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Fulham Law Offices - Selling of a Home Brochure
Your Home's Equity
Equity is the amount of money you will have after the sale of
your home. To calculate equity, simply take the total sale
price and subtract all debts, liens, and charges against the
property which must be paid as part of the sale transaction.
While this seems very straightforward, it is usually difficult
to calculate your exact equity in advance because of the
uncertainty of factors including: the amount of mortgage
owing, the status of any mortgage owing, the status of any
mortgage tax account, the delay at the Land Titles Office, and
These items are costs which the seller of a house must pay
but which, for reasons of convenience, the lawyer pays on
behalf of the seller at the appropriate time. GST is payable on
The Manitoba Bar Association provides a suggested set of
legal fees for house sale transactions. The fees that will be
charged are dependent upon such factors as the complexity of
the transaction, whether there is a rush to process the
documents, seasonal delays, etc.
Our flat-rate for a basic residential home purchase
transaction is $675.00 plus G.S.T. & R.S.T .
Real Estate Commission:
The standard commission is 4% of the selling price, and this
must be paid by the seller's lawyer upon completion of the
If your home has been used as collateral for a personal loan,
then the loan must be paid. As well as loans from utilities or
government agencies must be paid, as they cannot be
transferred to another property.
Water accounts must he paid to the date of possession, as
any unpaid water accounts are added to the property tax bill.
Outstanding accounts must be paid from the sale proceeds,
by our office.
Liens and Judgements:
Although these are not common, any liens against your
property resulting from a law suit or other legal proceeding
must be paid out before the sale is complete
These include the mortgage discharge fee payable to the Land
Titles Office, title investigation charges, and other fees such
as couriers, accounting fee, file fee, photocopies, faxes, file
management, file storage, postage and office supplies. These
charges usually fall or are around $300.00.
You are responsible for the property taxes for the months that
you own your house. In all transactions, either the buyer or
the seller pays the annual tax bill. The party who paid the
taxes is then reimbursed by the other party by way of an
adjustment to the sale price.
If you have paid or will pay the tax bill prior to possession
date, then you will be reimbursed by the purchaser. The
reimbursement is done by having the sale price adjusted
upward. This will increase your equity.
If the tax bill is not paid as of possession date, the purchaser
will take over the responsibility for it and you will credit the
purchaser for your share by adjusting the sale price
downward. This will decrease your equity.
If you have been paying your taxes as part of your mortgage
payments, the tax portion of your payments will have been
placed in a separate savings account. The credit or debit in
this account will be applied to the balance owing on your
Any money owing on a mortgage will reduce your equity.
Don't forget to include any mortgage penalty and other
Unless your mortgage is at the end of the term or is an open
mortgage, you may have to pay a penalty to the lender to
have it discharged. The amount of the penalty is
predetermined by the lender. Also, there will be a discharge
fee to be paid to the lender. The average amount is $100.00.
The mortgage payments always cover the previous time
period. As a general rule, you must make mortgage payments
that fall due until title has issued.
The question of interest arises often arises when there is a
delay in the processing of mortgage documents at the Land
Titles Office. During a delay, you will receive interest on the
proceeds of the sale at the mortgage rate of interest. At the
same time, you will pay interest on any mortgage on the
property and on any interim financing you may have.
Please Note: Fees are subject to change without notice.
The general information in this brochure and the examples
are for the purpose of illustration only. Various other factors
may come into play and affect the financial outcome of any
individual home sale. Please contact my office for details
regarding the sale of your home.
Example of a Sale
Possession Date: June 1
(seller's existing to pay out, Interest rate is 5%)
Property Taxes $2,400.00
Interim Loan $10,000.00
(seller is buying a new home, borrows against equity at 7% interest)
Land Titles Delays 21 days
Sale Price: $200,000.00
Mortgage Owing: $150,000.00
Legal Fee $ 675.00
Real Estate Commission 8,000.00
Final Water Billing 75.00
Misc. Disbursements 300.00
Tax and Title Searches 50.00
GST on * ($8,975.00) 448.75
RST on Legal Fee ($675) 54.00
Subtotal $ 9,602.75
Property taxes due June 30
(credit purchaser 5 months)
($2,400.00 ÷12 x 5) $1,000.00
Interest on the mortgage
$150,000.00 x 4% x 21/365 $ 345.21
Interest on interim loan (if applicable)
$10,000.00 x 7% x 21/365 $ 40.27
Combined Adjustments $1,385.48
($200,000.00 - $3,000.00 deposit)
$197,000.00 x 4% x 21/365 ($453.37)
($1,385.48 - $453.37) $932.11
Total payments to be made:
($150,000.00 + $9,548.75 + $932.11) $160,480.86
($200,000.00 - $160,480.86) $39,519.14