An open discussion on closing costs

Buying a new home or condominium is likely one of the largest financial investments you will make in your lifetime, especially considering today’s prices. On the day you take possession, you should be excited.

Unanticipated closing costs can put a damper on that enthusiasm, so go into your purchase understanding exactly what you will owe, and when. Any salesperson or builder-developer will encourage you to take your Agreement of Purchase and Sale and any other documents you receive to a real estate lawyer so that a professional can advise you of what is expected of you. If you are buying new, be sure you take your documents to a lawyer who specializes in pre-construction real estate. The onus is on the builder to be clear, but in the end, it is your responsibility to do your homework and find out what the closing costs are – especially if you are buying a condominium suite.

Pre-construction knowledge

Your Agreement’s adjustment section will outline your portion of maintenance fees and other important information such as whether HST is included in the purchase price. Pay particular attention to your Tarion Warranty Corp. documents, which include schedules that list all known closing costs and other costs you might be charged for.

You have a 10-day recession period to get your lawyer to place caps on those items. There are some charges the builder may hold firm on; others will work. Therefore, pre-construction knowledge is a must for the lawyer you select. Ask your salesperson to recommend two or three they deal with. It is well worth a couple hundred dollars to ensure that you understand exactly where you stand. Closing costs are heavily regulated, and builders do not make money on those. However, when a statement of adjustments is presented, the builder must justify costs by producing the required documents.

Occupancy fee

Closing costs include a variety of items, such as the balance owing on your deposit. Your enrollment fee for Tarion is another cost, and that is out of the developer’s control. So are charges such as the Land Transfer Tax and utilities hook-ups. If in doubt, ask.

When you buy a condominium, another thing to consider is the fact that when you take possession of your suite, you don’t legally own it until the condominium is registered. Until that happens, you pay a monthly “occupancy fee” to the developer. This fee includes several items, such as your monthly maintenance fee (and remember that convenience is a big reason for buying a condo), your share of property taxes, as well as the interest on your outstanding balance to the builder. Another thing you may be expected to pay up front is an amount toward the condominium corporation’s reserve fund. Again, this ensures your building will be kept in good shape in years to come. Once the building is registered (approved by a Land Registry office), you pay your mortgage provider directly.

An educated buyer is a happy one. Do your due diligence and move into your new home or condo with confidence.