Whether you are considering using our services or the services of another firm, this page should help answer frequently asked questions regarding the cost of a real estate purchase, sale, or refinance, to better assist you in choosing a real estate lawyer. We encourage every client (or potential client) to ask questions regarding how much it costs to buy, sell, or refinance a home—it's a lawyer's job to help you figure that out. We also recommend you read the Ontario Bar Association's "Working With A Lawyer When You Buy A Home" and the Financial Services Commission of Ontario "Understanding Title Insurance."
Disclaimer: This article is not a substitute for legal advice. No action in regards to your particular matter should be taken until you have first sought full legal or professional advice from a lawyer fully retained to act on your behalf.
Why do I need a lawyer?
It is the law, in Ontario, that a licensed lawyer transfer ownership of your home. This law was passed to better protect the public from fraudsters and bad purchase and sale agreements.
What is the cost of buying, selling or refinancing a home?
Every property is different, and so is every real estate transaction—the buyer, seller and financing are different, the property is different. It is this unique set of circumstances that require a similar but unique set of documents and legal analysis, every time, and for every property. Put another way, a home is not a "one-size-fits-all" item, and neither are the legal work associated with it. For example, a property may have an easement (a right for someone else to use the land), or a septic tank and well, instead of municipal services. Despite this uniqueness, real estate lawyers traditionally charge a standard fee to make it simpler for their clients, and to stay competitive with local lawyers who provide a similar level of service. This fee is only part of the cost of buying, selling or refinancing a home.
Clarifying legal Costs
The total cost of a real estate transaction consists of three separate categories: the legal fee, disbursements, and expenses. What you pay the lawyer (the legal fee) is only one part of the total cost. It is the job of a real estate lawyer to help you determine the total cost of your transaction—including, for example, the price of the home, legal fees, disbursements, and other expenses. Below, we break down some of the costs for you into the three categories.
THE LEGAL FEE
The legal fee covers the time the lawyer (and any assistants at the firm) spend on your transaction.
This can include...
- analysis of the offer
- discussions with you (the client) about what you need to do
- collecting your information
- drawing up the documents
- liaising with lenders, lawyers, and other parties
- advising about pending issues as they arise
- checking all the numbers
- communicating with you as the deal progresses
- answering any questions you may have
- meeting with you to sign the final documents
- and more
A disbursement is money the lawyer spends on your behalf. These are also referred to as, "third-party costs." A good analogy for this is, you've bought the car and now you have to pay for the insurance and registration.
These costs normally include...
- government taxes (such as Land Transfer Tax)
- a search of title (the ownership) and registration of title (the new ownership) on the government database
- title insurance (if applicable)
- banking fees for certified funds or wire transmissions
Expenses are additional costs relating to the property.
These can include...
- default insurance (if applicable)
- municipal change of ownership fee
- adjustments for remaining fuel oil and propane (if applicable)
- moving costs
- property inspections
- environmental reports
- land surveys
- tax adjustments between the new and former property owner
- utility connection charges
- lender fees
- lender deductions for insurance fees or pre-paid taxes
- additional costs listed in Tarion™ Schedule B (on new builds)
WHY DO SOME LAWYERS CHARGE A BIGGER OR SMALLER FEE?
Many things can affect a lawyer's fee: the years of experience acquired by the lawyer (more experienced lawyers can cost more), the skill level of any support staff involved in the transaction, the location of the lawyer (Toronto lawyers tend to charge bigger fees, due to higher overhead), and what services the lawyer includes in the fee.
It is important to note that some lawyers may quote a low fee on their website or over the phone, but charge additional lawyer’s fees, later on. Put another way, not every lawyer includes the same services in their fee quotation. For example, some lawyers can charge additional fees for...
- transfer of title
- changes to mortgage documents
- holding money in trust
- direct deposits to clients
- and other services that other lawyers simply include
We encourage you to ask if there are additional lawyer's fees, separate from disbursements and expenses. That is an important conversation to have. For example, you can ask, “Aside from disbursements and expenses, is that the only lawyer’s fee?” As of September 2017, the rules governing Ontario lawyers have changed to prevent advertising fees that are not all inclusive—so Ontario lawyers should no longer advertise fees that do not include all fees for legal services, disbursements, third party charges, and other amounts. In general, you should find that most lawyers who appear to charge a low fee actually charge about the same or more than other lawyers in their community. If you are uncertain about a lawyer's fee, we are happy to help you compare, whether you choose our services or not.
HOW SHOULD I CHOOSE A REAL ESTATE LAWYER?
Some clients prefer a lawyer who works alone (a sole practitioner) who can process their transaction relatively inexpensively. Other clients prefer a lawyer who employs more accessible and highly skilled assistants (extra sets of eyes and ears) who collect and organize client information for lawyer review—which can also reduce costs. Either of the above examples can do a good job. Rather than basing your choice on price (i.e., what services you receive for what cost) we recommend choosing a real estate lawyer who...
- speaks to you personally or calls you back quickly (when you first call about your purchase, sale, or refinance)
- has experience processing transactions like yours
- teaches you about the legal process
- has a good reputation for practising real estate law in your community
- and has not been subject to any disciplinary orders or prosecutions by the Law Society (published orders can be found here)
Whether you plan on using our services, or that of another firm, if you have more questions about fees or about the purchase, sale, or refinancing of your property, please do not hesitate to contact us.