Points a Purchaser Should Know

Purchasing a home can be a confusing experience. Your Realtor, Lender, and Notary gives you a wealth of information and advice. There is a great deal to think about.
What steps can you expect when buying a home, from the initial signing of your contract through to the completion of your home purchase?

The Initial Interview

Upon receiving your contract, we will contact you to confirm information such as the Purchasers’ full legal names, who your lender is, if any, how you wish to be registered on title, and we’ll answer any questions that you may have.

Advice on Tenants in Common vs. Joint Tenants

When purchasing a home with someone else or with multiple people on title, it is very important that you make an informed decision as to what happens to your interest in the property, should you pass away. This is the time to decide.
If you register as Joint Tenants on title with your co-owner, that means that if one of you dies, that person’s share will transfer completely to the surviving owner.  Registration as Joint Tenants requires that all owners have an equal share in the property.
If you register as Tenants in Common on title with the other owner(s) and you were to pass away, your share will pass on to your estate and be divided as per your Will, if you have one.

Call us to discuss the proper way for you to be registered on the title of your property.

Before Completion

Shortly before your completion date, you’ll be asked to come in to our office to review all documentation with one of our Notaries. We will also inform you of how much money you need to complete your purchase.
You should expect the following costs at the time of closing:

You will be required to pay the balance of your down payment, for example, if you paid a $10,000.00 deposit on a $450,000.00 home and are receiving a mortgage for $350,000.00, you should expect to pay the balance of $90,000.00 plus costs.

In addition you will be expected to pay for:

• GST, if applicable
• your site-survey if required.  Many lenders will require a Survey Certificate or Title Insurance to be obtained by the notary or lawyer on behalf of the Purchaser.  The cost for a new Survey Certificate or Title Insurance for mortgages less than $500,000 usually ranges from $250 to $300.
• your portion of the city/municipality Property Taxes for the current Year (the vendors portion will be credited to you if you purchase before the taxes are due)
• adjustment of city/municipality utilities (water and sewer)
• the Property Transfer Tax
• Legal Fees and Disbursements

Make sure that prior to your completion date you have arranged for fire insurance on the property (insurance on strata properties is usually arranged by the strata corporation) . Your Lender will not fund your mortgage until you have arranged for fire insurance on your property.

Questions on Buying or Selling a Home?

Do you have questions about the legal aspects of buying or selling a home that you’d like answered?  We’d like to answer your questions.  Email us at Sablok & Sablok Notaries Public to find out how we can help or better yet phone us and talk to one of us in person.

Disclaimer:

The material you find in this site is for general information only and must not be taken as legal advice. Many situations are unique and may require consultation with our office.

Closing Adjustments:

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.

BUYER’S GUIDE – A Review of the Closing Costs for Buying Residential Property in Greater Vancouver

INTRODUCTION

Buying a home is, for most people, their largest single investment. This information brochure is intended to assist home buyers in understanding the legal costs, closing adjustments and taxes associated with buying real estate.

LEGAL COSTS

Legal costs for a purchase with mortgage usually range from $800 – $1000 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 fees, land title search and registration fees and GST and PST. Costs that are usually quoted separately from “legal costs” are third party charges that may 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 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. The lender may require a survey certificate, Western Law Societies Conveyancing Protocol or Title Insurance. The costs and benefits of each of these products varies and should be reviewed with your lawyer or notary.

CLOSING ADJUSTMENTS

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

TAXES

Taxes can be a very large part of the costs associated with buying real estate, especially with newly built or substantially renovated homes. The two most significant taxes are Property Transfer Tax (“PTT”) and the Goods & Services Tax (“GST”). The other tax is Municipal Property Tax which will be discussed under the Closing Adjustment section. PTT is a provincial tax applied against purchases of real estate in the province at the rate of 1% on the first $200,000 of the purchase price and 2% on the balance. The tax is submitted at the time of registration of the transfer in the land title office and the amount required must be provided to the lawyer or notary. There is a full or partial exemption for “first time buyers”. There are number of criteria to qualify for the exemption and the purchase price determines whether or not it is a full or partial exemption. The main criteria are that buyers must be Canadian citizens or permanent residents of Canada; have resided in B.C. for a least 12 months or filed income tax returns as a resident of B.C. for  of the six taxation years immediately prior to registration of the transfer; and never previously owned a principal residence anywhere in the world. There is a full exemption available for properties with a purchase price of $425,000 or less and a proportionate exemption is available for properties with a purchase price between $425,000 and $450,000. There is no exemption on properties with a purchase price greater than $450,000. The GST is a federal tax and is payable on all new or substantially renovated homes by the first occupier of the property. GST is charged at the rate of 5% and may be included in the purchase price or added to it depending on the language of the contract of purchase and sale. Buyers should review the language carefully with their Realtor as GST is a significant cost. Rebates are available, please check with your Realtor or accountant for current details.

Do you have a question you’d like answered? We’d like to answer your questions. Email us at Sablok & Sablok Notaries Public to find out how we can help or better yet phone us and talk to one of us in person.

Disclaimer: The material you find in this site is for general information only and must not be taken as legal advice. Many situations are unique and may require consultation with our office.