Chapter 19: Closing the Transaction Flashcards
List the common closing costs associated with a purchase of a resale home when a mortgage is used to complete the purchase.
Appraisal Fee Closing Adjustments HST Estoppel Certificate Fee Home Inspection Interest Adjustment (based on 10 days at J2=6%) Land Transfer Tax Legal Fees New Home Warranty New Hydro Account Property Insurance PST on CMHC Premium @ 8% Title Insurance Total
What might be the legal fees on a purchase of a $750,000 residential property?
On the first $100,000 - $850
On the excess between $100,000 – $300,000
0.5% of the excess amount
.005 x (300,000 – 100,000)
.005 x $200,000
= 1,000
On the excess over $300,000 0.25% of the excess amount
.0025 x (750,000-$300,000)
.0025 x $450,000
= $1,125
Therefore, the total fee would be $850 + $1,000 + $1125 = $2,975.00
Under what circumstances is HST charged in the purchase of a property?
On a new home, HST is charged; however, the builder may include it in the purchase price. If it is not included, it must be paid on closing. In addition, there is a HST rebate applicable to new homes, substantially renovated homes, and modular and mobile homes for which an application must be completed.
What tax is charged on the mortgage default insurance premium?
PST
List the pre-closing and closing procedures that a Lawyer can complete using Teraview.
Automated title searching
Writ searching
Subsearching
Creation of drafts and documents ready to be registered
Calculation and payment of land transfer taxes
Electronic registration of documents, as well as other procedures.
Explain the significance of the Acknowledgement and Direction in the closing process
This document allows the Lawyer to close the transaction electronically.
What purpose does the DRA (Document Registration Agreement) serve?
This document allows the Lawyers to handle the client’s documents and funds and by signing this document, both Lawyers agree to undertake their professional obligations as to the handling of these documents and funds.
In a title-insured transaction, who remits the insurance premium to the title insurer?
The Lawyer.
Define the IAD - Interest Adjustment Date
The IAD is date that the interest adjustment payment is due.
Ms. Homeowner is receiving a mortgage for $350,000 on February 11th. The mortgage bears interest at a rate of 5.4% per year, compounded semi-annually, not in advance. The mortgage has monthly payments that begin on April 1st. What is the amount of the interest adjustment payment due on March 1st?
28 (number of days in February) – 11 (date of advance) = 17 +1 (add the date of advance) = 18
5.4 SHIFT NOM%
2 SHIFT P/YR
SHIFT EFF% 5.4729
365 SHIFT P/YR
SHIFT NOM% 5.3287751356
350000 +/- PV
18 N
0 PMT
FV 350,920.903452
$350,920.90 – $350,000.00 = $920.903452
Therefore, the interest adjustment payment due on the interest adjustment date is $920.90 (this is not a periodic payment so the amount is rounded off)
