“Finally,” the notary continues as he removes a document from the file in front of him and gives everyone a copy, “here is the breakdown of the costs to be paid at this time to complete the transaction.” The following is a list of several points, the last of which is: “To be paid by the buyer, $7,495.” The bright smile of the new owners immediately disappears.
Brutal shock for new buyers! These fees often come as a surprise. But what is that exactly? These are the costs paid in advance by the seller and which the notary must distribute when selling the property. Let's look at the elements in question.
1. Municipal and school taxes
Depending on the date on which the transaction takes place, the notary determines the amounts paid by the seller to the municipality and the school authority in proportion to the days.
Example of local taxes:
- Annual municipal tax already paid by seller: $4682
- Transaction date: September 15th
- Number of days between September 15th and December 31st: 107 days
- Amount to be refunded by buyer: 107 days/365 days
However, if the seller is in default of payment, he is responsible for paying the amounts due for the current year.
2. Heating oil tank
If the home has an oil heater, the fuel tank can typically hold up to 250 gallons or 1115 liters. The current price for a liter of heating oil is $1,549/liter. Assuming the tank contains half of its capacity, the calculation is as follows:
- 1115 liters/2 x $1,549 = $863.57
3. Maintenance contracts
The seller may have committed to snow removal, lawn maintenance, swimming pool and heat pump maintenance, and water heater rental over several years. These amounts are also subject to distribution.
4. Other types of transactions
Depending on the type of apartment sold, certain costs must also be distributed, such as co-ownership contributions for a condominium or rent collected for an investment property. We also find the contract for the alarm system, which is often paid in advance.
Diploma
Residents of a home enter into different types of contracts over the years. Many can be canceled by the new owner, others such as electricity, telephone and internet services are transferred simply by contacting the providers. It is best for both parties to discuss all the details in advance and reach an amicable agreement before going to the notary.
Advice
- Consult your real estate agent who can explain the costs to you before signing with the notary.
- Make sure you understand all distribution costs explained by the notary
- Always have a budget for closing costs