FREQUENTLY ASKED QUESTIONS
WHAT ARE THE LEGAL COSTS LIKELY TO BE FOR THE PURCHASE OF MY
HOME?
Legal fees for the purchaser of a home are determined by
the amount of work that your lawyer is required to perform and will be
influenced by such factors as where the property is located ie. is it
on a plan of subdivision within the City or is it rural, whether the
lawyer will be acting for a lender in preparing a mortgage to assist in
the financing of the home, the purchase price of the home as this
determines risk, and whether the lawyer is involved in the negotiation
or preparation of the agreement of purchase and sale. Most real estate
lawyers will be happy to provide an estimate of the legal fees for your
transaction at the time of their engagement and you should not be
hesitant to raise the matter prior to retaining him or her to handle
the transaction for you.
WHAT TAXES WILL HAVE TO BE PAID IN CONNECTION WITH MY
PURCHASE?
In Ontario, subject to some exceptions, outlined herein, a
land transfer tax is paid to the Ontario government on all purchases of
land within the province. The tax is based on the purchase price paid
for your property. The tax rate is .05% on the first $55,000.00 of the
purchase price and 1% on the portion between $55,000.00 and
$250,000.00. The rate increases to 1.5% for the portion of the purchase
price over and above $ 250,000.00. .
Spouses are able to transfer property to each other for
nominal consideration without incurring Land Transfer Tax by stating
that the transfer is made for "natural love and affection" or that it
is being made pursuant to the terms of a Separation Agreement.
Currently in Ontario there is a partial exemption from the
provisions of the Land Transfer Tax for home buyers who have never
owned a home before anywhere in the world.
WHAT ARE THE 'DISBURSEMENTS' A HOME BUYER WILL BE EXPECTED
TO PAY ON A TYPICAL PURCHASE TRANSACTION?
Disbursements are the expenses that will have to be paid
by the lawyer on the purchaser's behalf to complete the transaction.
Every transaction may differ, but one can expect to pay costs of
approximately $500.00 to $600.00 for the expenses on a typical purchase
transaction. This would include registration fees paid for registration
of the transfer of title and mortgage, title insurance premium, the fee
for an execution certificate confirming no outstanding judgements are
on file that would affect title, costs incurred in searching the title
to the property and other minor administration costs involved in
handling the transaction.
If purchasers elect not to have their property title
insured there would be certain additional disbursements incurred as the
title insurance company assumes the risk for you of not having paid for
these inquiries to be made. It is increasingly more prevalent to have
purchasers opt for title insurance because the cost of closing their
transaction is less.
WHAT IS TITLE INSURANCE?
Title insurance provides an alternative to a lawyer's
opinion as to title. It protects the purchaser from someone else
claiming an interest in the property they have purchased and against
non-compliance with the requirements of applicable municipal and
regulatory authorities. The insurer provides an agreement to indemnify
up to the face amount of the policy to the purchaser, and in many cases
the mortgagee, should loss arise from any number of specified causes.
With title insurance the claims process is no fault. Whether or not
there was an error the purchaser will be compensated as long as the
loss results from a covered risk.
The lawyer can arrange the title insurance policy for the
purchaser. Title insurance eliminates the need for a number of
investigative searches that would otherwise be required, thereby
reducing in many cases the overall cost to the purchaser. The option of
title insurance for your real estate purchase should be discussed at
the initial interview with your lawyer.
HOW SHOULD I HOLD TITLE TO THE PROPERTY I HAVE PURCHASED?
Most spouses choose to hold title to the home they occupy
as their matrimonial in both names as 'joint tenants'. Joint tenants
means they each have an individual one-half interest in the home and
that if one of them dies the other inherits the one-half interest of
the deceased spouse automatically. It does not form part of the Estate
of the deceased and need not be included in the inventory upon which
probate fees are calculated.
© 2003, Ronald
Scott
