By Mark Sawyer
The latest provincial budget was released on March 26th, 2015, and it contained steep land titles fee increases effective on documents that are registered after July 1st, 2015. This fee increase will have a significant financial impact on people buying and refinancing properties in Alberta.
Costs of real estate transactions
When an individual purchases or refinances a residential property in Alberta one of their first calls after executing their purchase contract or talking to their mortgage broker is to their lawyer with the question, “How much is this going to cost?”
When I am discussing a quote with a client I explain that there are two parts to the fee on a real estate transaction:
- The actual legal fee charged to the client,
- The amount of the disbursements, or hard costs, that the law firm incurs related to the transaction.
Disbursements include courier expenses, faxing and estoppel certificates, but by far the biggest disbursements are the ones charged by the Land Titles office in order to obtain titles and copies of encumbrances and to register transfers of land and mortgages.
Flat-fee increase for land title and mortgage registration: July 2015
As of July 15th, 2015, flat-fee charges for land title and mortgage registration documents will rise by 50%, from $50.00 to $75.00 and the variable fee will go up by 600%, from $1.00 to $6.00.
While on the surface this does not seem like a material increase, when you look at the difference in registration costs on a standard purchase, the difference is very dramatic.
How this increase will impact buyers
For example, to buy a $350,000 home in Alberta with a $300,000 mortgage the fees will rise from $120 for the transfer of land and $110 for mortgage registration to $495 for the transfer of land and $435 for the mortgage registration.
That means the total land titles registration fees payable will rise from $230 to $930—a difference of $700.
Or, for example, to buy a home worth $850,000 in Alberta with a $750,000 mortgage the fees will rise from $220 for the transfer of land and $200 for mortgage registration to $1,950 for the transfer of land and $975 for the mortgage registration.
That means the total land titles registration fees payable are rising from $420 to $2,070—a difference of $1,650.
Save money before the July 1, 2015 deadline important if you are refinancing or purchasing real estate
If you are considering refinancing or purchasing in the time leading up to the July 1st, 2015 deadline, it will be important to ensure that your mortgage instructions are sent to your lawyer as soon as possible to avoid the increased fees.
Important: Land Titles does not care when a possession date is and the new increases will impact documents registered on or after July 1st, 2015.
For example, if you have a possession date of June 30th, 2015, you will still have to pay increased fees if your documents are not sent to land titles in time for registration before July 1st, 2015.
The Land Titles system does not have instant registration, and the summer is normally their busiest time of the year. Therefore it is recommended to provide your lawyer with as much lead time as possible to try to avoid having to unnecessarily pay new fees.
If you are unsure of how the new land titles fees might impact your real estate plans, contact Mark Sawyer for more information>>