Buying or selling a home is a big decision. It involves many steps, documents, and costs. One term you will often hear during this process is real estate disbursement. Many buyers and sellers find this term confusing.
Yet, understanding it is crucial for anyone involved in a property transaction. It allows you to budget better and feel more confident throughout the process.
By learning what real estate disbursements are, how they work, and who pays for them, you can make smarter decisions. As an experienced real estate lawyer, we’re here to help.
This blog will break down everything you need to know about real, helping you navigate your real estate journey with ease.
What Are Real Estate Disbursements?
Real estate disbursements are the various expenses and fees that are necessary to complete a real estate transaction. These costs are incurred by your real estate lawyer on your behalf during the closing process.
Disbursements are different from legal fees, which cover the lawyer’s services. Instead, they include third-party charges such as title searches, land transfer taxes, and registration fees.
Without these disbursements, the transaction could face delays or complications. Additionally, understanding these costs allows both buyers and sellers to plan their finances accurately, avoiding any last-minute financial stress.
Common Types Of Real Estate Disbursements
Real estate transactions can be complex, and disbursements cover a wide range of necessary expenses. Here is a closer look at some of the most common types of disbursements buyers and sellers may encounter:
1. Title Search Fees
A title search is a critical step in the real estate process. It confirms that the seller has the legal right to sell the property and that there are no outstanding claims or liens against it.
This ensures that the buyer will have a clear title to the property once the purchase is complete. Title search fees are a typical disbursement and are usually mandatory for any real estate transaction.
2. Title Insurance
Title insurance protects the buyer and lender against any potential disputes over property ownership that might arise after the sale. While a title search aims to uncover any existing issues, title insurance serves as a safeguard against unforeseen claims.
The cost of title insurance is typically included in real estate disbursements.
3. Land Transfer Taxes
Land transfer taxes are levied by provincial governments whenever a property changes hands. The amount varies by province and is usually calculated based on the property’s value.
This is a significant cost that buyers need to be aware of, as it is paid upon closing and can add up quickly.
4. Registration Fees
Registration fees are paid to register the transfer of the property with the local land registry office. This fee ensures that the new ownership is officially recorded, providing legal recognition of the buyer’s rights to the property. These fees are standard disbursements in any real estate transaction.
5. Surveyor Fees
A property survey provides an accurate representation of a property’s boundaries and any physical features such as buildings, fences, or trees. This survey is crucial to ensure there are no encroachments or boundary disputes. Surveyor fees can be part of the disbursements, especially if a new survey is needed.
6. Courier And Administrative Fees
During a real estate transaction, documents often need to be sent back and forth between the parties involved.
Courier and administrative fees cover the costs of transporting these important documents. While these fees are relatively minor compared to other disbursements, they are still a necessary part of the process.
Also Read: 5 Reasons To Hire A Real Estate Law Firm For Your Property Transactions
Who Pays For Real Estate Disbursements?
Both buyers and sellers should be aware of the costs involved in real estate disbursements. But who exactly pays for these expenses? Generally, most disbursements are the responsibility of the buyer.
However, there are situations where the seller may also have some disbursement costs.
Disbursements For Buyers
For buyers, real estate disbursements can represent a significant portion of the closing costs. These costs are often added to the final amount payable at closing.
That is why it is crucial to budget for them in advance. Some of the most common disbursements that buyers cover include title searches, registration fees, and land transfer taxes.
Disbursements For Sellers
While most disbursements fall on the buyer’s side, sellers may also have some fees to cover. For instance, if there are any outstanding property taxes, they will need to be settled before the sale can go through.
Additionally, if the seller has agreed to pay for certain repairs or adjustments, these costs can be part of the disbursements.
About Us
At Nexus Legal, we are committed to providing comprehensive legal services tailored to your needs in Edmonton.
Our team of experienced real estate lawyers is dedicated to guiding you through the complexities of real estate transactions, ensuring all legal requirements are met efficiently. For any questions or to schedule a consultation, contact us today.
587-855-0008
