Other expenses you’ll be paying at closing.
Hopefully you haven’t suffered a heart attack after reading my previous blog about how much LTT you’ll be paying upon the purchase of your property.
… the inconvenient truth is that there are other expenses to pay when you purchase, as well. Gulp.
Handy Things You Should Keep In Mind (And Tell Your Real Estate Lawyer)
Utilities. Gas. Hydro. Water (don’t forget about the hot water heater). Cable/phone/internet. You know… all the important stuff. YOU (the buyer) are responsible for setting all these up (not your lawyer). Call each provider well ahead of time and be prepared to tell them your move-in date and the address of your new property. This way, they know when to turn everything on and from when to bill you (i.e. so you don’t get billed for before you moved in). If you want to keep the same provider, you will still need to update them on your change of address.
And speaking of change of address, it is best to let the post office know to forward your mail accordingly. And your employer(s). And everyone/every service you use so bills, important notices, etc. don’t keep getting mailed to your old address. Driver’s license should get updated, too. The government does like to know where you live…
In the final documentation the “reporting package”, you receive from the lawyer’s office after your property has closed, you will see a sheet entitled “Statement of Adjustments”. Basically, this list of expenses outlines where slight changes in expenses owing were made, and who was paid what, when. As most closings do not fall exactly at the end of the month, partial monthly expenses must be calculated based on how far into the month services were used by the seller before they vacated. One example would be that, if someone took possession of a property on the 10th of the month, they would be responsible for the property taxes from the 10th to the 30th of that month (i.e. 20 days’ worth, or 2/3rd of the month); therefore, they would owe 2/3rd of the cost of property taxes for that month.
This proportional method of calculating closing costs based on date of possession would apply to pretty much everything (i.e., like a condo fee or how much oil is left in a propane tank).
And on the subject of property taxes, will you be paying them directly to the City or as blended into and through your mortgage? Be clear on this. Best to ask your financial institution.
Again, this is calculated based on the purchase price of the property (i.e., more expensive properties pay more).
Title insurance ensures nobody else can lay claim to ownership of the property. That’s a big deal. In fact, it’s so important that most financial institutions will not lend mortgage funds (i.e., protect their interests) unless the buyer has Title Insurance. Other pesky items that Title Insurance addresses include well and/or septic tank issues and rights-of-way (i.e., easements) that may run along or across the property in question. Again, it’s always best to know what you’re getting into before you sign on the dotted line.
And after spending so much time, effort and money in the house hunt, why not protect yourself for so little (often less than $1000)?! If a major bank thinks it’s a good idea, you should probably think it’s a good idea, too.
Other Sticky Situations
Please be mindful to let your real estate lawyer’s office know if:
- You are not married but in a common law relationship OR
- you are “divorced” but really just separated
Also, note that if only one person is on title, other spouse will still have to consent to refinance (or to sell) the marital home.
Just saying. No sneaking one past the goalie, there. Again, clarify everything with your lawyer.