It is too often that we get clients who are closing the purchase or sale of their home in Alberta and are surprised to find out that they did not budget for all their real estate closing costs.
Nothing is more stressful than finding out you have to scramble to come up with more money for your closing. Nobody likes surprises. That’s why we are always aiming to educate our clients and partners early in the home buying or selling process.
If you are buying or selling a home in Alberta, here are some of the real estate closing costs you may encounter:
Legal Fees
In Alberta, you will need a lawyer to close your Real Estate transaction. Legal fees can range from $800 - $1500 and can sometimes include or exclude disbursements (expenses incurred by the lawyer, which are typically passed on to you such as couriers, search costs or other fees).
When comparing legal fees, ask for an estimate of total fees you can expect to pay for your closing, including disbursements.
At Deeded, we can connect you with one of our friendly, independent real estate lawyers, who offer a flat fee for closings.
Adjustment Fees
Say you are buying a home, closing in July and the seller has prepaid their full property taxes for the full calendar year. In this situation, your lawyer “adjusts” the taxes so that you (as the buyer in this example), would owe a pro-rated portion of the expense to the seller.
Typical adjustments happen for property taxes, condo/strata fees, or any other fees that may have been pre-paid or unpaid by the buyer or seller.
It is important to always budget for adjustments as they can increase your real estate closing costs.
Land Titles Fees
The cost of transferring land title in Alberta is set by the Land Titles Act and charged by the Alberta Land Titles Office. It is paid for by the purchaser of the property on closing.
This fee is calculated based on the value of the property and the mortgage funds borrowed and can be several hundreds of dollars.
Real Property Report (RPR)
A Real Property Report (RPR) is a legal document that clearly illustrates the location of significant visible improvements relative to property boundaries. A seller will typically have to obtain an RPR as a condition of their sale.
The amount of work (and cost) to prepare a Real Property Report varies between properties. Lot size and shape, number of buildings, natural features, age and availability of the property boundary information all affect the cost.
Estoppel Certificate Fees
You need this certificate to purchase a strata unit or a condominium in Alberta. The estoppel certificate typically costs around $200 and shows you if outstanding interest is due from the previous owner, or if there are any unpaid condo contributions or interest that is due.
Title Insurance
Title insurance protects you from unknown title defects (title issues that prevent you from having clear ownership of the property). For example, existing liens against the property’s title , encroachment issues (e.g. a structure on your property needs to be removed because it is on your neighbour’s property), and Title fraud.
Title insurance is often recommended, but is optional. The cost of a title insurance policy in Alberta can range from $200 and up, depending on the value of your property and could be a worthwhile investment for peace of mind.
Property Insurance
If you are borrowing money for your home, your lender will typically require that you have a certain level of insurance coverage on your home and ask for proof of insurance (also known as an insurance binder), prior to closing. Without insurance, a lender will typically not advance the mortgage funds to the lawyer.
It is a good idea to call your insurance broker and shop around a few weeks prior to closing.
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