FREQUENTLY ASKED QUESTIONS

YOU'VE JUST SIGNED A PURCHASE AGREEMENT, NOW WHAT?

Preparing for closing could be overwhelming. We've prepared a general checklist to help you:
(1) Estimate how much you will need to prepare for your purchase closing (see below)
(2) Contact your banker or mortgage broker to ensure that your mortgage is approved as soon as possible (if you require a mortgage)
(3) Double check to ensure the information on your purchase agreement are accurate (e.g. the name(s) on the agreement match(es) your I.D.)
(4) Contact your insurance broker to ensure your insurance will be active on closing
(5) Contact your lawyer (preferably Simplus) to act on your behalf
(6) Follow-up with your banker or mortgage broker - from our past experiences, mortgage approval delay is one of the top causes for delay in purchaser's closing

HOW MUCH MONEY DO YOU NEED TO PREPARE FOR YOUR PURCHASE CLOSING?

We will let you know exactly how much you will need for your day of closing. Your closing amount will depend on many factors which may take time for third parties to produce. We will always estimate a ballpark for you upon request. To estimate yourself, you need to consider:

ADD: Land Transfer Tax - see below for Land Transfer Tax calculation
ADD: Adjustments - (i) if resale, adjustments are normally up to your proportionate share of property tax and condo fees; and (ii) if new construction, adjustments are normally defined in your purchase agreement
ADD: Legal Fees and Disbursements - we will let you know how much this is when you ask us for a quote
MINUS: Deposits - please always double check to ensure the deposits you paid matches the amount stated in the purchase agreement
MINUS: Mortgage Amount - it is important to ask your banker for the amount we will be receiving on closing as banks sometimes deduct their fees from the mortgage amount (e.g. appraisal fees, Canada Mortgage and Housing Corporation (CMHC) Insurance premium for high ratio mortgages, etc.)

WHAT IS TITLE INSURANCE AND IS IT MANDATORY?

Generally, title insurance is an insurance that protects insured property owners and their lenders against losses related to the property’s title or ownership. Title insurance is not a replacement for legal advice.

During the professional closing process, our lawyers will review the scope of coverage offered by a title insurance policy. It is important to note that as with all insurance policies, not all claims have pay-outs.

Our lawyers will also discuss with you the advantages and disadvantages of title insurance compared to a solicitor’s opinion for protecting marketability of title for your property.

Title insurance is not mandatory in Ontario and purchasers may also choose to rely on a solicitor’s opinion. Depending on your transaction, a solicitor’s opinion will likely require additional searches or surveys. Kindly note that there may be additional costs for obtaining such searches and additional legal fees for the solicitor's opinion on the searches.

If you will require a solicitor’s opinion for closing, we will need you to inform our office well in advance to allow us sufficient time to address your request. We encourage you to contact our office to discuss any questions you may have on options to protect the marketability of title.

WHAT INFORMATION DO YOU NEED TO GIVE YOUR LAWYER TO GET YOU STARTED?

Copy of the Agreement of Purchase and Sale
Copy of the MLS listing
Full legal names and date of birth of all purchasers that will take title on closing (make sure they match your photo I.D.)
Whether or not you are a first time home buyer (let us know if any of the purchaser(s) have owned property anywhere in the world)
Whether or not the purchaser(s) are spouses and whether or not the property will be occupied with your spouse
Whether or not any of the purchasers are Canadian Citizens or Permanent Residents
Any surveys or plans provided to you by the seller

YOU HAVE RETAINED US TO HELP YOU COMPLETE YOUR CLOSING, WHEN WILL YOUR APPOINTMENT BE SCHEDULED?

Before we can prepare your closing documents, we will require several items from third parties. For example, if you are purchasing, we will require your mortgage provider to provide us with instructions and the amount of the mortgage advance. If you are selling, we will require your mortgage provider to tell us how much is required to pay-out your mortgage.

As soon as we have all required items, we will contact you to set up an appointment.

Kindly follow-up with your mortgage professional on when instructions can be provided to your lawyer (if you are purchasing or refinancing).

Please let us know at your earliest convenience any special requirements for your signing appointment (for example if you are leaving the country before closing) and we will do our best to accommodate.

HOW MUCH WOULD TITLE INSURANCE COST APPROXIMATELY?

For properties (in Ontario) valued under $500,000, Title Insurance generally costs a one time premium of:

Non-Condominium: $350 + HST (approx.)
Condominium: $200 + HST (approx.)

Excess Title Insurance for properties valued over $500,000:

Approximately $100 for every $100,000 property value over $500,000

FCT (First Canadian Title) Costs:

Example for $800,000 Detached House:
- $350 + [ ($800K - $500K) / $100K ] x $100 = $ 650 + HST
Example for $600,000 Condo:
- $200 + [ ($600K - $500K) / $100K ] x $100 = $ 300 + HST

HOW DO I CALCULATE LAND TRANSFER TAX?

Ontario Land Transfer Tax applies to all Ontario properties including Toronto. Tax rates are based on the value of the consideration:

0.5% of amounts up to and including $55,000
1.0% of amounts exceeding $55,000 up to and including $250,000
1.5% of amounts exceeding $250,000 up to and including $400,000
2.0% of amounts exceeding $400,000 up to and including $2,000,000
2.5% of amounts exceeding $2,000,000

In addition, if your property is in Toronto, the following Toronto Land Transfer Tax also applies (on top of Ontario Land Transfer Tax). Tax rates are based on the value of the consideration:

0.5% of amounts up to and including $55,000
1.0% of amounts exceeding $55,000 up to and including $400,000
1.5% of amounts exceeding $250,000 up to and including $400,000
2.0% of amounts exceeding $400,000 up to and including $2,000,000
2.5% of amounts exceeding $2,000,000

YOU ARE A FIRST TIME HOME BUYER, DO YOU GET ANY BENEFIT IN RELATION TO LAND TRANSFER TAX?

Provincial Land Transfer Tax Rebate:

Provincial Land Transfer Tax is payable anywhere in Ontario (including Toronto)
Maximum first-time buyer rebate is $4,000.

Toronto Land Transfer Tax Rebate:

Toronto Land Transfer Tax is payable only for properties in the City of Toronto.
Maximum first-time buyer rebate is $4,475.

Requirements:

You cannot have previously owned a home, or had any ownership interest in a home, anywhere in the world, at any time.
If you have a spouse, the spouse cannot have owned a home, or had any ownership interest in a home, anywhere in the world, while he or she was your spouse. If this is the case, no refund is available to either spouse.
You must be at least 18 years of age.
You must occupy the home as a principal residence no later than 9 months after the date of closing.

YOU ARE A FIRST TIME HOME BUYER AND YOU HAVE SOME RRSP SAVINGS, CAN YOU USE SOME OF YOUR RRSP SAVINGS TOWARDS THE PURCHASE OF YOUR HOME?

Up to $35,000 per person can be withdrawn tax-free from RRSPs to buy or build a principal residence. Couples, including common-law, will be able to withdraw up to $70,000.

Requirements:

You have to intend to occupy the qualifying home as your principal place of residence no later than one year after closing.
You have to meet the first-time buyer’s condition. You are not considered a first-time home buyer if you or your spouse owned a home that you occupied as your principal place of residence in the past 5 years.
Your RRSP contributions must remain in the RRSP for at least 90 days before you can withdraw.
Neither you nor your spouse can own the qualifying home more than 30 days before the withdrawal is made.
You have to be a resident of Canada.
You have to receive all withdrawals in the same calendar year.

Repayments:

A 15-year repayment period will begin in the second calendar year following the calendar year in which the withdrawal is made. In addition, a qualifying home must generally be acquired before October 1 of the calendar year following the year of withdrawal. For example, those making withdrawals under the plan in 2019 will have until October 1, 2020 to acquire a qualifying home and their first annual repayment will be due by the end of 2021 or the first two months of 2022.

WHAT IS A FIRST-TIME HOME BUYER'S TAX CREDIT?

A First-Time Home Buyers’ Credit (FTHBC) provides a 15% credit on a maximum of $5,000 of home purchase costs (e.g. legal fees, land transfer taxes, etc.), meaning maximum tax relief of $750.

Requirements:

You will be considered a first-time home buyer if neither you nor your spouse or common-law partner owned and lived in another home in the calendar year of the home purchase or in any of the four preceding calendar years.

WHEN WE SAY FEES AND DISBURSEMENTS, WHAT ARE DISBURSEMENTS?

Disbursements are out of pocket expenses our firm incurs while completing your closing. Most transactions contain disbursements such as: title searches (not applicable for sale transactions), couriers, conveyancing, bank charges, law society transactional levies, etc.

Some less common but potentially necessary disbursements include corporation searches, property compliance letters, execution letters, etc.

These FAQs are not intended to be a complete statement of the law or an opinion on any subject. While some effort has been taken to ensure the accuracy of the information and tools, no one should act upon them without thorough examination of the law after the facts of a specific situation are considered.
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