Escrow / Adjustment Costs

With all selling and acquiring of properties there is miscellaneous expenses and this is the time when those are paid. This day is agreed by the purchaser and seller ahead of time. The purchaser will receive a statement outlining their adjustments, as well the seller will receive information specific to them. It should be pointed out that each transaction has its own unique circumstances, and these are only the basic fees you may encounter.

Down payment
Adjustments can include a record of deposits with the offer by the purchaser.

Mortgages
If the purchaser is getting a mortgage the information will be recorded and is responsible for any fees relating to the mortgage.

Municipal Property Taxes
Since most municipalities require taxes paid by July 1st, there will be adjustments when the seller paid taxes for the entire year including the portion after they move out. In this case an adjustment giving the seller a refund and charging the purchaser for that amount after the adjustment date. In a situation where the seller has unpaid taxes, an adjustment is made requiring the seller pay the tax and penalties prior to possession and purchaser pays the taxes after they take possession.

Rental Payments
In a situation where rental payments from income producing properties are involved and the adjustment date is the middle of the month, an adjustment is paid based on the number of days prior (seller) or after (purchaser) the adjustment date. In other words each party is entitled to rental income based on the number of days.

Home Insurance
For home insurance it best for the seller to cancel their policy and the purchaser to start a new one. The policies change hands on the time of the completion date.

Title
Since the seller is responsible for clearing the title they may encounter fees in proceeding to offer a free clear title to the purchaser.

Bridge Loan
In the event where you purchase a new home and in the processing of closing your old home, a lender may lend you a bridge loan to pay for the closing costs until your old home is sold. The lender may require some form of security for this loan.

Condo / Co-operative Transfer Fees
If you are moving into a condo or co-operative, you may be charged transfer fees. Your lawyer will instruct you how much money to bring with you on closing day.


Lawyer & Real Estate Fees
As well there are professional fees to be paid to each lawyer and the real estate commission will come from the sale proceeds to the seller.

Home Owner Grant
In British Columbia, property owners who are eligible for a basic homeowner grant. Additional grants include seniors, disabled persons, the war veteran allowance and school taxes.

Property Transfer Tax
The property transfer tax in British Columbia is paid by the purchaser. The tax is calculated at 1% of the first $200,000 and 2% for the remainder of the fair market price of the property. There are exemptions such as a transfer between spouses. Also first time home buyers who are getting a mortgage for 70% or more of the fair market value of the property up to $325,000 are eligible for an exemption. Please consult your local government if you are eligible or programs in your region.

Goods & Services Tax
In Canada when you purchase a new home, you will need to pay the Goods & Services tax. You can get a partial rebate so consult the Government of Canada for more information.

Survey & Title Insurance
A lender of a mortgage may require the purchaser to pay for a survey of the property. The purpose is to find the boundaries and placement of buildings on the property. As well any encroachments will be revealed. The lender wants to make sure the property is good security for the loan. Title insurance will help to remedy and encroachments found on the property. Lenders may be more willing to give you a mortgage because of more security from insurance. In some situations title insurance maybe better than a survey.