Land Titles Office Fees Increasing Sooner Than You Think – Updated May 12
Alberta has long been the cheapest place in Canada to buy a home, when it comes to closing costs. However, the new provincial budget that was announced last month included a massive increase in fees from the Land Titles Office. Although we have no land transfer tax here, as most other places in Canada do (some places have multiple taxes from different levels of government) there is not that much difference between these fees and a land transfer tax in my mind. While it is still cheaper here than in the rest of the country, the increase is significant. For those that are aware of the increases, many believe they just have to take possession of their new home by June 30 to avoid the increased fees, however, that is not the case.
Registration Fee Increases:
The cost to register the transfer of title will increase on July 1, 2015, to $75+ $6 for every $5000 of purchase price – this currently costs $50 +$1 for every $5000. The cost to register a mortgage will use the same calculation but is based on the mortgage amount. So what does this mean for the average single family home purchase? Based on a $440,000 sale price (the average price for single family homes in Edmonton last month), and 20% down payment on the mortgage, the land titles fees will increase from $258 to $1100!
Closing costs are not included in your mortgage
In recent years we have seen a number of regulatory changes related to mortgages (decreasing the maximum amortization from 40 years to 25 for example) that have impacted our local real estate market. While these changes have affected the overall cost of home ownership, they didn’t hit new home owners directly in their pocketbooks, the costs were included in their mortgage, or the regulations affected how much mortgage they could qualify for.
The land titles fee increases are not just lumped in with your mortgage, these fees must be paid separately, before taking possession of your home. Currently we tell our clients to expect to pay about $2500 at the time of closing to cover legal fees and land titles fees. Property taxes may also have to be paid if the homeowner pays them annually (although this is becoming less common all the time). These closing costs are about to increase significantly, especially if you’re buying a high end home.
Buying a home before July 1
will may not “get you in under the wire”
So, many people are thinking: I’ll just take possession of my new home on June 30 to avoid the increased fees, but this
will may not work. The fees are charged based on the date the documents are registered, not the date your lawyer requests the registration. Currently, there is about a one week gap between the request and the registration. When you consider late June to early July is the busiest time of the year for the land titles office, the gap between request and registration only grows. Throw in the Canada Day holiday (and extended long weekends) and the gap grows further.
Our broker Sheldon Johnston never recommends a June 30 possession date, because it’s typically the busiest day of the year for real estate lawyers, moving companies, truck rentals, elevator reservations (you name it), and when things go wrong, they take a lot longer to fix. This year we have one more reason to move your possession date as early in June as possible.
UPDATE April 28: The Land Titles Office reached out to let us know that they will honour the current fees as long as a registrable document is received by the end of the business day on June 30, 2015. So, great news for those that are buying a home on or before June 30! Just make sure you do all your home work, and everything is in order, and your lawyer gets everything to land titles and you should be fine. That being said, if you are able to move your possession sooner, you should probably try. And of course, this is only a proposed budget so I could very well be updating this post again in a week or two.
Update May 12: Statements from the newly elected NDP government indicate that the government will be pushing forward in eliminating these increases. There is no official timeline yet for this to take place, as the election result represents a significant change and the NDP will require time to transition into office and be prepared to take real action on campaign promises.
About Sara MacLennan
Sara MacLennan is the Director of Marketing at Liv Real Estate and a licensed Real Estate Associate. The bulk of Sara’s experience and wealth of expertise lies in on-line technology and marketing both for agents and consumers. Sara is the former National Director for Interactive Marketing for Coldwell Banker Canada where she was responsible for an extensive training program traveling to offices across the country training agents and brokers on marketing and technology. Find Sara on Twitter @edmontonblogger.