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Explanation of Disbursements

Disbursements are simply the out of pocket expenses incurred by lawyers on behalf of their clients in performing work for the clients.

The amount of disbursements are usually a surprise to the client, and the more lawyers one talks to perhaps the more confusing it gets. In the mid 1980s the Profession with the sanction of the governing body began to contract out a portion of the work done on real estate files that a client might normally consider fees, typically the tile search and closing fee. Lawyers were then allowed to charge these fees as "disbursements", thus muddying the water further.

In this section we will attempt to categories the disbursements for you as the potential client in order that you will understand what you are paying for in a typical real estate transaction at any lawyers office.

Clerks Fees

The clerk's fee is either included in the fee quoted by the lawyer to the client or added on as a disbursement. For a long time this was the explanation for a large variation in fees between lawyers. The clerk's fees is charged on two different portions of the transaction:

    The title search fee, which is the fee charged by the clerk to the lawyer for searching the land registry office records and providing the lawyer with a copy of all the documents necessary for the lawyer to determine title to the property and to provide a summary of problems that have been noted from the search.
    The closing fee, which is the fee charged by the clerk to search for any changes to the title of the property since the original search (called a subsearch) and to inspect and register the deeds.

The title search fee is one of the disbursements which can vary the greatest. It depends as a practical matter on the difficulty of the search, or simply how many documents have to be reviewed. A search of a relatively new home in a subdivision can cost as little as $60.00 encompassing only a couple of hours of clerk's time to do a search. An older property where the clerk has to search the land being purchased for 40 years along with adjoining properties can invovle a better part of a day on behalf of the clerk and the search fee can be as much as $150.00. The lawyer can usually give the client a good idea from the legal description, however, it is one of those items that one only knows for sure the cost of the search once it is actually tackled.

Title Search Disbursements

Are the fees paid by the lawyer or his or her clerk for copies of and fees for looking at Government Title records to the Land Registry Office. They are:

  1. The Search fee - The cost is $5.00 to look at each lot and $1.00 to copy each page of the lot abstract. If the initial search uncovers no Planning Act problems that cost is usually only $5.00, however, if adjoining lots have to be searched it is $5.00 for each additional lot for what is usually a maximum of $20.00. The abstract book is basically an index of all the documents effecting the title to the property and records all deeds, mortgages, easements, subdivision agreements and other restrictions on a property. In the Land Titles system the register also certifies the "owner of the property" subject to the other title documents.
  2. The Sheriff Certificate - If a person is sued a lien can be filed against the any property they own by filing a Certificate of Execution in the Registry Office. If one purchases property effected by an execution their interest or ownership in the property ranks after the execution. The Sheriff's Certificate is a certificate produced at the Registry Office which confirms if a person has executions filed against them. In the case of Land Registry system one must search all the owners for the last 20 years. In the case of Land Titles one must only search the persons listed as the owners in the abstract, but the certificate must be produced for the Registrar before the title is transferred. The cost is $11.00 per name, and if the purchaser is mortgaging the property the mortgage company always requires the purchasers be searched as their mortgage would also be effected by any executions against the mortgagors. Executions against the Vendors and Purchases are normally done on the initial search and must be redone on closing. The problem is that the indexing system is based on names only, and a person of a similar name will show up as an execution against vendor or purchaser even if it is not the same person. If the searches of the vendors and purchasers are left to closing and an execution is found it will usually cause the closing date to be put off at a significantly greater cost, so it is not a good idea to try to save money by putting the search against the purchasers off until closing.

Closing Disbursements

Are disbursements paid by the lawyer or his or her clerk to the land registry office to conduct a subsearch or update of the title search previously made and to register the title and mortgage documents.

  1. Search Fee - see above, the usual cost of the subsearch fee is $5.00, as only an update on the lot being purchased is required to ensure no new documents effecting title have been deposited.
  2. Sheriff Certificate - See above, an additional Sheriff's certificate must be obtained for the vendor and purchaser on closing to ensure there have been no executions filed against either since the last search. In addition, in Land Titles the Registrar will not certify title without the Sheriff's certificate being produced by the lawyer or clerk. The cost is $11.00 per person.
  3. Registration Fee - The cost for each document registered is $50.00.

Municipal and Utility Search Disbursements

These disbursements are monies paid to municipalities and utilities to confirm the status of accounts effecting the property and zoning compliance. These very according to how the property is serviced and differing land use restrictions. In addition, the fees for these items are also set by the municipalities and utilities and also very locally. They can be broken into two broad categories.

  1. Utility Disbursements - The Utilities involved are usually Gas, Hydro, Water & Sewer. Unpaid utility accounts form liens on a property which can be enforced by way of sale even against a subsequent purchaser of the property where it has been left unpaid by the vendor. The utility searches involve getting a letter from the utility confirming the status of the accounts (to confirm that there are no arrears of payments), confirming that there are no unpaid for appliances on the property such as furnaces, stoves, water heaters etc.., and asking the utility involved to conduct a final reading of the meters on closing and to switch over the name of the owner on the bills. Where the property is serviced by well and septic, the public health department must be consulted for a permit for the septic and the water needs to be tested for potability (quality).
  2. Municipal Disbursements - The searches involved are usually the Tax Certificate and the Zoning Compliance letter. Unpaid municipal taxes form a lien on the property that can be enforced by way of tax sale even against subsequent owners, therefore the tax certificate is necessary to confirm whether the tax payments are up to date. Zoning compliance letters confirm that the property can be used as required, the building comply with the zoning restrictions and that there are no outstanding work order or deficiency notices. This ensures the property can be used uninterrupted by the owner and is not subject to any outstanding compliance orders which can also be enforced against subsequent owners. Further, zoning problems must also be addressed when the purchaser goes to sell the property. Also, in the case of new subdivision a further search for compliance with subdivision agreements is required to ensure the owner does not have the liability of the developer under the subdivision agreements if services aren't completed or maintained.

Office Disbursements

Are disbursements incurred in the office on the file. These include photocopying and faxing at .25c a page and long distance, postage, courier and wiring fees as incurred. In addition is the charges for certification of cheques as charged by the bank. There is a further charge that amounts to a tax of $50.00 by the Law Society which is basically a tax on the transaction.

Land Transfer Tax

Is a tax charged by the Provincial Government that is basically a sales tax on land and is based on the purchase price. Please see our page on Land Transfer Tax for the amount.