What do you have to pay?
Closing costs are separated into two parts; the buyer and the seller. The seller pays the commission, but the commission is not considered a closing cost. A closing cost includes the legal fees and disbursements from the lawyer, his base fee plus disbursements, courier cost and so on. There will also be tax adjustments.
In Calgary, property taxes are due June 30th, every year. When you pay on June 30th, you’ve actually paid for the past six months and for the next six months. Therefore, if you sell your home during the first six months of the year, and then the closing is on say, May 30th, you, as the seller, actually owe the new buyer 5 months’ worth of taxes.
If you sell your home after June 30th and the possession is October 1, you, the buyer, pay three months taxes (for October, November & December) to the seller. This results in a tax adjustment that can be fairly high.
Real Property Report
The seller is responsible for the real property report as well. That’s a pretty hefty bill these days. The Real Property Report used to be called a Survey Certificate and is supplied by a surveyor. This report reflects the property and improvements to the land or the lot, where the buildings are situated and that they are situated properly to comply with city bylaws.
For instance, in most situations, a side yard has to be 1.2 meters from your home's foundation. The Real Property Report will reflect that. This report, which is paid for by the seller, costs between $575 and $650 and maybe more depending. An additional $100 is charged for a stamp of compliance through the City of Calgary. While there are slight variations in what the surveyor charges, the $100 charged by the City of Calgary is a fixed cost, with no flexibility.
In addition to tax adjustments and real property reports, sellers must be very cautious of mortgage payout penalties. Penalties aren’t really considered closing costs, but it’s good to be aware that sometimes an unexpected payout penalty on a mortgage occurs for discharging the mortgage prior to its maturity date.
That sums up the closing cost for sellers.
Closing Costs for Buyers
Buyers have to pay the Lawyers base fee plus disbursement costs for the lawyer. There are also a couple of additional costs for land registration, registration of the mortgage for the bank, protection on the security, and any potential tax adjustments. Remember that the tax adjustments can be in the buyer’s favour, or against it, depending on whether the home possession is before or after June 30th.
For more information contact Tom Waller at 403.803.5151