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Whether you're a first time home buyer or this isn't your first rodeo, the process of buying a home can be intimidating. There's a lot of jargon and a lot of legalese, but the most daunting question of all is:
How much is this going to cost me?
Fair question. You've worked hard to save the money for a downpayment on a house - now it's time for you to take the plunge and you're worried about surprises.
To make the whole process a little bit less intimidating, we've broken down the fees associated with a real estate transaction (from the buyer's side) so you can have an idea of how much the whole deal will actually cost.
Let's handle this with a case study.
Buyers: Linda & Greg
Linda and Greg are a young couple who just moved back from Alberta to start a family in Cape Breton. They found a perfect house in Sydney River (for $200,000) and already have plans for a fence for the dogs. They've saved to buy the house and only need a mortgage for $75,000. Let's say, for the sake of this post, that there was no adjustment made to the original purchase price. Linda and Greg's fees on the transaction (on top of the purchase price) will be:
Deed Registration Fee ($100)
When you buy a property you receive a deed from the seller. It's your lawyer's job to register the deed on the parcel register (an online system for all things land and property in Nova Scotia); the province charges a fee of $100 for registering a deed.
Deed Transfer Tax (1.5% of the Purchase Price)
In the CBRM the deed transfer tax is 1.5%. This is money collected from your lawyer when your lawyer registers your deed. On a $200,000 purchase this would be $3,000. There are some exemptions to this, but that's for another post.
Mortgage Registration Fee ($100)
Just like registering the deed in the online system, the province charges a fee of $100 to register your mortgage. Registering the mortgage is the responsibility of your lawyer and is required by your lender as a condition of providing the money for the purchase.
Title Insurance (Starting at $200) or Survey (Starting at $1,000)
Your lawyer will also recommend obtaining either title insurance or a survey of your lot. Title insurance protects you from certain defects with your land which could arise after the sale. A survey is prepared by a qualified Nova Scotia Land Surveyor and (most of the time) is preferable to title insurance because you can deal with problems proactively, rather than after you've already purchased the land. Your lender will require either title insurance or a survey to make sure they're covered in the event the land is something other than what everyone thought.
Legal Fees ($900 to $1,200 + HST)
Of course there are legal fees and of course they range. They range based on the lawyer and on the nature of the transaction. Ultimately, it's best to find a lawyer who is experienced with property transactions and who is attentive to your needs. This is likely the biggest transaction of your life.
Here's the total breakdown for Linda and Greg:
If I were representing Linda and Greg in this transaction, I would contact them ahead of time to let them know the final amount I needed from them in order to close. In this case, that would be $129,830.00 ($204,830 minus $75,000 in mortgage funds). If they obtained a bigger mortgage with a smaller down-payment the picture would look a bit different.
As you can see, the fees for Linda and Greg add up to $4,830.00. Most of that is the $3,000.00 Deed Transfer Tax owing to the municipality. You can see how Linda and Greg, as new home buyers might be surprised by these fees. When it comes to finances it's good to be prepared, especially when you're buying a home.
If you're selling a home, the fees are very different. We'll cover the fees associate with the sale side of a real estate transaction in another post.
How much is this going to cost me?
Fair question. You've worked hard to save the money for a downpayment on a house - now it's time for you to take the plunge and you're worried about surprises.
To make the whole process a little bit less intimidating, we've broken down the fees associated with a real estate transaction (from the buyer's side) so you can have an idea of how much the whole deal will actually cost.
Let's handle this with a case study.
Buyers: Linda & Greg
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| Linda & Greg - aren't they cute. |
Deed Registration Fee ($100)
When you buy a property you receive a deed from the seller. It's your lawyer's job to register the deed on the parcel register (an online system for all things land and property in Nova Scotia); the province charges a fee of $100 for registering a deed.
Deed Transfer Tax (1.5% of the Purchase Price)
In the CBRM the deed transfer tax is 1.5%. This is money collected from your lawyer when your lawyer registers your deed. On a $200,000 purchase this would be $3,000. There are some exemptions to this, but that's for another post.
Mortgage Registration Fee ($100)
Just like registering the deed in the online system, the province charges a fee of $100 to register your mortgage. Registering the mortgage is the responsibility of your lawyer and is required by your lender as a condition of providing the money for the purchase.
Title Insurance (Starting at $200) or Survey (Starting at $1,000)
Your lawyer will also recommend obtaining either title insurance or a survey of your lot. Title insurance protects you from certain defects with your land which could arise after the sale. A survey is prepared by a qualified Nova Scotia Land Surveyor and (most of the time) is preferable to title insurance because you can deal with problems proactively, rather than after you've already purchased the land. Your lender will require either title insurance or a survey to make sure they're covered in the event the land is something other than what everyone thought.
Legal Fees ($900 to $1,200 + HST)
Of course there are legal fees and of course they range. They range based on the lawyer and on the nature of the transaction. Ultimately, it's best to find a lawyer who is experienced with property transactions and who is attentive to your needs. This is likely the biggest transaction of your life.
Here's the total breakdown for Linda and Greg:
If I were representing Linda and Greg in this transaction, I would contact them ahead of time to let them know the final amount I needed from them in order to close. In this case, that would be $129,830.00 ($204,830 minus $75,000 in mortgage funds). If they obtained a bigger mortgage with a smaller down-payment the picture would look a bit different.
As you can see, the fees for Linda and Greg add up to $4,830.00. Most of that is the $3,000.00 Deed Transfer Tax owing to the municipality. You can see how Linda and Greg, as new home buyers might be surprised by these fees. When it comes to finances it's good to be prepared, especially when you're buying a home.
If you're selling a home, the fees are very different. We'll cover the fees associate with the sale side of a real estate transaction in another post.
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| This post was written by Anna Manley. If you'd like to contact Anna you can send her an email: anna@manleylaw.ca |
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| Click on the image to view full size infographic. |
Welcome to the 2018 Manley Law Real Estate Update. We do this every year to ensure our clients have a good idea of the housing trends on the island.
As of April 2018 there were 531 houses listed for sale in Cape Breton. That's down from 663 this time last year.
Of the houses currently listed, the least expensive was being offered for $19,000, while the most expensive home listed for sale was priced at $1,200,000.
The average price of a residential home in Cape Breton was $128,000 in the last quarter of 2017 - that's a 4.3% increase from the same time in 2016. The Average price for Nova Scotia is currently $240,000 and the average price for Canada is $494,309.
Residential home sales in Cape Breton increased 3.7% in the last quarter of 2017, compared with the fourth quarter of 2016. Compare that to the average increase of 9.1% for all of Nova Scotia.
In 2017, 2,808 people moved to Nova Scotia from other provinces - an increase of 11.4% from 2016. International immigration added 900 people to the province.
Pretty interesting stuff.
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| This post was written by Anna Manley. If you'd like to contact Anna you can send her an email: anna@manleylaw.ca |
Who doesn't like pie? If you own the family cottage with your siblings or other family members it's probably more like a pie than you think. Looking at your deed you might see something like this:
Peter MacKenzie, of Sydney, Nova Scotia
-and-
Paul MacKenzie, of Sydney, Nova Scotia
-and-
Mary MacDonald, of Iona, Nova Scotia
AS JOINT TENANTS AND NOT AS TENANTS IN COMMON
What does "Joint Tenants" mean?
What does "Tenants in Common" (the other alternative) mean?
These are two different way people can own property (also known as "hold title"). One means the whole pie - shared. The other means separate pieces of the pie.
Let me unpack that.
Imagine the cottage as a whole pie.
If you own your property with other people as Joint Tenants is means you have an un-divided interest in the property. What does that mean? In the case of Peter, Paul, and Mary it means they each own the whole thing, but they own it together. They each have an un-divided one-third interest. Their pie would be undivided. Peter can't sell his interest in the property as a separate piece and the property can't be sold without Peter's signature.
Joint Tenancy also carries with it the "right of survivorship" - meaning if Peter dies tomorrow, Paul and Mary automatically inherit his interest in the property without the need to use Peter's will (if he even has one). Due to the right of survivorship, in the context of the family cottage, and in other cases as well, Joint Tenancies can be used as and estate planning measure to avoid the cottage being included in a deceased person's estate (i.e. to avoid probate fees).
Tenants in Common on the other hand means each of the owners of a property have their own separate interest. In the case of Peter, Paul, and Mary, if they held the property as Tenants in Common, instead of Joint Tenants, they would each have a separate one third interest in the cottage. Their pie would look like this:
Mary can even sell her interest to anybody she wants. If Mary dies tomorrow her interest in the property is handled by her will (if she had one) and her heirs will receive her share of the cottage. This means, over time, cottages can end up with many owners. Imagine Mary died leaving her cottage interest to her three children as Tenants in Common and they each had three children , leaving their respective interests to their children as tenants in common. Assuming Peter and Paul are still alive after all this, the pie would look something like this:
Which is why most people try to keep things simple by giving the cottage to their children as Joint Tenants. This strategy doesn’t always work. Families have unique dynamics and leaving the family cottage to your children as Joint Tenants is not a one size fits all solution. You need sound advice to determine what's best for you and your family.
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| This post was written by Anna Manley. If you'd like to contact Anna you can send her an email: anna@manleylaw.ca |
