Buyer Info Package
Content
B U Y E R I N F O R M A T I ON ON P A C K A G E At the time o closing o residential purchases o property, there are additional closing costs that are ofen unanticipated unanticipated by Buyers. Te ollowing are typical costs incurred at the time o closing, and some inormation related to closing issues that all Buyers should be aware o beore the scheduled date or closing. CONTENTS
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Deposit Survey itle Insurance Land ranser ax Page 2 Legal Fees Disbursements Federal Identification Inormation Statement o Adjustment Proessional Home Inspection
Home Insurance Page 3 Moving Costs First Mortgage Costs Second Mortgage Cost HS Page 4 Closing Date Insurance Concerns
DEPOSIT At the time o presenting an Offer to Purchase you will have to submit a deposit cheque, which will be held in trust by the listing broker i the offer is accepted. Te cheque is approximately 5% o the sale price or more depending on the circumstances and closing date. Te cheque is usually certified cert ified and deposited the day afer acceptance. Occasionally the deposit unds are wired by electronic transmission. transmission. SURVEY I the seller does doe s not provide the Buyer with an up-to-date survey in the Agreement o Purchase and Sale (showing the existing location o ences, buildings and structures), struc tures), it will ofen be necessary to have a new one prepared by an Ontario Land Surveyor as mortgage lenders may require it. Solicitors will not give an unqualified opinion o title without an up-to-date survey sur vey.. ypically and depending on the circumstances a survey will cost in the t he range o $1,000 - $1,500. TITLE INSURANCE
An to an up-to-date survey is Buyer’s title insurance. are aovariety o insurers thatalternative provide this product including the lawyer. Tere Te cost title insurance is based on a sliding scale depending on the value o your purchase. ypically, costs are between $300 and $500. A note o caution: title insurance does not correct title problems. It merely compensates the Buyer as a result o negative impact resulting rom a title deect. LAND TRANSFER TAX Purchasers o real estate in Ontario are required to pay provinvial Land ranser ax on closing. It is paid directly to the Province o Ontario. Ontario. It is based on the ollowing ormula: • 0.5% is paid on the rst $55,000 of property value; • 1% is paid on the next $195,000 of property value;
• 1.5% is paid on the next $150,000 of property value; with • 2% paid on any value in excess of $400,000
In short $4,475 in provincial Land Transfer tax is owed on the rst $400,00, with 2% payable on any value in excess exces s o that amount. In addition, a municipal municip al Land ranser ax scheme was introduced or properties purchased in oronto with closing dates on or aer February 1, 2008. e formula is as follow follows: s: • 0.5% is paid on the rst $55,000; • 1% is paid on the next $345,000 (up to $400,000); and • 2% is paid on any value in excess of $400,000 First time Buyers may be eligible or rebates under both or either o the provincial or municipal schemes. Legal advice should be sought as to eligibility. eligibility. Go to the Chestnut Park website (www.chestnutpark.com) and click on “Land ranser ax Calculator” under the “Find A Property” tab to calculate land transer taxes owing according to property value. va lue.
LEGAL FEES You will require the services o an Ontario lawyer to act on your behal to close your house purchase. Your lawyer will charge you or services, including title searching, and or his/her expenses (disbursements). Your sales representative can recommend 3 lawyers to you i you do not have one already.
Beore retaining a lawyer, you should ask him/her or a complet completee breakdown o ees, disbursements, and mortgage work. Most legal work or home purchases exceeds $1,500 and can be much higher under certain circumstances. Be sure to ask first. DISBURSEMENTS Tere will be other costs which the lawyer will have to pay on your behal. Basically things like photocopies, tax certificates, zoning clearance and work orders, couriers, registering o the deed and mortgages, searching executions, mortgage schedules, status certificates (or condominiums) and other incidentals. Tese disbursements will be in the range of $600 - $800. FEDERAL IDENTIFICATION INFORMATION Te Federal Government has implemented legislation that requires real estate brokerages under the auspices o the Financial ransaction and Reports Analysis Centre o Canada Canada “FINRAC” to identiy the parties to real real estate transactions. transactions. Te legislation is designed to prevent money laundering and the movement o the proceeds o crime. Your real estate agent is required thereore to obtain inormation
rom you to complete various orms to be retained in Chestnut Park’s files. STATEMENT OF ADJUSTMENT STA A DJUSTMENT Balance due on closing – basically the balance due on closing is the difference between the sale price and the amount o your deposit that was presented with the offer. However, there are certain other items that will be adjusted at the time o closing. Taxes – i the Seller S eller has paid taxes or the ull year, the Buyer will be responsible or his/her portion rom time o closing until the end o the year. Fuel – i the property is heated by oil, then the tank will be filled by the Seller on closing, and the Buyer will be charged on the adjustment with a ull tank o oil
(usually 200 gallons). ga llons). Utilities – all utilities and gas that are metered will be read on closing and the seller will be responsible or them up to the date o closing.
Tese are normal adjustments. Particular attention attention should be paid to new construction transactions, especially condomini condominiums. ums. Tere are numerous additional adjustments adjustmen ts in these purchases. Tese adjustmen adjustments, ts, including the Ontario New Home Warranty Fee, could amount to $3,000 or more. PROFESSIONAL HOME INSPECTION is is usually around $400 and up. e cost will vary with the t he size of the home being purchased and the inspection company used.
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HOME INSURANCE Tis varies. Minimally, Minimally, costs start at $500. Call or quotes. N.B. – 1st mortgage must be noted on policy. (Home insurance insurance has become a serious closing issue. See details below.) below.)
MOVING COSTS ese vary from $200 per hour and up, depending on the company and the number o movers. It will also depend on the size o the vehicle and the time t ime o the month and year you are moving. FIRST MORTGAGE COSTS Interest Inter est adjustment – Tis is something most Buyers do not understand. Basically, Basically, i you are arranging a new first mortgage, your lawyer will receive the mortgage monies rom the mortgage company on the morning o the closing date.
However, most mortgage companies use the 1st or the 15th o the month as a payment However, date. Tereore, i you are closing a deal on, say s ay August 10th, the mortgage company company will deduct rom the mortgage monies interest interest rom date o closing (10th) to the first o the ollowing month (i.e. September 1st) – interest adjustment adjustment date – and your first payment will then commence the 1st day o the ollowing month (i.e. October 1st), and continue on a monthly basis thereafer. Example: on a $100,000 mortgage at 5.5% interest rom the 10th to the 1st o the ollowing month, interest would wou ld amount to approximately $316 and instead o getting $100,000 from the mortgage company on closing, you will receive only $99,684. (Interest (Inter est adjustment costs will not affect every ever y mortgage, as some will have payment commencing one month afer closing.)
Loan processing or bank appraisal ee – Usually about $300. High ratio mortgages will demand a higher processing ee. A high ratio mortgage is one in which the Buyer is seeking nancing in excess of 80% of the purchase price, or in some cases the approved value o the property. SECOND MORTGAGE COSTS Usually require the payment o additional legal ees, appraisal and brokerage ees. Tese vary dramatically dramatically,, depending on the transaction and the t he risk as perceived by the lender. HST Re-sales – although most used residential re-sales are exempt rom HS, HS, almost all
services involved with the transaction will be subject to HS, e.g. real estate commissions, lawyer’s ees, appraisals, processing ees, home inspections, insurance, moving cost, etc. Substantially renovated houses – are subject to HS i purchased rom the builder/renovator. Commercial properties – are subject to HS. Tis is a complex area and individuals should seek advice rom a specialist, e.g. accountan accountant, t, tax lawyer. New housing – – is subject to HS. HS. It is also a complex topic. Ofen the HS will be included in the purchase price. Tere are also H.S. H.S... rebates available in a number o instances. Tese rebates are most ofen assigned to the builder builder.. Vacant land l and – this is a very complex HS area. Vacant land attracts HS in most, but not all cases. As a cautionary note assume that it does until the nature o the land, its use and its ownership can be clarified by a specialist.
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CLOSING DATE Just a note at this point about the procedure on the actual closing date. It will be necessary or your lawyer to obtain the money rom the mortgage company on the day o closing.
Lawyers ofen have many deals closing on busy days, and it is ofen difficult or them to arrange a closing time until later in the t he day. day. It is probably not adviseable to plan or an early morning move into your new home. Please discuss this with your lawyer. lawyer.
Your lawyer should be in touch with you within the week prior to closing to arrange an appointment to sign and bring in the necessary closing money (appointment probably day prior to closing). INSURANCE CONCERNS A number o insurance concerns have developed in the real estate industry that could have a financial impact or a Buyer on closing. Although an exhaustive explanation is not possible here, Buyers should be aware o the ollowing: 1. Knob and Tube wiring Tis is an older orm o ungrounded wiring that some insurers may not cover or mayonly do so at greatly inflated premiums. In some cases buyers may be denied insurance altogether or until until such time as the house has been rewired. Tese costs could easily exceed $5,000. 2. Hydro Service Insurance companies companies are reusing to insure properties with 60-amp service and homes with use panels instead o breakers. As in the case o knob and tube wiring, hydro service may have to be increased to at least 100-amp service beore b eore insurance insurance can be obtained. 3. Oil Tanks Insurance companies companies are reusing to insure homes with oil tanks that have not been certified by a echnical Standards and Saety Association (SSA) technician. Tis is particularly true for oil tanks that are older than 25 years. In addition, fuel oil
companies willofno longer to the homes with tanks that have ound not been certied. Cost a new fuelprovide oil tankuel can oil be in range of $2,000. Undergr Underground fuel oil tanks are now subject to strict regulation and in most cases must be removed. Seek advice beore b eore buying a property with an underground tank. 4. Other Issues Generally,, insurance companies have been shedding risky (in their opinion) policies. Generally In some parts o the country the t he age and type o structure struc ture have also become issues. In Ontario, galvanized steel plumbing is becoming an insurance concern as is insulbrick siding in some cases. Properties owned by absentee owners/landlords may also raise concerns.
www.chestnutpark.com Chestnut Park Park Real Estate Limited, Brokerage Brokerage • Head Head Oce 416.925.9191 4
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