At Meredith Bateman Law Office in Riverview, we provide Real Estate and Mortgage services for the following:
• Residential properties
• Commercial properties
• Municipal and planning acts
• Industrial properties
• Land development and subdivision
• Mortgage enforcement
If I buy real estate, what does my lawyer do?
The purchaser’s lawyer protects you throughout the transaction and makes sure that you obtain “good title” to your new property. Your lawyer searches title and prepares and registers your documents and co-ordinates the closing. Usually, the purchaser’s lawyer also represents the interests of your mortgage lender in preparing and registering the mortgage documents for the mortgage you have arranged. You and the lender will each receive a final report from your lawyer.
If you are selling, your lawyer looks after preparing documents, proceeding with the closing, ensuring any mortgage or debt on the property gets paid, and providing the remaining proceeds to yourself, and any service providers necessary connected to the property you are selling.
What is an Agreement of Purchase and Sale?
The Agreement of Purchase and Sale is the most important document you sign when buying or selling a house. It sets out all the terms the purchaser and the vendor have agreed upon for the transfer of the property. If you have a realtor, the realtor will prepare the Agreement. The Agreement will set out the purchase price, the deposit to be paid, the closing date, the items that are to remain with the home, and any repairs that are to be made before closing. To protect the purchaser, the Agreement should also be conditional upon satisfactory property inspection and upon mortgage financing (even if you already have been pre-approved, your bank will want to confirm that your house is worth the amount of money you are borrowing). If the property is not serviced by a municipal water and sewer service, the Agreement should also be conditional upon verification of the water supply and septic system. Once both the vendor and the purchaser have agreed to all the terms, signed the Agreement, initialed all changes, and all the conditions have been met, you or your realtor must provide your lawyer with the Agreement so that your lawyer can begin preparing the required documents, including the title search if the property is not currently registered on Land Titles.
What will it cost?
Your lawyer should quote a block fee for professional services for all aspects of the transaction.
At Meredith Bateman Law Office, our usual fee for a purchase is $730.00, plus HST and disbursements, if on the Land Titles system, or $850.00, plus HST and disbursements, if not on the Land Titles system. New Brunswick has two (2) different systems for Registry for Property, the older system being Registry, and the "new" system being Land Titles. If your property is on the older Registry system, you will have larger fees on purchase to cover the cost of a title search and anything that arises from that. If your property is on the Land Title system already, a title search is not necessary and a Certificate of Registered Ownership will be issued by the province for far less than a title search will cost.
If you are selling property, fees on a sale of a home that is on Land Titles are $650.00 plus HST and disbursements. On the sale of a home that is not on Land Titles, fees are $700.00, plus tax and disbursements. Disbursements are amounts that your solicitor needs to pay out in order to complete the transaction. Items such as Certificate of Registered Ownership that is ordered from the province, Transfer Tax on a purchase, filing your Deed or Transfer, and filing your mortgage with the province so that it is registered against the house are also necessary disbursements. Filing fees for a mortgage registration and for a Deed or Transfer are currently $85.00, which is a fee payable to the province for each document filed. If you have more than one piece of property that you are buying, you will need to pay that registration fee for each PID, or piece of property. These items can all affect the final closing costs on your property.
Further if you are buying property, you should be aware that you must pay Transfer Tax to the province through this office, that is payable on closing and forms part of the cost of closing on a purchase. Currently, Transfer Tax on the purchase of a property is at one (1%) percent of the purchase price, or the assessed value, whichever is higher. For instance, if you are buying a house for $150,000.00, then your Transfer Tax would be $1,500.00. These are not fees that go to your solicitor, but are fees that are collected by your solicitor, and remitted to the province on your behalf.
What are the disbursements?
Disbursements are the various expenses over and above the lawyer’s fees for the work the lawyer does and which is charged to you during a real estate transaction. Your lawyer should also give you an estimate of the disbursements. “Disbursements” include the cost of a title search, government charges to register documents, land transfer tax, registry computer access fee, courier charges, photocopies, and certificates.
Land Transfer Tax in New Brunswick doubled effective June 1, 2012 and is an expense to keep in mind so you are not surprised. This is a tax that is paid by the purchaser for any real property in New Brunswick and, like most other disbursements, due on your closing date. The higher the purchase price the more you are going to pay in transfer tax which could get quite expensive.
Other “unexpected” surprises a purchaser should consider in calculating funds needed to buy are oil or propane adjustments which could amount to $200.00 to $500.00, property tax adjustments, and items like surveys (around $550.00 to $1,000.00 or more) or title insurance (around $250.00) required by your lender/mortgage company, which will add hundreds of dollars on your final amount needed to close your purchase that you may not have been expecting.
Usually your lawyer will have you bring in one certified cheque or bank draft on the day before closing payable to your lawyer’s firm “in trust” to include the lawyer’s fees and disbursements and the adjusted balance due to the vendor on closing (“Adjusted?” – see adjustments below). Those funds will be placed in the lawyer’s trust account along with the mortgage advance and will be used to close the deal. Your lawyer should provide you an exact figure before the closing date.
What are adjustments?
The final payment to the vendor is “subject to the usual adjustments.” Here are a few examples of “adjustments”:
Or consider the following which is not strictly an “adjustment,” but is an additional closing cost that may be an unpleasant surprise; you have selected a high-ratio mortgage with mortgage insurance to protect the lender or CMHC fees. The lender/bank then deducts the full insurance premium from the mortgage funds before sending the balance of your mortgage funds to your lawyer to complete the purchase of your property, reducing the available money for closing and your lawyer calling you and telling you a day or so before closing (or sometimes the day of!) that you have an amount of money you need to bring in to close that is around $2,000.00 or so more than you were expecting or planning on.
What is title insurance?
Title insurance is not a substitute for a title search, which your lawyer must perform in any event. The purpose of title insurance is to give you insurance protection for title defects that your lawyer might have missed, and for any other defects that would not normally be revealed by a title search, such as a survey problem, or a technical violation of a zoning by-law. You pay a one-time premium on closing. Title insurance is now generally REQUIRED by most lenders.
Keep in mind though that if you decide to switch mortgage companies or lenders five years down the road when your mortgage is up for renewal you will have to purchase a new title insurance policy to cover the new mortgage company/lender even though you are dealing with the same property.
What is a survey? Do I need one? Who pays for it?
In a real estate purchase, the only “survey” that counts is one signed and sealed by a New Brunswick Land Surveyor, and which shows the boundaries of your property, along with the location of the buildings, fences, and other physical features on that property. If you have retained the surveyor and paid his professional fee, then you have a claim against the surveyor for any inaccuracy. An engineer’s sketch is not a survey, nor is a copy of the subdivision plan.
Usually, the vendor’s only obligation is to give the purchaser a copy of any document in the vendor’s possession, updated by the vendor’s written declaration. For most new construction, and for fairly new resale houses, and for most properties created by severance of an existing building, there is likely some kind of survey document available that may give you helpful information if not complete legal protection. You will have to make an informed decision whether you want the additional expense of a new survey.
You may hear that a survey is unnecessary because of title insurance. This is partly true – if you have title insurance, your mortgage lender will not insist on a survey. But bear in mind that you have a higher personal and legal interest in the property than does your lender. It may benefit you to know exactly where the foundation and fences are in relation to the lot lines – before you buy the house and not after trouble arises, and you discover your garage is sitting halfway across your neighbour’s property and they now want you to move it.
Taking care of your property is made simpler with the help of Meredith Bateman Law Office.