A young couple can hardly contain their excitement as they are about to sign documents to close on their first home purchase. However, when their lawyer discloses to them the amount of funds required to close, their excitement turns to displeasure. Through all the excitement leading up to the big day, the couple had forgotten about other costs that they had to pay on top of the purchase price, which their lawyer had initially told them about.
This young couple’s experience is unfortunately common among many homebuyers. In New Brunswick, the unpleasant realization of spending more money than anticipated to purchase a home can originate from several sources. Excluding legal fees and realtor commissions, this blog will shed light onto “hidden” costs that homebuyers often forget about.
Real Property Transfer Tax (“RPTT”)
One of the biggest “hidden” costs to homebuyers in New Brunswick is RPTT. This tax is calculated at one percent (1%) of the greater of either the purchase price or assessed value of the property.
For example, if the assessed value of the property is $350,000 and the purchase price is $500,000, the RPTT on closing will be $5,000 (1% of purchase price). Conversely, if the assessed value is $350,000 and the purchase price is $300,000, the RPTT on closing will be $3,500 (1% of assessed value).
Talk about a housewarming gift! For more information and to learn about exempt transactions see: Real Property Transfer Tax Act.
Recording Documents
There is a $85 recording fee to register most documents with New Brunswick Land Titles. This includes a $85 fee for the recording of transfers and mortgages. Some documents are exempt from the filing fee. For more information see: Schedule B of NB Reg 83-130.
Due Diligence Costs
Property buyers in New Brunswick are usually responsible for either (1) ordering the Certificate of Registered Ownership (“CRO”) for properties that are already converted in the current Land Titles system or (2) converting the property into Land Titles if it has not already been done prior to closing. Ordering the CRO costs $35. Lawyers charge different fees and disbursements to convert properties into Land Titles. If the property that you are buying needs to be converted prior to closing, ask your lawyer what fees and disbursements you can expect to pay for the conversion.
Title Insurance or Surveyor’s Real Property Report
Either title insurance or a Surveyor’s Real Property Report (“SRPR”) is usually required when purchasing residential property in New Brunswick. Title insurance can be purchased to cover the owner’s interest in the property and is most often required to cover the lender’s interest. The purchase of title insurance is a one-time policy purchase at the time the property is bought and covers the policyholder for as long as they own the property. Title insurance may cover defects such as encroachments, boundary issues, or building by-law infractions that existed at the time of closing but are discovered after the transaction is finished. The cost of title insurance differs amongst providers but usually costs a few hundred dollars.
A SRPR will reveal issues related to the boundaries and improvements on the property at the time of closing. Generally, a SRPR costs more than title insurance. A SRPR allows buyers to deal with issues before closing. Sometimes the seller will be unable or unwilling to remedy the problem. The buyer will then need to decide whether to accept the property as is, knowing they will need to disclose the issue in the future if they sell the property, or terminate the deal.
Property Taxes
If the seller has already prepaid the current year’s property taxes, homebuyers can expect to have the property taxes adjusted for the portion of the year in which they own the property. There is also a $20 fee for requesting a tax certificate from the province, which allows the buyer to see how much outstanding tax there is on the property.
Oil and Propane
If there is an oil or propane tank on the property, the seller is responsible to top the tank up. The buyer will then be responsible for paying the seller for the value of the full tank.
Condominium Fees
Like property taxes, if the seller has prepaid condominium fees for the year, or for the month, homebuyers will be expected to reimburse the seller for the portion of the year or month in which the buyer owns the property.
In summary, homebuyers at the outset should ask their lawyer and real estate agent about what costs they should expect to pay at the time of closing. Taking note of “hidden” costs and keeping them in mind leading up to closing is a good way to minimize the unpleasant realization of needing to pay more. Some of these costs will be difficult to precisely pinpoint at the outset of the transaction. However, these professionals can approximate costs, or make homebuyers aware of future adjustments, so that the unpleasant realization is not an unexpected one that takes away the joy of purchasing a new home.
Looking for Guidance?
For Nova Scotia homebuyers, check out our article titled, Hindering Homebuying Happiness: “Hidden” Costs in Nova Scotia Real Estate Transactions (note that the PDTT rate has now increased from 5% to 10% as of April 1, 2025).
If you think you need assistance navigating a property purchase, or have any further questions about real estate transactions, please contact our Real Estate team here at BOYNECLARKE LLP.