So you have decided to buy a property in Vancouver and are now looking forward to becoming a homeowner or landlord. Ideally, people would want to be informed about what to lookout for before making such a large investment. In reality however, for most people, a lawyer is only brought on board when they have already signed the on the dotted line and is ready to complete the deal.
In this article, we will go through the typical pricing and costs of a real estate purchase conveyance, because let’s be honest, money matters, especially when we are talking about Vancouver real estate. Please also see Part 2, covering property transfer tax.
First, we will describe the difference between legal fees and disbursements. Legal fee are the fee you pay the lawyer for completing the transaction, which typically would include reviewing the contract, drafting the documents, such as the purchase and mortgage documents, facilitating the payment of money to the sellers lawyer, and ensuring that your interests are protected.
Disbursements: Disbursements are fees that the lawyer pays on your behalf to third parties to complete the transaction. Common disbursements include the following (The numbers stated below are rough estimates under the assumption that no rush charges are applied. Collingwood Law Office has no control over these third party costs, and make no representations as to the accuracy of the following information. Readers should be aware that such fees are subject to changes by their respective agency from time to time without notice):
Registration of Transfer – $78
Registration of Mortgage – $78
Property Tax Certificate – $45 to $75
Law Society Trust Administration Fee – $15
Insurance Binder Fee – $0 to $75
Title Insurance – $130 and up (scaling according to property purchase price)
Strata Form(s) Fee – $50 to $120 (applicable to stratified properties)
Stewart Assyst Fee – $26.50 (applicability depends on mortgage provider)
With a few rare exceptions, the fees above are in most cases mandatory.
1. The Registration of Transfer disbursement is a fee charged by the Land titles office to transfer or change the name of the title on the property from the seller’s name to your name.
2. The Registration of Mortgage disbursement is a similar fee to the registration of transfer above. It is a fee charged by the Land titles office to register the mortgage the bank is giving you against the property title. If you have a mortgage this fee is mandatory as the bank will not loan you the money unless the mortgage is registered against the property.
3. As with every property, there is property tax. When you buy a property, the seller would have either already paid the property tax (after July 1) or property tax is still owing (before July 1). In order to correctly assess how much property tax should be credited to seller (after July 1) or to the municipality (before July 1), we need to obtain an official tax certificate from the municipality. The property tax certificate also allows us to see the property tax (and often utilities) for your property, and if there are any penalties or outstanding amounts owed by the seller. We then make adjustments in accordance to the tax certificate. For example, if you buy a property on February 1, then you are responsible for paying the property tax for the days between February 2 to December 31, because you will be the owner of the property for those days (note that we assume for the purpose of this example, that the adjustment date is the day following the completion date, which is typical of residential real estate transactions, but can be a date that is completely different depending on how your realtor drafted your purchase and sale agreement). The Seller will be responsible for paying the property tax from January 1 to January 31 as the seller was the owner during that time.
4. The Law society trust administration fee is a mandatory fee the law society of B.C. imposes on every distinct transaction or file. It is used for many purposes, one of them being for insurance purposes, ensuring your money (especially large sums as with real estate purchases) are protected when they are in the lawyer’s bank account.
5. Insurance binder fee is charged by your insurance company. Every transaction that includes a mortgage requires an insurance binder. An insurance binder is a cover note stating that the building or property has a sufficient amount of insurance, so that if something happens to the building, the Lender’s mortgage will be paid out.
6. Title Insurance is often a mandatory requirement for many banks, as it protects the bank or lender from losses associated with the priority and enforceability of the mortgage, title and survey defects, and title fraud. Title insurance also protects you, the buyer, from title fraud, survey and title defects, as well as challenges against your ownership. Title Insurance works for future incidents but also retroactively, meaning things that have affected your property in the past. You can enjoy peace of mind knowing that you a covered under the title insurance homeowner policy. Title insurance is a one off cost that protects you as long as you own the home.
7. In B.C., Strata Form(s) B and F are mandatory if you choose to purchase an apartment, condominium or townhouse. Strata form B and F are important to you as they tell you the specific strata fees for the month in which you are to move in, if there are any pending court cases against the strata, if the seller owes money to the strata (which, if not paid, will most certainly become your problem), if there are any upcoming by-law changes that could occur (such as rental restrictions), and if you are entitled to a parking spot or storage locker, as well as many other things.
8. Different mortgage providers have different methods of providing instructions to the lawyers working on your file. Some banks uses a pay-per-use third party platform to electronically manage mortgage instructions, fund requests and other matters in relation to the mortgage issued. If your selected mortgage provider chooses this option, there will be an additional $26.50 charge from the company providing the third-party electronic mortgage platform.
For more information please contact us at 604-434-2977 (Vancouver) or 604-674-8896 (Richmond)