Understanding Closing Costs in Alberta Real Estate Transactions
Whether you’re buying your first home, upgrading, or investing in real estate, closing day marks an exciting milestone. But before the keys are in your hand, it’s essential to understand the various closing costs involved in an Alberta real estate transaction. These are the final fees and adjustments that ensure all parties—buyers, sellers, lenders, and the government—are paid what they’re owed so that the property can officially change hands.
Here’s a clear breakdown of what you can expect when it comes to closing costs in Alberta:
1. Legal Fees and Disbursements
Estimated Cost: $900 – $2,000+ (depending on transaction complexity)
In Alberta, hiring a real estate lawyer is mandatory to complete the purchase or sale of a property. Your lawyer will:
- Review and prepare legal documents (like the purchase contract and title transfer)
- Conduct a title search
- Register the new title with Alberta Land Titles
- Handle the transfer of funds
In addition to their professional fee, expect disbursements—out-of-pocket costs your lawyer pays on your behalf (e.g., title searches, couriers, land title registration fees).
2. Land Title Transfer Fees
Estimated Cost: Varies, based on property value and mortgage amount
Alberta does not charge a land transfer tax (a big plus compared to other provinces like Ontario or BC). However, you do pay land title registration fees, calculated as follows:
- $50 + $2 for every $5,000 of property value (for the transfer of title)
- $50 + $1.50 for every $5,000 of mortgage amount (if applicable)
For example, if you’re buying a $500,000 home with a $400,000 mortgage, your land title registration fees would be approximately:
- Transfer fee: $50 + (500 ÷ 5) × $2 = $50 + $200 = $250
- Mortgage registration fee: $50 + (400 ÷ 5) × $1.50 = $50 + $120 = $170
3. Home Inspection Fees
Estimated Cost: $400 – $700
Although optional, a professional home inspection is highly recommended. This cost is usually paid upfront before closing and gives buyers peace of mind about the property’s condition.
4. Property Appraisal Fees
Estimated Cost: $350 – $600 (may be covered by your lender)
If you’re financing your purchase with a mortgage, the lender might require an appraisal to confirm the property’s market value. Some lenders absorb this cost, so it’s worth asking upfront.
5. Title Insurance (Optional but recommended)
Estimated Cost: $150 – $350
Title insurance protects against potential title defects or disputes (like unknown liens or fraud). Although not mandatory, many lenders require it, and it provides valuable protection for both buyers and lenders.
6. Adjustment Costs
Estimated Cost: Varies
On closing day, you’ll reimburse the seller for prepaid expenses, such as:
- Property taxes (adjusted to the closing date)
- Condo fees (if applicable)
- Utilities (in rare cases, if they’ve been prepaid)
Your lawyer will calculate these adjustments and ensure they’re included in the final closing statement.
7. Mortgage Insurance (If applicable)
If your down payment is less than 20%, CMHC mortgage insurance is mandatory. Although this premium is typically rolled into your mortgage, you’ll need to pay provincial sales tax (PST) on the insurance premium upfront—fortunately, Alberta does not charge PST, so you’re off the hook here.
Final Thoughts: Budget Wisely
While Alberta’s lack of a land transfer tax saves buyers thousands compared to other provinces, closing costs can still add up. A safe rule of thumb is to budget 1.5% to 4% of the purchase price for closing costs—though your actual costs may be lower depending on your situation.
Working with an experienced real estate professional and lawyer can help you anticipate every fee and avoid last-minute surprises. If you’re preparing to buy or sell in Alberta, feel free to reach out—I’m here to guide you through every step of the process.
EXIT Realty Results, Whitecourt, Alberta
780-268-3948 cell.
