Buying property in Nova Scotia can come with some surprising costs, especially if you’re a first-time buyer or haven’t purchased in a while. Here are five unexpected expenses to watch out for when closing day arrives:
1. Deposit
When you make an offer on a property, you’ll need to submit a deposit either with your offer or within a few days afterward. The deposit amount varies with the property’s value but typically ranges from $1,000 to $10,000 or more. Your real estate agent can help you determine the ideal deposit amount to make your offer appealing. Keep in mind that mortgage funds won’t be available until closing, so you’ll need to have your deposit ready upfront. Your purchase agreement will specify the terms for returning or retaining your deposit.
2. Property Inspection
If you’re buying a property with a house, getting a property inspection is essential. This will help you understand the property’s condition and identify any potential issues. Often, a septic inspection is included as well. Without a thorough inspection, you might end up with unexpected problems. If issues are found, you may be able to walk away from the deal if your purchase agreement allows it. If you choose not to move forward with the purchase, you likely won’t be reimbursed for the expense; as it is your responsibility to complete your own due diligence and investigations.
3. Municipal Deed Transfer Tax
Municipal Deed Transfer Tax (MDTT) is an often-overlooked cost. This tax is paid by the purchaser for the transferring of the property. The tax is paid to the municipality in which the property is located. In Nova Scotia, MDTT rates range from 0.5% to 1.5%, with H.R.M. having a rate of 1.5%. This tax is due on closing day and is not usually covered by your mortgage. You’ll need to have the MDTT amount available to pay your lawyer, who will then handle the tax payment.
4. Tax/Betterment/Road Maintenance/Condo Fee Adjustments
In Nova Scotia, it’s common for the purchaser to reimburse the seller for any expenses they have paid that cover periods extending beyond the closing date. This often includes property taxes, which sellers usually pay in advance. If the seller has prepaid for part of the year after closing, you’ll need to pay them back for that period. Adjustments can range from $50 to $1,500+ depending on the amount and timing of the taxes. This principle also applies to condo fees and road maintenance fees. These adjustments can add up, especially if there are multiple items to account for.
5. Oil and Propane Adjustment
In Nova Scotia, sellers are expected to fill any propane or oil tanks before closing. Standard agreements typically require the purchaser to reimburse the seller for the full tanks of fuel. Although this might seem unusual, it ensures that you get a full tank, and the seller is credited for the fuel they’ve already paid for. Since tank gauges may not be entirely accurate, the most straightforward solution is to have the tanks filled before closing. The seller will provide proof of payment, and you will need to reimburse them. While this adds an extra expense on closing day, it means you benefit from full fuel tanks immediately on closing.
As you can see when it comes to purchasing property there is more to consider than just the purchase price. If you have any questions about this article or purchasing or selling in general, you can contact Alexander Silvester or any of our lawyers at (902) 826-9140 for advice on your specific matter.
This article is meant to offer basic legal information and should not be relied upon for legal opinion.
