Below are answers to common questions sellers have about the legal process, timing, and costs involved in selling a home in British Columbia.
Selling a home involves more than just accepting an offer. In addition to real estate commissions, there are legal, tax, and closing costs that sellers should plan for in advance. Understanding these costs can help you avoid surprises and plan confidently for your sale. Below is an overview of the most common costs associated with selling residential real estate in British Columbia.
Real Estate Commission
For many sellers, the largest expense is the real estate commission. Commissions are typically calculated as a percentage of the sale price, with the amount and structure set out in the listing agreement.
Where a realtor is used, the commission is usually shared between the listing agent and the buyer’s agent, and GST applies. The commission structure is confirmed in the listing contract.
Legal Fees and Disbursements
The seller normally bears all costs associated with clearing title. For example, if there is a mortgage registered against title it must be paid out. The seller’s notary will make arrangements to have all financial charges paid out on the completion date and discharged from title. This includes obtaining mortgage and other payout statements, arranging for the discharge of registered financial charges, and ensuring the seller’s documents are properly signed and completed.
As part of the closing process, adjustments such as property taxes and utilities are reviewed and accounted for, and sale proceeds are handled through trust in accordance with legal requirements.
In addition to legal fees, there may be disbursements such as Land Title Office filing fees, title searches, and electronic registration charges. Your notary or lawyer will provide a fee estimate in advance.
Mortgage Payout Costs
Depending on the terms of the mortgage, a prepayment or interest penalty may also apply. Contacting the lender early helps sellers understand these costs before completion.
Property Taxes and Utilities
Property taxes and utilities are adjusted as of the completion date. Depending on what has already been paid, the seller may receive a credit or owe an amount.
Any unpaid property taxes are paid from the sale proceeds and shown on the Statement of Adjustments.
Capital Gains Tax (If Applicable)
If the property is not the seller’s principal residence, capital gains tax may apply. This can include rental properties, vacation or recreational properties, or properties partially used to earn income.
Capital gains tax is not handled through the conveyancing process. Sellers should speak with their accountant or tax advisor regarding their tax obligations.
Non-Resident Withholding Tax (If Applicable)
If the seller is a non-resident of Canada for income tax purposes, the buyer is generally required to withhold a portion of the sale proceeds unless a clearance certificate is obtained from the Canada Revenue Agency.
This withholding can affect both the timing and the amount of funds the seller receives, making early planning especially important.
Repairs, Moving, and Other Costs
Many sellers also budget for costs such as repairs, cleaning, preparing the property for sale, and moving or storage expenses. These costs vary depending on the property and the seller’s plans.
When Are These Costs Paid?
Most selling costs are paid from the sale proceeds on the completion date. This typically includes legal fees, mortgage payouts, and adjustment
Setting the right sale price is one of the most important decisions when selling a home. Pricing too high can discourage buyers and lead to a longer time on the market, while pricing too low may reduce the amount you ultimately receive. A well-considered price helps attract serious buyers and supports a successful sale.
Your sale price is not fixed by law. It is based on market conditions, comparable sales, and informed judgment. Whether you sell privately or with professional assistance, careful pricing is essential.
Comparable Sales and Market Conditions
One of the primary ways to determine a sale price is by reviewing recent comparable sales in your area. These are properties that have sold recently and are similar in location, size, age, and condition. Current market conditions, including supply and demand, interest rates, and buyer activity, also influence pricing.
In a strong seller’s market, properties may sell quickly and at higher prices. In a slower market, realistic pricing is especially important to attract interest.
Professional Advice and Market Information
Some sellers choose to work with a real estate agent who can provide market data and pricing guidance. Others may rely on independent research, online sales information, or advice from valuation professionals.
Regardless of the approach, sellers remain responsible for deciding the final listing price.
Condition, Location, and Property Features
The condition of a property can significantly affect its value. Maintenance, renovations, layout, and curb appeal may all influence how buyers view a home. Location, lot size, views, parking, and nearby amenities are also important factors.
Certain features may appeal strongly to some buyers but may not always result in a higher sale price.
Appraisals and Financing Considerations
Even if a buyer agrees to a purchase price, the sale may be subject to financing. Lenders often require an appraisal, and the appraised value must support the agreed price. If the appraisal is lower than expected, the buyer may need to renegotiate or provide additional funds.
Adjusting the Price After Listing
If a property does not receive showings or offers within a reasonable period, a price adjustment may be considered. Adjusting the price sooner rather than later can help renew interest and avoid a property appearing stale on the market.
Final Thoughts
Setting a home’s sale price is both a strategic and practical decision. Whether selling privately or with professional assistance, careful pricing and an understanding of market conditions can help support a successful sale.
If a homeowner sells their residential property on or after January 1, 2025, and the property was purchased less than 730 days before the sale, income earned from the sale of the property may be subject to the BC home flipping tax, unless an exemption applies.
The BC home flipping tax applies to income from the sale of a property, including presale contracts and bare land zoned for residential use in British Columbia.
For more information about the British Columbia Home Flipping Tax, including when it applies and available exemptions, please refer to the Government of British Columbia Home Flipping Tax webpage .
Should I Let a Buyer Assume My Mortgage?
In some real estate transactions, a buyer may ask to assume the seller’s existing mortgage instead of arranging new financing. Whether this is a good option depends on the terms of your mortgage, current interest rates, and lender approval.
What Does It Mean to Assume a Mortgage?
A mortgage assumption occurs when the buyer takes over the seller’s existing mortgage, including the remaining balance, interest rate, and the remaining term and amortization. Not all mortgages are assumable, and lender approval is always required.
When Might a Mortgage Assumption Be Attractive?
Mortgage assumptions are most commonly considered when interest rates have increased since the seller obtained their mortgage. If the existing mortgage has a lower interest rate than what is currently available, an assumption may make the property more attractive to buyers.
Important Things Sellers Should Consider
Lender approval is mandatory, even if your mortgage allows an assumption. The buyer must qualify under the lender’s current lending criteria.
Sellers must also ensure they are fully released from the mortgage once it is assumed. Without a formal release, the seller may remain personally liable if the buyer later defaults.
If the purchase price exceeds the remaining mortgage balance, the buyer must provide the difference through cash or separate financing.
Some mortgages, including insured mortgages, may have restrictions or conditions that limit or prevent assumption.
Pros and Cons for Sellers
Potential advantages may include increased buyer interest and improved marketability in a higher interest rate environment.
Potential risks include delays while lender approval is obtained, additional complexity in the transaction, and the risk of ongoing liability if the mortgage is not properly discharged.
How Our Office Helps
If a buyer proposes assuming your mortgage, our office will review the mortgage terms, confirm lender requirements, coordinate with the lender and realtors, and ensure that all documentation is properly completed so that you are released from future liability.
Bottom Line
Allowing a buyer to assume your mortgage can be beneficial in certain circumstances, but it is not suitable for every sale. This decision should only be made after reviewing your mortgage terms and confirming lender approval.
Home insurance is an important part of protecting your property, but many sellers are unsure when coverage should end after a sale.
Cancelling insurance too early can expose a seller to risk, while cancelling too late may result in unnecessary premiums.
Keep Insurance in Place Until Completion
In British Columbia, a seller should keep their home insurance in place until the completion date of the sale. Until completion occurs, the seller remains the legal owner of the property.
If damage occurs before completion, the seller may still be responsible, even if possession has already passed to the buyer.
Completion Date vs. Possession Date
The completion date and possession date are not always the same. Completion is the date when ownership transfers and sale funds are exchanged. Possession is the date when the buyer receives the keys and takes physical possession of the property.
Insurance should remain in effect until completion, not possession. Cancelling insurance based on possession alone can leave the seller uninsured while still legally responsible for the property.
What Happens After Completion
Once the sale has completed and ownership has transferred, the seller is no longer responsible for insuring the property. At that point, the buyer’s insurance should be in place.
Sellers should contact their insurance provider shortly after completion to cancel or adjust coverage, effective as of the completion date.
Rental or Vacant Property Considerations
If the property is rented or vacant before completion, sellers should ensure their insurance policy accurately reflects how the property is being used. Some policies require specific coverage for rental or vacant properties.
Sellers should confirm coverage details with their insurer to avoid gaps in protection.
Role of Your Notary or Lawyer
Your notary or lawyer will confirm the completion date and can advise when ownership transfers. While they do not arrange insurance, they can help ensure you understand when your responsibility for the property ends.
Final Thoughts
As a general rule, sellers should not cancel home insurance until the sale has completed and ownership has legally transferred. Maintaining coverage until completion helps protect against unexpected loss and avoids unnecessary risk during the final stages of the transaction.
Sale Proceeds Are Paid on the Completion Date
The seller receives the sale proceeds on the day of completion. Completion is the date when ownership transfers at the Land Title Office and the purchase funds are received. Until completion has occurred, the seller does not have access to the sale proceeds.
What Happens on the Completion Date
On the completion date, the purchase funds are received into the seller’s notary or lawyer’s trust account. The seller’s notary or lawyer then completes the final steps required to release the funds. These steps include clearing registered financial charges, confirming the Statement of Adjustments, and ensuring all legal and trust accounting requirements have been met.
Clearing Registered Financial Charges
Before sale proceeds can be released, the seller’s notary or lawyer must clear title of all registered financial charges, such as mortgages and other secured debts. Once these amounts are paid out and adjustments are completed, the remaining balance represents the seller’s net sale proceeds.
How and When Funds Are Delivered
Sale proceeds are released to the seller on the completion date. The timing during the day can vary depending on when purchase funds are received and when final trust accounting steps are completed. Funds are typically provided by electronic transfer, direct deposit, or other agreed method once release is authorized.
Completion Date vs. Possession Date
The completion date and possession date are often different. Sellers usually receive their sale proceeds on the completion date not the possession date. Possession relates to when the buyer receives the keys and takes physical possession of the property and does not affect when the seller is paid.
Role of the Seller’s Notary or Lawyer
The seller’s notary or lawyer receives the purchase funds, clears registered financial charges, prepares the final Statement of Adjustments, and releases the net sale proceeds on the completion date once all requirements are met.
Final Thoughts
In British Columbia, sellers receive their sale proceeds on the completion date, after ownership has transferred and all required payouts and adjustments have been completed. Understanding this timing helps sellers plan with confidence during the final stages of the sale.
Sellers are often asked whether they should complete a Property Disclosure Statement when selling their home. While a disclosure statement is not legally required in every transaction, it can play an important role in meeting disclosure obligations and reducing the risk of disputes after completion.
What Is a Property Disclosure Statement?
A Property Disclosure Statement is a document completed by the seller that provides information about the property based on the seller’s knowledge. It typically addresses the condition of the property, known issues, and past repairs or alterations.
The disclosure statement is not a warranty or guarantee. It reflects what the seller knows about the property at the time the statement is completed.
Duty to Disclose Latent Defects
In British Columbia, sellers have a legal obligation to disclose known latent defects. A latent defect is a hidden defect that would not be discoverable through a reasonable inspection and that makes the property dangerous, unfit for habitation, or significantly less valuable.
This obligation exists whether or not a Property Disclosure Statement is provided. A seller cannot remain silent about a known latent defect.
Using the Property Disclosure Statement to Disclose Latent Defects
A Property Disclosure Statement is often an appropriate place for a seller to disclose known latent defects. By documenting known issues in writing, the seller helps ensure that important information is communicated clearly to the buyer.
Disclosing a latent defect in the disclosure statement can help demonstrate that the seller acted honestly and in good faith. It also creates a written record showing that the information was provided before the sale completed.
Benefits of Providing a Property Disclosure Statement
One benefit of providing a disclosure statement is transparency. Buyers are better able to understand the property and make informed decisions when known issues are disclosed upfront.
A properly completed disclosure statement may also reduce the risk of disputes or claims after completion by showing that known information, including any latent defects, was disclosed.
Completing the Disclosure Carefully
Sellers should take care to answer disclosure questions accurately and honestly. Sellers should not guess or speculate, and should clearly disclose known latent defects rather than minimizing or omitting them.
If a seller is uncertain about an issue, it is often better to state that uncertainty clearly or seek professional advice before completing the disclosure statement.
Final Thoughts
While a Property Disclosure Statement is not mandatory in every sale, sellers are legally required to disclose known latent defects. Using a disclosure statement to document that disclosure can help support transparency, reduce risk, and contribute to a smoother transaction.
When selling real estate in British Columbia, some sellers are required to obtain a clearance certificate from the Canada Revenue Agency. This requirement most commonly applies when the seller is a non-resident of Canada for income tax purposes.
Understanding how clearance certificates work and when they are required can help sellers avoid delays and unexpected withholding of sale proceeds.
What Is a Clearance Certificate?
A clearance certificate is a document issued by the Canada Revenue Agency under section 116 of the Income Tax Act. It confirms that the seller has either paid or provided security for any Canadian income tax that may be payable as a result of the sale.
The certificate relates specifically to the sale of Canadian real property by a seller who is a non-resident of Canada for income tax purposes.
Who Is Considered a Non-Resident Seller?
A seller may be considered a non-resident for income tax purposes if they do not ordinarily reside in Canada. Residency for tax purposes is determined by federal tax rules and does not depend on citizenship.
Sellers who are uncertain about their residency status should obtain tax advice early, as the clearance certificate process can take time.
Why a Clearance Certificate Is Important
If a required clearance certificate is not provided, the buyer is legally required to withhold a portion of the sale proceeds and remit that amount to the Canada Revenue Agency.
This withholding can significantly reduce the funds released to the seller on completion and may delay access to the full sale proceeds.
Withholding of Sale Proceeds
Where a clearance certificate has not been obtained by the time of completion, the buyer is generally required to withhold a percentage of the purchase price and remit it to the Canada Revenue Agency on the seller’s behalf.
The withheld amount is held as security against the seller’s potential tax liability and is not released to the seller until the Canada Revenue Agency issues the clearance certificate or otherwise resolves the matter.
Timing and Application Process
Applications for clearance certificates should be made as early as possible. Processing times can vary, and delays may occur if information is incomplete or if additional documentation is required.
Early planning helps reduce the risk of funds being withheld at completion.
Role of the Seller’s Notary or Lawyer
The seller’s notary or lawyer will advise whether a clearance certificate may be required and will coordinate with the buyer’s representative regarding any required withholding.
While notaries and lawyers assist with the conveyancing process, sellers are responsible for applying for the clearance certificate and addressing any tax obligations with the Canada Revenue Agency.
Final Thoughts
Clearance certificates are an important consideration for non-resident sellers of Canadian real estate. Addressing residency status and tax obligations early can help avoid delays, reduce withholding issues, and ensure a smoother completion process.
When selling real estate in British Columbia, special rules apply if the seller is considered a non-resident of Canada for income tax purposes. These rules can affect the timing and amount of sale proceeds a seller receives.
Understanding who is considered a non-resident, how withholding works, and what steps can be taken in advance can help avoid delays and unexpected financial consequences.
Who Is a Non-Resident Seller?
A non-resident seller is a person who is considered a non-resident of Canada for income tax purposes at the time of the sale. Residency for tax purposes is determined under federal tax rules and depends on where a person lives and maintains their residential ties.
Residency is not the same as citizenship. A Canadian citizen can be a non-resident for tax purposes, and a non-citizen can be a resident for tax purposes. Citizenship alone does not determine residency.
Why Residency Status Matters
If a seller is a non-resident of Canada for income tax purposes, the Income Tax Act requires that steps be taken to ensure any Canadian tax owing on the sale is paid.
As part of this process, a clearance certificate may be required from the Canada Revenue Agency.
Withholding of Sale Proceeds
If a non-resident seller does not provide a clearance certificate by the time of completion, the buyer is generally required to withhold a portion of the sale proceeds and remit that amount to the Canada Revenue Agency.
This withholding is often referred to as a holdback. The withheld funds are held as security for the seller’s potential tax liability and are not released to the seller until the Canada Revenue Agency issues a clearance certificate or otherwise resolves the matter.
What a Non-Resident Seller Can Do
Non-resident sellers can reduce delays and withholding issues by addressing residency and tax matters early in the selling process. This may include confirming residency status, applying for a clearance certificate in advance, and obtaining professional tax advice.
Early application for a clearance certificate can help ensure that sale proceeds are released on completion without a significant holdback.
Role of the Seller’s Notary or Lawyer
The seller’s notary or lawyer will identify whether a non-resident issue may apply and will coordinate with the buyer’s representative regarding any required withholding.
While notaries and lawyers assist with the conveyancing process, the seller is responsible for addressing tax residency status and applying for any required clearance certificate with the Canada Revenue Agency.
Quick Summary
A non-resident seller is determined based on tax residency, not citizenship. Non-resident sellers may be subject to withholding of sale proceeds unless a clearance certificate is obtained. Addressing residency status early and applying for a clearance certificate in advance can help avoid delays and reduce holdbacks.
Final Thoughts
Non-resident sales involve additional tax considerations, but with early planning and proper advice, many issues can be managed efficiently. Understanding these rules helps sellers avoid surprises and supports a smoother completion process.