Buying a Home

Buying a home is a very exciting but stressful process. For most people it is their largest single investment. We want to make the process as easy and understandable as possible. Our objective is to help home buyers understand some of the costs involved in buying a home as well as the process to go from having an accepted Contract of Purchase and Sale and an approved mortgage to becoming the legal owner and receiving the keys to their new home.

We know how stressful the process can be so don’t hesitate to call our offices. Bell Alliance acts for clients primarily in Vancouver and the Lower Mainland of British Columbia but the information provided applies throughout B.C. We also act for clients outside of B.C. where we utilize technology to streamline the closing process.

“What’s it going to cost to close my purchase?” is usually the most pressing question for home buyers once they have found their new home. And for most buyers they’re thinking just in terms of legal fees when they really need information on:

• Legal Costs;
• Third Party Closing Costs;
• Property Transfer Tax and Goods and Services Tax
• and Closing Adjustments.

“What do I do now?” is usually the second most commonly asked question for home buyers. They’ve entered into a binding contract of purchase and sale and been approved for their mortgage but the rest of the process is confusing – what do they need to do and when? There are any number of questions that arise and we want to help home buyers understand that process. Take a look at the Closing Process.

And for Non-Resident Buyers there are some special considerations.

Closing Costs and Adjustments

Legal costs for a purchase with a mortgage usually range from $800 – $1,100 regardless of whether the buyer retains the services of a Lawyer or Notary Public. It is important for the buyer to understand what is or is not included in a quote and what might be added as additional charges. Costs that are usually included in a quote are professional fees, land title search and registration fees and miscellaneous office disbursements. HST is usually added to fees and disbursements as with other services and products.

These costs are usually quoted separately from “Legal Costs” as they vary from one transaction to another. For example, the lawyer or notary will need to obtain a Municipal tax certificate, the cost of which varies from $25 to $50 depending on the municipality. Similarly the lawyer or notary will obtain an insurance binder showing loss payable to the lender, the cost of which varies but usually ranges from $25 to $35. Finally, for strata title property, the lawyer or notary will require a Form F stating there are no arrears in maintenance fees, the cost of which varies but usually ranges from $25 to $35. The Strata Corporation may also charge a “Move-In” fee which usually ranges from $50 to $200.

Many lenders will require the lawyer or notary to obtain on behalf of the buyer a Survey Certificate, Title Insurance or Western Law Societies Conveyancing Protocol. A Survey Certificate is used by the lender to ensure that the buildings on the property do not encroach on adjoining property or into “set backs”. If a Survey Certificate is not available lenders may accept Title Insurance or the Western Law Societies Conveyancing Protocol. Title Insurance and Western Law Societies Conveyancing Protocol provide insurance to protect the lender from any encroachments that would have been identified by a survey certificate. Title Insurance has some additional coverage that may be important to a buyer. The cost for a new Survey Certificate or Title Insurance for mortgages less than $500,000 usually ranges from $200 to $250. In the event of a subsequent refinancing an owner may need to buy a new Title Insurance policy. Most law firms will charge only a nominal fee for the Western Law Societies Conveyancing Protocol. It is important to review with your lawyer or notary the appropriateness of each product to your situation.

Closing adjustments cover a number of items including municipal taxes, municipal water and sewer fees, strata maintenance fees, rent and security deposits.

Strata fees are charged and paid monthly on the first day of each month. The monthly strata fees will be pro rated between the buyer and the seller, with the buyer reimbursing the seller based on the number of days between the date of adjustments agreed to in the Contract of Purchase and Sale and the last day of the month.

Rent is adjusted on a similar basis with the buyer receiving a credit for a portion of the rent. In the case of a continuing tenancy, the buyer will receive a credit for the security deposit with accrued interest as the buyer will be responsible for reimbursing the correct amount when the tenant vacates at a later date.

Municipal property taxes will also be adjusted. Property taxes are based on a calendar year. Some municipalities such as Vancouver provide for an advance payment in February with the balance due and owing usually at the beginning of July. Other municipalities do not have an advance tax payment but the full years taxes are payable usually at the beginning of July.

The adjustment between buyer and seller will therefore vary depending on the time of year of closing of the transaction and the municipality in which the property is located. The tax adjustment is one of the more complicated adjustments to understand but it is based on the parties being responsible for any costs associated with the property only for the period of time in which they are in possession.

These adjustments are set out in a document normally referred to as the Statement of Adjustments. The Statement of Adjustments sets out the buyers total costs and identifies the sources of funds to pay these costs. The sources of funds will include the initial down payments pursuant to the Contract of Purchase and Sale, the Mortgage proceeds, any credits in terms of rent, tax or other adjustments. The final line item on the Statement of Adjustments will identify the amount of money required to complete the transaction. The balance required to complete will need to be delivered by certified cheque or bank draft payable in trust to the lawyer or notary firm.