Real Estate Lawyer Toronto | LD Law | Property Law (2024)

Closing costs are an umbrella term for different legal fees and expenses paid on closing. They refer to closing adjustments including prepaid property taxes, maintenance, as well as, Land Transfer Taxes, legal fees, disbursem*nts and HST. Closing costs do not have a precise definition and will differ depending on the real estate transactions.

The fees included in closing costs vary widely per the nature of the real estate transactions. For example, some fees apply when buying or selling a new home, e.g., builder adjustments such as paving, Tarion warranty and the cost of tree planting, are not typically included in a resale home. Some of the most common closing costs in the real estate law include:

• Land transfer tax

• Legal fees

• Home inspection fee

• Property appraisal fee

• Title search and insurance

• Prepaid taxes and insurance

• Prepaid maintenance for the closing month (for condos)

The buyer pays the closing costs, at the time of closing. This cost is then added to the payable total. Your Toronto real estate lawyer fees and disbursem*nts will be added to it as well. The land transfer taxes will be paid by your real estate lawyers to the Province and the other closing costs will likely be paid to the seller with your real estate lawyer Toronto retaining the money that is payable to him on account of fees, expenditures, and HST.

There are usually no ‘closing costs’ in a refinance transaction, other than legal fees and disbursem*nts, which would be payable to your real estate lawyer. In some circ*mstances, your lender may require pre-payment of property taxes for the full year.

The buyer usually pays the closing costs in a real estate transaction, whether on a commercial or residential property. The total closing costs are added to the property's price and are payable on the closing day. Your lawyer then disburses the closing costs to the relevant parties; for example, the land transfer tax is paid to the province and the tree planting costs to the seller. Legal fees and all other disbursem*nts costs are typically included in the closing costs, which means that your lawyer will retain their fee after completing all other payments.

In some cases, sellers can agree to pay a percentage of the closing costs.

If you're purchasing your property in cash, you will still have to pay closing costs. However, the closing costs might be a little less as you won't have to pay any of the loan-related fees.

This cost varies from builder to builder but excludes the Land Transfer Tax. Homebuyers in the City of Toronto pay Municipal Land Transfer Tax (“MLTT”) in addition to the Ontario Land Transfer Tax (conditions apply). The MLTT follows the same rate structure as the provincial tax. First-time homebuyers do get a rebate. It would be reasonable to set aside at least 1.0% of the purchase price on account of closing costs (excluding Land Transfer Taxes).

Whether paying cash or purchasing with a mortgage does not change the closing costs. The only cost that may change is that the expenditures with the experienced Toronto real estate lawyers maybe a couple of hundred dollars smaller.

Closings costs differ depending on the residential real estate transaction. A builder might include costs of- tree planting, property tax adjustments, extension fees, etc. Not all builders charge the same amount of closing costs. Closing costs do not apply to homes for resale.

Closing costs are normally limited to an adjustment in respect of any prepaid property taxes, fuel oil tank (if any), and prepaid maintenance for the month of closing, in the case of condos. Closing costs will include your real estate lawyer Toronto fees and expenditures.

A CAP rate is a type of ‘rate of return’. In simple terms, a cap rate is an estimate of annual net rents (excluding financing costs) divided by the price paid for the property. There are other forms of ‘rates of return’. Financing drastically alters the rate of return. Cheap financing is a source that greatly increases the rate of return whereas expensive financing (i.e., high-interest-rate loans) results in a lesser return.

Since an individual's ability to finance the property differs depending on individual circ*mstances, all transactions become even by eliminating financing as a factor and comparing the value of the properties as if they were purchased for ‘cash’ (i.e., without financing). This enables a better comparison of prices between different properties and helps in evaluating a property’s potential. CAP rate is inversely proportional to price.

Market participants need only refer to a CAP rate. A higher CAP rate is more beneficial to the owner than a lower CAP rate, and thus a purchaser wishes to buy at a HIGHER CAP rate and a seller wishes to sell at a LOWER CAP rate. The lower the CAP rate the greater the price must be.

The costs of refinancing your mortgage are not really closing costs since you are not selling or buying a home. The refinancing costs include legal fees, appraisal fees, mortgage registration fees, mortgage discharge fees, and more.

When buying a new real estate property, a purchaser should be ready to incur closing costs ranging from 1.5% to 4% of the property purchase price. New home buyers pay the builder's costs (paving, tree planting, etc.)in addition to legal fees, land transfer tax (LTT), and disbursem*nts. In Toronto, buyers incur a municipal land transfer tax (MLTT) in addition to the Ontario LTT. Note that first-time homebuyers may qualify for government rebates.

Capitalization rates, also referred to as Cap rates, are measures utilized in commercial real estate to estimate and compare rates or returns expected to be generated by similar real estate investment properties. A property's cap rate is generated by dividing its net operating income (excluding financing costs) by the current market value (its price) and is expressed as a percentage. The net operating income is determined by deducting all the expenses for managing a property from the total annual return.

Cap rates have an inverse relationship to the property value, i.e., the lower the cap rate, the higher the property price and vice versa.

Although other measures are used to indicate a property's investment strength/risk, CAP rate is the most vital property metric for estimating potential return and profitability.

Mortgage refinance is the process of paying off the current mortgage on your home and replacing it with a new one. It is done when a homeowner wants to change certain details of their mortgage. The new mortgage can provide lower interest rates, a shorter term, higher mortgage balance, adjusted pricing from variable to fixed (or vice versa) or allow you to tap into your home equity.

The time taken to refinance a mortgage in Ontario varies widely. However, on average, it takes between two to four weeks to complete the whole process. The time taken is generally dependent on how prepared the homeowner is and any hurdles experienced in any step of the process. For example, delaying your appraisal can affect the time taken to refinance your mortgage.

Before you start the process of refinancing your mortgage, first determine if it is right for you or if there are better terms or providers available. For example, if you are seeking lower rates, check if getting lower interest rates will be worth more than the mortgage penalties you will face.

After determining that your reason for refinancing your mortgage is viable, you should consider working with real estate lawyers to ensure that the rest of the process goes smoothly. Your lawyer will work with your current lender or help you shop for a new mortgage lender through a mortgage broker. Note that switching to a new lender may add costs and penalty fees, e.g., discharge fees.

Refinancing your mortgage, just like applying for a new mortgage, requires you to provide all the necessary documents to your lender, including pay stubs, tax return statements, details of your existing mortgage, and more. An appraisal should also be done on time to prevent delays in the refinancing process.

Once your lawyer provides the necessary documents to your lender and your mortgage request is approved, they will receive details about the new mortgage and ask you to review and sign the paperwork.

Your lawyer will receive the new mortgage and disburse the funds as required, with the net balance payable to you. Upon completing the refinancing process, a new mortgage will be registered on your property, and the previous one will be discharged.

Mortgage refinance comes with certain costs that vary depending on where and when you refinance. Some costs include legal fees for your real estate lawyer and mortgage registration fees to register your new mortgage.

When refinancing a mortgage, your lender may ask for a home appraisal to determine the exact Loan to Value Ratio, which means that you’ll incur some appraisal fees.

If you refinance your mortgage by switching lenders, your old lender will charge you a mortgage discharge fee. This allows you to clear them from your property title and add your new lender.

Refinancing your mortgage within the term may attract a mortgage prepayment penalty. The penalty applied depends on whether the existing mortgage is a fixed-rate closed mortgage (higher penalty) or a variable-rate closed mortgage (lower penalty).

No law prohibits a foreigner, resident or non-resident, or any other legal entity (corporation, partnership or trust) from purchasing real estate in Ontario or anywhere else in Canada. However, obtaining real estate in Ontario is more complex for foreigners due to certain stringent measures put in place by the government.

There are no restrictions for foreigners looking to buy real estate in Ontario. However, the province has added some conditions, such as non-resident speculation tax, making real estate less attractive for foreign buyers.

Generally, yes. However, there are very stringent conditions that make it harder for foreigners to obtain financing from a Canadian bank. You will be required to provide lots of documents, including your bank statement, to prove your income and creditworthiness as a borrower. Also, you'll be required to make a minimum down payment of at least 35%.

On the other hand, other costs, such as interest rates, property prices, and property taxes, will be mostly similar for citizens and foreigners.

Yes. Having an Ontario bank account makes it possible and convenient to make mortgage payments, maintenance payments, pay property taxes and receive rent if you are leasing your real estate property.

There are no additional costs or fees for foreigners when purchasing real estate property, except for non-resident speculation tax.

No. There are generally no restrictions.

Buying real estate property in Canada is not a ticket to residency for a foreign real estate buyer. You will still have to go through the immigration process like any other immigrant seeking residency in Canada.

Yes, an experienced real estate lawyer or real estate law firms can transfer funds overseas to a seller unless there are legal reasons or suspicions barring them from doing so.

No. There are no special financial privileges or benefits for foreign real estate buyers.