The Legal Costs of Finding Your Perfect Home

With the addition of your new baby, your family may be fast outgrowing the condo that had worked so well for you.  The idea of a backyard and three bedrooms now has a certain appeal.  Before finding that perfect home for your growing family, you may want to consider all of the relevant closing costs of buying a home, including legal costs, and budget accordingly.

Buying a new home and selling your old home can incur legal costs for which you may not have budgeted.  To ensure that you budget more accurately, the following is a breakdown of the range of real estate legal costs that you might expect:

Legal fees only for the purchase or sale of a residential property – $600 to $1,500 + HST

Legal fees only for the purchase of your new residential property and the sale of your old one – $1,000 to $2,500 + HST

Keep in mind that the above costs are only for legal fees.  You will also come across the following costs, which may or may not be included in your final bill with a real estate lawyer:

Other costs related to the transaction performed by the lawyer’s legal team (often referred to as disbursements):  $250 to $450 + HST.  These costs would include property searches.

Registration fees – to register documents with the Land Registry Office, there is a cost of approximately $70 + HST per document.  For example, if you register the Deed/Transfer and your mortgage against the property, the cost would be approximately $140 + HST.

Title Insurance – the premium will depend on the value of your property.  Depending on the comprehensiveness of the title insurance you purchase, it would normally cover defects with title which might affect your claim to ownership of the property.

In total, you could be looking at total legal costs in the range of $1,500 to $3,500 excluding land transfer tax.

Land transfer taxes can be significant.  In Ontario, a certain percentage of the property purchase price must be paid by the purchaser to the Ontario government.  In Toronto, a second land transfer tax also applies and is also calculated as a percentage of the property purchase price.  Land transfer taxes are usually paid by the purchaser.  Therefore, if you are purchasing a property in Toronto, keep in mind that you will be paying two land transfer taxes which can add another $10,000 to $20,000 to your tab.  If you and your spouse are first-time homebuyers, you may be eligible for a rebate of a portion of the land transfer taxes, lowering the amount owed.  To get an idea of how much land transfer tax you may have to pay, try this land transfer tax calculator.

Legal costs are only one of the major costs associated with closing a residential real estate purchase.  You may also be required to pay premiums to the Canadian Mortgage and Housing Corporation, moving costs and other unexpected costs.  Be sure to create a realistic budget taking into consideration all closing costs, including legal costs, when deciding on how much you can afford to spend to buy that perfect home for you and your growing family.

About the Author:

Jeffrey Fung is the Founder of MyLawBid.com, a free resource that saves you time and money in your search for a real estate lawyer in Toronto and across Ontario.  To begin reaching out to lawyers in real estate or any other area of law, complete the short MyLawBid information form.  MyLawBid.com has over 200 registered lawyers in all areas of law from Ontario, British Columbia and Alberta and has been written about in Techvibes.com, Moneyville.ca and The Globe and Mail.

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