When it comes to buying, selling, or refinancing a residential property in Ontario, the legal and tax fees involved are often underestimated, and frequently misunderstood. While many buyers focus solely on the purchase price, the reality is that legal fees, disbursements, and various taxes can add up quickly. More importantly, if misunderstood or poorly documented, they can also lead to serious legal and financial consequences.
This guide outlines the true cost of closing a real estate transaction in Ontario in 2025, breaking down legal fees, hidden disbursements, land transfer taxes, HST rules, and ownership traps that often go overlooked.
Real Estate Legal Fees
Legal fees in real estate transactions referes to the costs you must pay the legal firm to handle your case. These fees cover various services that we will discuss shortly.
What’s Included in Legal Fees?
Real estate legal fees cover much more than document signing. A licensed Ontario real estate lawyer ensures the legal and financial integrity of the transaction. Services typically include:
| Legal Service | What It Covers |
| Title search & due diligence | Verifies encumbrances, liens, easements, and other issues affecting title |
| Agreement of Purchase and Sale (APS) | Review or drafting (ideally before signing) |
| Closing documents | Preparation of transfer deed, lender instructions, declarations |
| Title registration | Completion and electronic registration via Ontario’s Teraview system |
| Trust fund handling | Secure movement of funds through the lawyer’s trust account |
| Lender coordination | Ensures mortgage, bridge loan, or payout instructions are followed |
| Statement of Adjustments | Ensures fair financial reconciliation of prepaid taxes, utilities, condo fees |
Flat-Fee Legal Services Often Exclude Key Items
Many “low-cost” legal services do not include disbursements, title insurance, or even post-closing corrections. Always ask for a full, itemized list of what’s included and clarify this in your signed retainer agreement.
2025 Average Legal Fee Ranges in Ontario
| Transaction Type | Typical Legal Fee Range (Before HST) |
| Purchase | $900 – $2,000+ |
| Sale | $700 – $1,500+ |
| Refinance (Mortgage) | $700 – $1,300 |
| Purchase + Refinance | $1,200 – $2,500 |
For new builds, fees are generally higher due to builder-specific documents, interim occupancy, and Tarion compliance.
Disbursements: The Commonly Misunderstood Cost
Disbursements are out-of-pocket expenses your lawyer incurs during the transaction. While often misunderstood as part of the legal fees, these are charged separately and must be itemized by law.
| Disbursement | Typical Cost | Details |
| Title Search | $75–$150 per parcel | Identifies liens or encumbrances |
| Land Registration Fees | $78–$80 per item | Deed and mortgage, per Ontario Land Titles Act |
| Title Insurance | $200–$500+ | Required by most lenders; protects against title issues |
| Courier/Admin Fees | $50–$100 | Includes courier, certified cheques, photocopying |
| Tax/Utility Certificates | $60–$120 | Confirms arrears with municipalities and water departments |
Always note that as per the Law Society of Ontario, lawyers must disclose all disbursements in writing. Flat fees that lump these together without itemization may violate professional conduct rules.
Taxes in Real Estate Transactions
1. Ontario Land Transfer Tax (LTT)
All residential property purchases in Ontario are subject to the provincial Land Transfer Tax (LTT), which is calculated on a tiered marginal rate basis:
| Value Bracket | Marginal LTT Rate |
| First $55,000 | 0.5% |
| $55,001 – $250,000 | 1.0% |
| $250,001 – $400,000 | 1.5% |
| $400,001 – $2,000,000 | 2.0% |
| Over $2 million (residential only) | 2.5% |
First-Time Buyer Rebate
Eligible first-time homebuyers can receive up to $4,000 in LTT rebates. However, this can be forfeited if ownership is incorrectly structured—for example, if title is held jointly with a non-first-time buyer parent or investor.
2. Toronto Land Transfer Tax (TLTT)
If your purchase is within the City of Toronto, you must also pay a municipal land transfer tax, mirroring the provincial rates. This effectively doubles your LTT.
| Value Bracket | Marginal TLTT Rate |
| Same as provincial LTT | 0.5% – 2.5% |
Two seperate tax declarations must be filed. Mistakes here can delay closing or result in late penalties.
3. Non-Resident Speculation Tax (NRST)
The NRST is a 20% tax on the purchase price of residential property across Ontario if the buyer is:
- Not a Canadian citizen, permanent resident, or protected person; and
- Purchasing residential property anywhere in Ontario.
There is a common pitfall to this, that if even one buyer is a non-resident, the full purchase price is taxed, unless they are the spouse of the resident buyer.
NRST Rebates (If Conditions Met)
Rebates are available if:
- The buyer becomes a permanent resident within four years; and
- Occupies the property as their principal residence within 60 days of closing.
4. HST on New Builds and Assignments
HST (13%) applies to most newly built homes and condos. It’s often included in the purchase price, but only if the buyer intends to live in the home.
| Scenario | Risk |
| Investor purchases | Must repay HST rebate ($24,000–$30,000) |
| Assignment sales | HST applies on original price + profit |
| Builder rebate clauses unclear | May lead to surprise adjustments on closing |
Your lawyer should confirm HST status, rebate eligibility, and whether the builder’s price “includes” the rebate. Many agents overlook this, resulting in costly disputes on closing day.
Ownership Structures and Legal Traps
Buying via Corporation or Trust
Buying through a corporation or trust can provide benefits, like asset protection or tax deferral, but introduces legal complexity:
- Subject to full LTT (no exemptions)
- May trigger commercial lending rules
- Requires additional due diligence and documentation
Hidden Trap: If you hold title in trust for someone else (e.g., a child), disclosure is required under the Land Registration Reform Act and federal trust reporting rules (T3 Schedule 15). Failure to disclose may lead to penalties or revocation of rebates.
Critical Legal Risks to Avoid
- Wrong Title Structure: Joint Tenancy vs. Tenants in Common affects survivorship and probate. Your choice should align with your estate plan, not be left to default.
- Undocumented Gifts: Family gifts (e.g., down payments from parents) must be clearly documented. Undocumented funds may trigger mortgage audits or LTT recharacterization.
- Missed Post-Closing Adjustments: Mistakes in prepaid taxes or condo fees may remain collectible even months after closing.
- Weak Title Insurance Coverage: Some policies exclude secondary units, additions, or encroachments. Your lawyer must review Schedule A, not just the summary.
- Status Certificate Oversight (Condos): Buyers should not waive legal review. Key issues include:
- Reserve fund sufficiency
- Special assessments
- Rental or Airbnb restrictions
Final Thoughts
Real estate transactions in Ontario come with legal and tax fees that can’t be ignored. Legal fees, disbursements, taxes, and title risks, if misunderstood, can derail even the smoothest transaction. That’s why working with a detail-oriented real estate lawyer is essential.
Whether you’re a first-time buyer, investor, or refinancing homeowner, make sure your legal team doesn’t just close the deal, but protects your long-term interests. The best legal advice isn’t about filling forms. It’s about identifying risks before they become costly problems.
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