Provincial Budget Affects Closing Costs
Monday, May 4th, 2015
Image Credit: Calgary Herald
Just over a month ago the provincial budget was released and now that citizens have finally had the time to sift through the comprehensive report, there is a new awareness of how it will affect personal financial choices. From the perspective of the real estate market, the largest impact will be seen in land title fee increases.
This will affect buyers most directly in terms of closing costs. Additionally, homeowners looking to refinance will also be hit by these additional fees. As explained by DBB LLP land title fees are part of the larger category of disbursement fees, as distinct from the actual legal fees. Disbursement fees are the hard costs incurred by the law firm as result of the real estate transaction. This makes the government fee less than immediately apparent, and a careful review of cost breakdowns may be necessary. Obtaining and transferring land titles is an integral part of a real estate deal, as well as legally necessary, therefore there is no means of avoiding this new government incurred expense.
Though the fee hike is not immediate, it will come into effect on documents registered on or after July 1, 2015, approximately 90 days after the budget announcement which, in real estate terms, will come up quite quickly.
It is important to note these dates are not impacted by possession date, only registration date is a factor.
As of July 15th the variable fee will increase from $1.00 to $6.00 while the flat fee (for land title and mortgage registration documents) will increase to $75.00 from a previous $50.00. These numbers appear to be quite negligible, especially as an additional cost on a property deal worth hundreds of thousands of dollars. However when applying these increases to examples, the additional costs become immediately apparent:
A summary of cost impact courtesy of DBB LLP Law.
For potential buyers, or owners considering refinancing, this fee hike could be seen as a motivator to move quickly on a decision as there is still ample time to close a deal before the deadline arrives. However, due to increased activity in the summer months, as much time as possible is necessary for lawyers and the land title office to complete registrations within the time frame.
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