If you are buying a home, legal fees are one of the items you must budget for. Twenty years ago, you would have to have estimated about 1% of the purchase price. Today to have the legal work done on a purchase and mortgage transaction, you need to budget about $1000.00, which includes the legal fees and disbursements.
Legal fees and disbursements are like parts and labour for a car. The legal fees are the labour of the lawyer and the disbursements are the parts that are needed to do the transaction. The legal fee component only makes up about one half of the total cost of the transaction.
The legal fee portion of the transaction has actually decreased considerably over the last 20 years while the disbursements have increased. For example, years ago, there was no tax on legal fees; today, the tax component is 12% (5% GST and 7 % PST). In order to do the transaction, the lawyer needs to assemble certain pieces of information like obtaining tax information from the municipality in order to adjust for taxes and utilities. This was obtained at no charge in the past, but now municipalities charge about $25.00. Land title charges have also increased. It now costs more than $64.00 each to register the transfer document and the mortgage. The cost of obtaining a title search, as well as the agent’s fee to take the documents to and from the Land Title Office have increased, as have courier charges and the cost to obtain a state of title certificate.
There is still a perception that you will pay less if you use a notary public for a purchase and mortgage transaction, but that is a myth in the Surrey area. Lawyers and notaries charge about the same.
When comparing legal fee quotes to purchase a home, it is important to compare “apples to apples”. Many firms quote a low fee but the disbursements such as taxes (GST, PST), courier changes and land title fees are shown separately on the statement of adjustments at the time of closing. These are often not included in what is quoted, so fees should not be your only consideration. Service and experience should be your primary consideration. Before you choose a lawyer based on the “low” fee quote, make sure you know what it includes.
Legal fees to purchase and mortgage a home are a bargain. In Metro Vancouver, you will pay less in legal fees today than you did 20 years ago for a standard purchase and mortgage transaction.