What Should it Cost?
Most people wonder about lawyer’s fees. Maybe you saw it on TV or you have heard of lawyers charging $200, $400 maybe even $600 an hour. Maybe you have even dealt with a lawyer all before and can recall only a couple phone conversations lasting only a few minutes each and ten or so minutes during office visit to sign papers.
What isn't seen, is all the time it takes to check titles, request and receive mortgage instructions, prepare the mortgage documents, have them checked for accuracy, have them signed and witnessed, deal with the other party's lawyer, receive pay-outs (if applicable), complete interim and final reports to all parties, trust accounting reports to the law society, among many other possible tasks that often arise.
Further, people tend to not see the risk that lawyers ensure against in real estate transactions. Most real estate transactions involve loans of $100,000's of thousands of dollars and assets of $100,000's of thousands of dollars. Lawyers oversee most of the financial aspects of a transaction and ensure that the exchange of title(s) for money happens, as it is supposed to. Considerable risk to the lawyer is involved in doing so.
Therefore, in most real estate transactions, the actual legal fees charged are dependent upon the value of the property involved, whether or not there is a mortgage, whether there are multiple transactions and how quickly the lawyer is required to close the deal.
The Law Society of Saskatchewan has a tariff that serves as a guideline for legal fees in real estate transactions. For example, for the purchase of a $105,000 home with a mortgage, the recommended fee is $950.00. Disbursements are additional. Lawyers who specialize in residential real estate may charge less than the suggested tariff amount. Fees may also be more for complicated or higher risk transactions or where other services are provided.
Consider asking for an estimate in writing. This simple precaution resolves most misunderstandings that may arise over the final bill, as to what was or was not included in the original fees quoted.
ISC – Land Titles Fees
Information Services Corporation (ISC), i.e. Land Titles, charges fees for title searches, mortgage registration or discharge and for transfer of ownership. The fee to register land under $500,000 in value is 3% of the land value. A $100,000 property would, therefore, cost $300 to register. Most mortgages cost $150 to register. Title searches cost $10.00 each and usually three searches per title are required on the average purchase transaction.
Property taxes are paid to the local municipality. Buyers may have to pay to reimburse sellers for taxes already paid, pay the taxes for the entire year or pay a prorated share. Depending on the value of the property and the time of year, this can be several thousand dollars. Your lawyer should be able to provide you an estimate of the cash required for taxes on closing.
CMHC Fees for Low down payment Mortgages
Anytime you put less than 25% down, you usually pay someone like CMHC, GE Capital or a finance company, a premium which can end up being as high as 3.5% of the amount borrowed. The more you put down the lower the premium. In addition to the premium there is a $165.00 application fee to pay.
Title Insurance or Surveyors Certificate
If your transaction involves a mortgage, most lenders make their loan to you conditional on their being a surveyor's certificate (a.k.a. real property report) or that their mortgage be title insured. Credit Unions in Saskatchewan are an exception to the rule and if the lender is Western based, i.e. from B.C. or Alberta, they require that the mortgage be title insured regardless of whether there is a surveyor's certificate or not.
A Surveyors Certificat is a drawing that shows the position and size of any buildings in relation to the property lines of the plot of land. It confirms or refutes whether all buildings fall inside the property and whether any buildings encroach on the property. The cost for a new real property report is usually between $600.00 - 800.00 dollars.
Title insurance is generally used when a Surveyors Certificate or Real Property Report is not available. However, title insurance does much more. Title insurance may protect you against defects in title, fraud, renovation work done without proper permits or approvals, outstanding work orders by the municipality, unforeseen condominium assessments and, in some cases, even some mistakes made by lawyers.
Title insurance is usually obtained through your lawyer, who will provide the title insurer with the details surrounding your transaction. Title inurance premiums are around $135.00 - 250.00 dollars but premiums vary depending on whether one get both a lender and an owner policy, if the deal exceeds $500,000 or if it is a commercial transaction. Also, lawyers generally charge an admin fee of approximately $75.00 dollars to cover the extra time and paperwork involved.
When you buy property or have a mortgage on a property, you are usually required to insure the buildings against damage from fire and other hazards. Make sure you have replacement cost fire insurance.
You NEED to have fire insurance in place or effective at least one day in advance of taking possession. If you are refinancing an existing mortgage you may be required to have the new lender listed as the second loss payable before the lender will advance funds.
Your insurance agent will have to fax your lawyer confirmation of fire insurance. Your lawyer should be able to provide a form to assist with this task.
Note, if you have children or dependents, then you may wish to consider mortgage insurance, disability insurance, and critical illness insurance. An insurance broker can advise on the different types of coverage and the costs associated with each.