Selling Commercial — The Budget
THE BUDGETSELLING COMMERCIAL
The question most people ask prospective lawyers is “How much do you charge?” The question you should be asking is “How much money do I need to budget for my transaction?”
Our aim is to provide you with clarity regarding you legal expenses at the beginning so you can properly budget for your sale. Moving is stressful enough without finding out on closing that the costs are higher than anticipated.
For budgeting purposes, you need to factor in these four areas:
ONE
LEGAL FEES AND EXPENSES
For multi-unit residential properties and commercial properties the legal fees and legal expenses can vary depending on the nature of the transaction, the scope of the lawyer’s work and the sale price. Give us a call at (613) 746-8115 and we will be happy to review your needs and provide you with a rough estimate or a range for the anticipated legal costs.
Our fees are due on closing and paid from the sale proceeds.
TWO
REAL ESTATE COMMISSIONS
On closing, we will pay from the sale proceeds, your real estate agent the commissions owed to him/her at the rate you agreed to pay. Keep in mind that there is HST applicable on those commissions; something that people often don’t consider.
THREE
MORTGAGE DISCHARGE PENALTIES AND ADMINISTRATION FEES
On closing, we will pay out the balance owing on your mortgage or secured line of credit. On top of the balance owing, the lender will be charging an administration fee to discharge the debt. If you are paying out your mortgage prior to maturity, you will likely be subject to an early payout penalty. You should check with your lender in advance to find out how much that penalty might be.
FOUR
ADJUSTMENTS AND OTHER EXPENSES
You also need to budget for:
Municipal Property Taxes: You share the year’s tax assessment with the buyers pro-rata. On closing, you will have already paid the municipality either more or less than your share of the year’s taxes. The difference is the adjustment and it is paid on closing.- Rents: Like with property taxes, the current month’s rents are shared pro-rata, typically resulting in a credit to the buyers. Buyers are also credited for the last month’s rents and accrued interest thereon.
- Condominium Fees (for commercial condos): You typically pay the current month’s condo fees and the buyer reimburses you pro rata for their share of the month’s condo fees.
- Oil / Propane: Where the property is heated with oil or propane, the fuel is not included in the price. You fill the tank and charge the buyers for the cost of a full tank.