At the Notary: The Costs That Still Surprise Too Many Homebuyers

Your offer has been accepted. Your financing is approved. Your appointment with the notary is booked.

You may think the hardest part is over.

Almost.

This is often the stage where buyers realize they still need to have several amounts available in addition to their down payment.

Here’s what you need to know to avoid unpleasant surprises.

The notary does more than just witness your signature

The notary plays a central role in the transaction.

They may need to verify the property title, prepare the deed of sale and mortgage documents, receive the lender’s funds, calculate certain adjustments, and make sure all required conditions are met before the transaction can be completed.

In other words, your appointment with the notary is much more than a simple signing.

1. The balance of your down payment

Your down payment must be available when requested by the notary.

Example

You are buying a property for $500,000.

Your mortgage loan before certain costs is $475,000.

You therefore need to provide:

$500,000 - $475,000 = $25,000

But be careful: that $25,000 may not be the only amount you need to have available.

Other costs may be added.

2. Notary fees

You should budget for the fees related to preparing and signing the legal documents, as well as certain disbursements connected to the transaction.

The total can vary depending on:

• the complexity of the file;

• the type of property;

• the number of documents that need to be prepared;

• the searches required;

• certain registration fees.

  
  

Example

You calculated your down payment down to the last dollar and only have $300 left in your account.

Even if your financing is approved, you could still come up short when it’s time to complete the transaction.

Tip: ask the notary for an estimate of the fees before your appointment.

3. Municipal and school tax adjustments

This is probably one of the items that creates the most confusion.

The seller may already have paid certain taxes for a period during which you will now be the owner.

The notary therefore has to make an adjustment.

Example

Imagine the seller has already paid the municipal taxes for the entire year.

You become the owner on July 1.

The seller has therefore prepaid part of the taxes for a period during which you will own the property.

You will normally have to reimburse the seller for your share as part of the transaction.

This is not a new tax.

It is simply a fair allocation of expenses between the seller and the buyer.

4. Mortgage interest adjustment

Your first mortgage payment does not always begin exactly on the day you become the owner.

There may therefore be a few days of interest to adjust.

Example

You sign at the notary on April 18.

Your first regular mortgage payment is scheduled for July 1.

The lender may require an interest adjustment to cover the applicable period before the regular payment cycle begins.

This amount may therefore be added to the funds you need at closing.

5. Title insurance

In some transactions, title insurance may be required.

It may be used when an issue involving the property title, the certificate of location, or another legal matter needs to be covered in order for the transaction to proceed.

Example

A certificate of location reveals an issue that needs to be clarified.

Rather than delaying the transaction entirely, title insurance may sometimes be used to cover certain risks.

If that insurance is required, the cost may be payable by the buyer.

6. Do you have an insured mortgage? Watch for the tax on the premium

When a buyer makes a small down payment, mortgage default insurance may apply.

The insurance premium can generally be added to the mortgage loan.

However, the tax applicable to that premium must be paid in cash.

Example

You buy a property with a 5% down payment.

Your mortgage insurance premium is added to your loan.

You therefore do not necessarily have to pay the premium directly from your bank account.

However, the tax on that premium may have to be paid as part of the transaction.

Another good reason not to put every last dollar of your savings into the down payment.

7. What about the “welcome tax”?

Here is another very common misunderstanding:

the welcome tax is generally not paid directly to the notary at signing.

After your purchase, the municipality will normally send you a bill for the land transfer tax.

Example

You sign at the notary in June.

A few weeks later, you receive a bill from your municipality.

Depending on the value of the property and the municipality, the bill may amount to several thousand dollars.

You therefore need to keep some cash available even after your appointment with the notary.

Where does the mortgage money go?

The lender does not simply deposit a large amount of money into your personal bank account.

The funds go through the notary.

Example

You are buying a home for $600,000.

The lender sends the mortgage funds to the notary.

The notary also receives your down payment.

From those funds, the notary may then:

• repay the seller’s existing mortgage;

• make the necessary adjustments;

• complete the transaction;

• remit the applicable balance to the seller.

  
  

This process is what allows ownership of the property to be officially transferred.

How much should you keep aside?

There is no single amount that applies to every buyer.

In addition to your down payment, keep a financial cushion for:

• notary fees and disbursements;

• tax adjustments;

• certain interest adjustments;

• title insurance, if required;

• tax on the mortgage insurance premium, if applicable;

• the welcome tax that will arrive after the transaction.

  
  

The mistake to avoid

The classic mistake is simple:

putting absolutely all your savings into the down payment.

Example

You have $42,000 available.

Your planned down payment is $40,000.

That leaves you with only $2,000 afterward.

On paper, the purchase works.

But if you then have to pay notary fees, adjustments, and eventually your welcome tax, your budget can become very tight very quickly.

A better strategy is to keep a cash reserve for closing and for the first few weeks of homeownership.

The key takeaway

A few days before your appointment, ask the notary:

“What total amount do I need to have available to complete the transaction?”

That way, you will know exactly what to expect.

Because an approved mortgage does not mean all the expenses are behind you.

The real finish line is walking out of the notary’s office with the keys… and still having enough money left in your account to breathe.