Purchasing a Home - What a Buyer Needs to Know
Lawyer's Role
The vast majority of home purchase and sales are governed by the Real Estate Purchase Contract which is developed by the Alberta Real Estate Association and used by their licensed members (realtors).
It is normal that the lawyer does not see the completed Real Estate Purchase Contract until it has been signed by both the Buyer and the Seller and is a firm deal. The Contract has standard terms used to protect both parties that are normal in the conveyancing of a home between a Buyer and a Seller. By the time the lawyer sees the Contract, the negotiations have been completed and it is the lawyer's job to enforce the terms of the agreement. In most situations, when a Buyer is obtaining a mortgage in order to pay for the home, the lawyer will also act for the Bank in preparing and registering the mortgage documentation. The lawyer will review the title for defects, registrations which must be discharged by the Seller, complete the Transfer and in conjunction with the realtor, ensure the Buyer has possession of the home. Finally, the lawyer will, to the best of their ability, ensure that all of the terms of the Real Estate Purchase Contract are enforced as allowed by the law.
The Cost of Purchasing a Home
I am frequently asked the question, "How much are the legal fees going to be?" There are two portions to every lawyer's bill for the purchase of a new home.
First, the fee portion. Lawyer's fees will vary depending on the complexity of the transaction, the experience of the lawyer, the mortgage company involved, and any other factors that the lawyer deems to be relevant (eg. a rush transaction, parties not available for signing in town if documents need to go elsewhere for execution).
The second portion are the disbursements. Disbursements are those items which are paid on behalf of the client which are required to close the transaction. Some disbursements are fixed costs and some are variable depending on what the mortgage company requires. Fixed cost disbursements would be land titles registration fees for registering the Transfer of Land and any applicable mortgage. These charges do not vary from law office to law office. Variable disbursements will include title searches, couriers, tax searches, and office fees such as photocopying or faxing. These costs may vary depending on which municipality the home you are purchasing is located in.
Always receive a quote from your lawyer in advance. It is my practice to talk to the client and based on the information that the client provides, to give an all inclusive quote so that the client can budget for their closing costs and not receive any surprises upon possession date. If you are buying a home with cash, the disbursements will be lower as there will be no charge at Land Titles for the registration of a mortgage and the lawyer's fee should be lower as it will not be necessary to do the work required by the mortgage company.
As an example, for the average home with a purchase price of $450,000.00 you can expect your all included costs to range in the neighborhood from $950.00 to $1,300.00
The vast majority of home purchase and sales are governed by the Real Estate Purchase Contract which is developed by the Alberta Real Estate Association and used by their licensed members (realtors).
It is normal that the lawyer does not see the completed Real Estate Purchase Contract until it has been signed by both the Buyer and the Seller and is a firm deal. The Contract has standard terms used to protect both parties that are normal in the conveyancing of a home between a Buyer and a Seller. By the time the lawyer sees the Contract, the negotiations have been completed and it is the lawyer's job to enforce the terms of the agreement. In most situations, when a Buyer is obtaining a mortgage in order to pay for the home, the lawyer will also act for the Bank in preparing and registering the mortgage documentation. The lawyer will review the title for defects, registrations which must be discharged by the Seller, complete the Transfer and in conjunction with the realtor, ensure the Buyer has possession of the home. Finally, the lawyer will, to the best of their ability, ensure that all of the terms of the Real Estate Purchase Contract are enforced as allowed by the law.
The Cost of Purchasing a Home
I am frequently asked the question, "How much are the legal fees going to be?" There are two portions to every lawyer's bill for the purchase of a new home.
First, the fee portion. Lawyer's fees will vary depending on the complexity of the transaction, the experience of the lawyer, the mortgage company involved, and any other factors that the lawyer deems to be relevant (eg. a rush transaction, parties not available for signing in town if documents need to go elsewhere for execution).
The second portion are the disbursements. Disbursements are those items which are paid on behalf of the client which are required to close the transaction. Some disbursements are fixed costs and some are variable depending on what the mortgage company requires. Fixed cost disbursements would be land titles registration fees for registering the Transfer of Land and any applicable mortgage. These charges do not vary from law office to law office. Variable disbursements will include title searches, couriers, tax searches, and office fees such as photocopying or faxing. These costs may vary depending on which municipality the home you are purchasing is located in.
Always receive a quote from your lawyer in advance. It is my practice to talk to the client and based on the information that the client provides, to give an all inclusive quote so that the client can budget for their closing costs and not receive any surprises upon possession date. If you are buying a home with cash, the disbursements will be lower as there will be no charge at Land Titles for the registration of a mortgage and the lawyer's fee should be lower as it will not be necessary to do the work required by the mortgage company.
As an example, for the average home with a purchase price of $450,000.00 you can expect your all included costs to range in the neighborhood from $950.00 to $1,300.00
