When getting ready to sell a house, your mind is filled with thoughts of renovations and boxes. In the midst of planning your next steps, there’s one thing you can’t forget about, and that’s the business side of the transaction.

You’re likely aware that there are seller closing costs before your sale can officially proceed. Real estate commissions typically take centre stage as they are usually the highest fees associated with selling a house.

Legal costs can also be significant depending on the complexity of the transaction. In this post, we’ll explore the legalities of real estate in more detail.

An accurate, unbiased assessment is the foundation of your effective home-selling strategy. Start by booking your complimentary home evaluation with our experts.

Typical Lawyer Fees for Closing

It’s hard to pinpoint an exact dollar figure on what to expect when selling your house because every law firm sets its own prices. There is no set schedule in Ontario, and every transaction has its nuances.

If all goes well, and it usually does, you might be looking at approximately $1,000 to $2,000 in total. This fee covers the lawyer’s base rate plus any disbursements on your behalf. Since this is considered a service under Ontario’s tax code, add another 13% in HST to the final bill.

If complications arise, all bets are off. These could include unresolved liens against the property, a private mortgage, a tenant who doesn’t wish to leave or a spouse who doesn’t want to sell.

Any of these issues can certainly bog down the closing process. Complications also lead to higher legal fees, but fortunately, most transactions are relatively straightforward.

Home sellers in Ontario should always have an understanding of the legalities of a transaction. The posts below can help:

• What’s in Your Listing Agreement?
• What Does Sold Conditional Mean?
• Conditions & Clauses on a Real Estate Purchase

Do You Need a Lawyer to Sell Your House?

In Ontario, you must have a real estate lawyer to close the transaction. The reason is that the Land Registry Office uses the Teraview system, and only legal professionals have access.

Working with a skilled real estate lawyer can also make the difference between a home sale that goes off without a hitch and one that is non-stop headaches. For example, imagine there’s a lien on your property that you don’t know about. It can haunt you later when you’re trying to acquire a new mortgage or sell another property.

A lawyer with a sharp eye verifies a clean title that is essential to the seamless transfer of ownership. How do you spot a true professional? Clear, consistent communication is one sign to watch for.

In addition, modern real estate transactions are almost 100% digital. Needless to say, your lawyer should be up to speed with the latest technology. If in doubt, ask your real estate agent for a referral.

Selling your house successfully begins with preparation. The posts below can help you get results:

• Worth It or Not? What Renovations Really Help When Selling Your Home
• How to Prepare Your Home for a First-Time Buyer
• Minor Upgrades, Maximum Results

Who Pays Lawyer Fees When Selling a House?

Both the buyer and the seller must have their own legal representation to close the transaction. To avoid conflict of interest and ensure a fair outcome, both parties should never use the same lawyer.

The buyer’s lawyer will protect their client by ensuring a clean title, reviewing the Agreement of Purchase and Sale (APS) and arranging for title insurance.

The seller’s lawyer will run a title search, prepare a statement of adjustments, close off your mortgage and handle anything that might interfere with the transfer of ownership. On closing day, they also take care of the most important part: making sure you get paid as agreed by your buyer.

Generally speaking, you will pay your lawyer and the buyer will pay theirs, unless otherwise stated in the APS. There can be some rare exceptions.

• If the market is slow, a seller can entice a buyer with “closing credits.” They don’t necessarily pay the buyer’s lawyer directly, but they might agree to a small concession on price to help cover the costs.
• In rare situations, the buyer might cover some of the seller’s legal fees to make their offer more appealing.

Most of the time, selling a house is a straightforward process. What if it’s not? You can find more in-depth guidance for anything you are facing in Challenges of Selling Your Home & How to Overcome Them.

Other Seller Closing Costs You Should Know

Some other closing costs sellers should be aware of include:

A mortgage discharge fee is a flat rate you pay just to have the lender’s name removed from your title. It can be a few hundred dollars.

Depending on the terms of your mortgage, penalties can add up substantially. Breaking a fixed-rate mortgage can be expensive, as the lender will recoup their lost revenue by charging either three months’ interest or the Interest Rate Differential (IRD), whichever is greater. The IRD can be steep, especially if interest rates have decreased since your contract began.

The penalty for breaking a variable-rate mortgage is typically capped at three months’ interest. One of the duties of your real estate lawyer is to check all calculations to ensure you don’t get overcharged by the bank. If you plan to buy another home, you may also be able to port your mortgage so you don’t have any penalties at all.

Setting aside at least 5% of the total selling price should allow you to comfortably cover your closing costs. This includes any agreed-upon real estate commissions, legal fees and other charges and incidentals.

Closing costs may seem high, but the best way to manage them is to make sure you prepare and price your home so that it earns the highest possible amount in the market. A successful cushion leaves room in your budget and allows you to comfortably move on to whatever comes next.

Do you want to talk strategy when selling your home in today’s market? Our top agents in Hamilton & Burlington can help you get the results you need. Reach out today with any questions you have, or call 905-332-9223 to connect with our office.