property taxes, the principal and interest must be paid from the sale proceeds.
• Prorated (Annual) Property Taxes:
If you sell before you pay the annual property taxes (due in July), your share of the taxes will be prorated and charged to you as a debit/cost upon completion.
• Final Metered Utility Invoice:
If you live in a municipality that meters utility consumption (water, sewer), your Notary will request a final metered utility reading to ensure that you are paying only for the services you use.
• Strata Costs:
Strata Fee Holdback: Strata management companies often require a holdback of the Seller’s last month’s strata fee payment (plus a nominal potential “NSF” deposit fee of typically $25-$45), pending clearance of the payment.
Move-out fee: if prescribed in the strata bylaws. Range: $50 – $250
Property Purchase
“Purchaser’s Closing Costs BC Edition”: below is a list of commonly incurred fees & closing costs when buying a house BC, Canada.
• Legal Fees (Notary or Lawyer):
Cost can vary depending on the transaction details. For example, a “cash” purchase costs less than a purchase involving a mortgage or secured line or credit; the purchase price, type of purchase (strata vs house), prior use of the home (resale vs. new development), and lender (public vs private lender for your new mortgage) can also impact fees.
Tip: when asking for quotes, make sure to inquire about the total cost for legal fees, taxes on legal fees (GST & PST) and disbursements, including conveyancing software fees.
Range: $1,800 – $2,500
• Property Transfer Tax (PTT):
Determined by percentages, based on the fair market value of the property:
1% on the first $200,000.00 and
2% up to and including $2,000,000 and
3% up to and including $3,000,000 and
5% on values over $3,000,000
• Strata Costs:
Strata Fee: first month’s strata fee is often payable upon completion and mid-month adjustments are made between the seller and buyer).
Move-in fee: if prescribed in the strata bylaws. Range: $50 – $250
Strata Form B Information Certificate: if required by your lender. Range: $35 – $300
Strata Form F Payment Certificate: Range: $15 – $150
Tip: Obtain strata documents early to avoid costly “rush” fees.
• Prorated (Annual) Property Taxes:
If you buy after the Seller already paid the annual property taxes (due in July), your share of the taxes will be prorated and charged to you as a debit/cost upon completion.
• Insurance Binder:
Lenders will require an insurance binder to ensure that they are named as a “loss payee” on the house/strata insurance policy.
Range: Free – $100, depending on your insurance provider
• Title Insurance (Homeowner & Lender Policies)
Protects the homeowner and lender against fraud and challenges or defects to the property title, after completion.
Range: Commonly $200, but cost can be more when the property value or mortgage amount is over $1M.
Property Mortgage / Refinance
“Borrower’s Closing Costs BC Edition”: below is a list of commonly incurred fees & closing costs for mortgaging or refinancing property in British Columbia, Canada.
• Legal Fees (Notary or Lawyer):
Cost can very depending on the transaction details. For example, private lenders, 2nd and 3rd mortgages, and additional requirements to payout unsecured debt payouts may require additional efforts and services and, therefore, add costs.
Tip: when asking for quotes, make sure to inquire about the total cost for legal fees, taxes on legal fees (GST & PST) and disbursements, including conveyancing software fees.
Range: $1,400 – $2,400
• Title Insurance (Lender Policy):
Protects the lender against fraud and challenges or defects to the property title, after completion.
Range: Commonly $200, but cost can be more when the mortgage amount is over $1M or if a private lender is involved.
• Mortgage:
The balance owing on your mortgage – including principal, interest and prepayment penalty – and, possibly your line of credit, if it is secured against your home.
Tip: your lender may charge a “prepayment penalty” if you are breaking your term by paying off the mortgage early; the penalty is usually the higher of (a) three-month’s interest or (b) the interest rate differential (IRD) — this can range quite drastically ($1,000 – $30,000) depending on your mortgage amount, interest rate and remaining term.
• Insurance Binder:
Lenders will require an insurance binder to ensure that they are named as “loss payee” on the house/strata insurance policy.
Range: Free – $100, depending on the insurance provider
• Strata Costs:
Strata Arrears: If you have any outstanding strata fees, special levies, fines, etc., the strata corporation will collect those amounts prior to (as a condition of) issuing the required Form B.
Strata Form B Information Certificate: Required by the Bank/Lender. Range: $35 – $300, depending on number of pages and timeframe for ordering (rush charges may apply if the document is required within 7 days of ordering).
The above adjustments and estimated “Closing Costs BC edition” are provided as a tool and reference to assist our clients with budgeting. For specific questions and assistance with your real estate transaction, please contact our office.
