When it comes time to purchase a home the finances have to be arranged and this includes more than the downpayment and the mortgage costs. There are closing costs that are part of the buying of a home and these often can take the buyer by surprise. For those who are buying a new home from a builder, they may expect that the closing costs are going to be included in the purchase price.

What Are The Standard Closing Costs?

Question Mark

These can vary depending on where one is buying their home  and will differ for both the buyer and the seller but they can include:

  • Land transfer tax
  • Unpaid taxes and utility bills
  • Insurance for defaulting on a mortgage
  • Costs for searching the title
  • Legal fees

As well as other costs depending on the circumstances. These are standard for a re-sale home but the closing costs for a new home build can be quite different.

New Home Closing Costs

New Home House Construction

The closing costs will differ depending on the type of new home being purchased. For example, the closing costs of a new condo build will be different from the closing costs for a detached home in a new community. Here there may be prepaid items along with other fees that are added to the costs of closing.

Property Title

The builder will normally hold the title of the new home build and will usually incur the initial fee. However, when the property is sold then the purchaser is responsible for the cost of the name transfer of the property.

Closing Costs The Responsibility of the Buyer

Every builder will have their own set policies when it comes to the sale of their new home builds. In general, they will not assume closing costs. However, some may offer different incentives that will help to offset some of these costs. For example when it comes to the financing of the purchase. The builder may offer some type of credit if the buyer is using their financing program.

Being Prepared


It is really important that a buyer of a new build has a good idea of what closing costs may consist of. This way there are no shocks or surprises. This is often what happens for buyers of new condos.  These can include:

  • Land transfer tax
  • Development charges
  • Legal fees
  • Utility installations
  • Tarion Warranty

Common Development Charges

Builders incur a lot of costs during the construction of new builds. In order to maintain their profit levels, they will pass as many of these costs onto the potential buyers that they possibly can.

Negotiations: Often builders have to negotiate with the city where they want to construct new builds. Which means they will offer incentives for the privilege of the city allowing them to build. Offering to pay more than the expected city costs. A portion of these additional costs will then get passed onto the buyers.

Agreements: Builders will also offer different levies to encourage a city to allow them to build. For example, they will include levies for schools, parks, and public art. Again additional costs to be passed onto the buyers.

Additional Costs: Not only will the buyer have to incur some of these additional costs upon closing they will be subjected to paying HST on these which is going to escalate the closing costs even more.

Getting Some of the Costs Capped


With there being so much diversity in some of these costs like the development costs potential buyers should consider putting a limit or capping some of these costs. This is applicable not only to new condo purchases but any new home build.

What this means is getting the builder to set a maximum limit on the development costs that they will be charging. These should be clearly outlined in the sale contract that will be taking place between the buyer and seller.

The Contract

The contract for buying a new build will be different than the contracts used in re-sale homes. These new build contracts have a lot more detail to them. For this reason, they can be very complex and hard to understand. It is imperative that the buyer reads every word and understands exactly what the contact exists of. It will include many of the closing costs that could exist. It clearly outlines what the build is responsible for as well as the buyer.

The Right Expertise

Buying a home whether it is a resale or new build is a big responsibility. It comes with a lot of decision making. For this reason alone it is important to rely on the right expertise. This includes an experienced real estate agent as well as a lawyer.

The real estate agent can go over each of the details outlined in the contract to help the buyer have a better understanding. There may be many things listed here that the buyer was not aware of, and with the proper knowledge may decide that the closing costs are going to be too expensive. There may also be room for negotiation which a realtor can help with. Keep in mind that the builder’s representative is acting on behalf of the builder. A realtor is acting on behalf of their client.

Then another professional that is critically important is the lawyer who will be handling the closing of the transaction. This is the professional that will make sure that the title is clear and that everything is in order for the date of closing.

It is always a good idea to get the lawyer to review the contract before signing. This way if anything stands out that may be wrong it can be rectified prior to signing. It is extremely difficult to make changes once the contract has been signed.

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