Given the substantial financial commitment involved in buying, selling, or refinancing a property, seeking clarity on your legal fees upfront is a reasonable request. If you are buying a property, buyers naturally want to know the total funds required for closing day to that they could plan their finances accordingly. While your lawyer can easily outline their fee structure, your legal fees, total closing costs, and the final amount needed to close will vary based on the specifics of your transaction. Knowing the difference between legal fees and total closing costs makes the process clearer and helps you accurately compare lawyer quotes.
Legal Fees vs. Closing Costs
When clients ask, ‘How much will my closing cost?’ they are asking a loaded question that requires breaking down several distinct expenses.
A legal fee is the amount charged for legal services required to complete your transaction. Depending on the type of transaction, those services may include reviewing documents, conducting title and execution searches, communicating with the other lawyer, title insurer and your lender, preparing closing documents, and completing the legal transfer of the property.
Closing costs are broader. They may include the lawyer’s fees, disbursements, applicable taxes, land registration charges, title insurance, land transfer tax (“LTT”), adjustments between the buyer and seller, and other amounts associated with the transaction.
Finally, funds required to close refers to the sum of money that is required to complete the transaction. On a purchase, for example, this calculation will include downpayment, LTT , adjustments, legal costs, and other applicable amounts.
This is why a lawyer can provide a firm quote for their legal services upfront, but cannot give an ‘all-inclusive’ final closing total until later in the process.
What Can Be Quoted Early?
At the start of a file, your lawyer can quote a base fee depending on the transaction type (such as a cash purchase, private mortgage, or sale. MBLAW’s Fee and Services Schedule follows this approach, bundling the core legal fee, office disbursements, and standard searches into a clear base price.
For example, for a purchase transaction, our fee schedule identifies legal fee, office disbursements, and a specified amount of title and execution searches as components of the base fee. This provides a useful starting point, but it does not mean that every financial component of the closing is already known.
The Law Society of Ontario requires lawyers to disclose fees and disbursements in a timely manner and recommends providing clients with as much written information about the basis of fees as is reasonable and practical in the circumstances. It also recognizes that if unforeseen complexities arise, the final cost may change.
When the Scope Changes
A seemingly simple transaction can become complicated as new information arrives.
One common example is mortgage financing. A client may already have a mortgage commitment from the bank, but that does not necessarily mean that the lawyer has received the lender’s legal instructions. Once lawyer receives mortgage instructions, the lender may require additional searches, registrations, payouts, or other work before mortgage funds can be advanced.
MBLAW’s current fee schedule specifically notes that additional fees may apply where a lender requires additional searches, debt payouts, additional registered instruments, or more than one mortgage discharge.
The same principle applies to a refinance. What begins as a standard refinance may require additional work if another mortgage must be paid out, ownership is changing, or the lender imposes additional requirements. Whether buying or refinancing, if your fee changes, it is because the necessary scope of legal work expanded, not the price of the original quote.
Not Everything Is a Legal Fee
Another common source of confusion is assuming that all money handled by your law firm is for legal fees. In reality, your lawyer collects funds to pay third parties on your behalf. For example, while your lawyer arranges your title insurance, that premium goes directly to the insurer. The same applies to government registration fees. A good rule of thumb is: Money collected by your lawyer is not necessarily money charged by your lawyer.
For example, the lawyers initial quote can also change based on the number of searches that need to be conducted to ensure that a clean title is transferred. Lawyer cannot anticipate the extent of searches that need to be conducted until they look at your parcel register. Therefore, many lawyer can only quote an estimate amount even when it pertains to the work done by their office. These are mandatory transaction costs, not legal fees. Always check if a quote includes these third-party costs, as a lower estimate may simply be leaving them out.
Taxes and Rebates
Taxes often make up the largest portion of your closing costs, but they are entirely separate from your legal fees. In Ontario, buyers must pay a Provincial Land Transfer Tax, and those buying in Toronto face an additional Municipal Land Transfer Tax. Land Transfer Tax calculations depend on facts such as the location and value of the property, ownership interests, and eligibility for any applicable refund or exemption. Because first-time buyers may qualify for substantial rebates, your final tax bill depends heavily on your specific situation. This is why two people buying identically priced homes can have drastically different overall closing costs, even if their legal fees are exactly the same.
Adjustments Between Buyer and Seller
The purchase price listed in your agreement is rarely the exact amount you pay. On closing day, prepaid property expenses—like property taxes or condo fees—must be prorated between the buyer and seller on a document called the Statement of Adjustments. Because these exact figures rely on the seller payment up to the closing date, your lawyer can provide an early estimate, but the final accounting is only settled as closing approaches. As a result, an estimated budget can be prepared earlier, but the final adjustments are usually known about two or three days prior to closing.
Mortgage Approval Is Not Enough
Buyers often assume that once their mortgage is approved, their final closing numbers are ready. However, an approval is just the first step. Your lawyer still needs the lender’s formal instructions, which outline the legal conditions that must be met before funds are released. Furthermore, the approved mortgage may be reduced by appraisal fees, lender fees, insurance premiums or mandatory debt payouts, meaning the exact funds available for closing are only confirmed late in the process.
For this reason, confirmation that financing has been approved does not necessarily mean that the loan amount is the same as the amount advanced to your lawyer on closing.
When Will You Know?
Real estate files develop in stages. Early in the transaction, law firm typically gathers information and documents, reviews agreement and confirms the scope of the retainer, completes required identification and verification procedures, and reviews the transaction information available at that stage.
As the closing date approaches, additional work may include title and execution searches, communications with the other side’s lawyer and title insurance company, submission of requisitions, review of lender instructions, and preparation of closing documents.
Closer to closing, the lawyers receive or finalize additional financial information, including the adjustments between buyer and seller and applicable lender figures. If it is a sale or a refinance transaction the lawyer final numbers are contingent on the receipt of discharge statement from the clients lender(s).
Once the necessary information has been received, the lawyer can complete the final calculation and advise the client how much must be provided to complete the transaction or how much would the client be receiving at the end of the transaction.
This explains why you may receive a legal fee estimate well in advance while the final amount required for closing may only become available shortly before the closing date.
Communication During the Process
A quiet period does not mean your file has stalled; Real estate transactions involve several parties, and certain steps can only be completed once the relevant documents, instructions, or information become available from third parties.
Good communication isn’t about guessing your final numbers prematurely. It is about keeping you informed on what is known, what is estimated, and when to expect the final numbers.
At MBLAW, our goal is to make these distinctions clear so that clients understand both the legal process and the financial process leading up to closing.
Comparing Lawyer Quotes
Price is a reasonable consideration when selecting a real estate lawyer, but comparing only the initial number you receive can be misleading.
The Law Society of Ontario has specific rules governing advertised prices for residential real estate legal services. These rules are intended to make advertised prices clearer and more comparable and address what must be included in an advertised price and which limited categories may be excluded.
When reviewing a quote, consider asking:
- What legal services are included in the quote?
- What costs, disbursements, are included in the quoted amount, and which are separate?
- Which figures are fixed and which are estimates?
- Would additional work increase the legal fee?
- Are title insurance and government registration charges separate from the quote?
- Could lender requirements create additional work and increase fees as a result?
- When should you expect to receive the final amount required for closing?
These questions provide considerably more information than simply asking which firm has the lowest advertised number.
Transparency Matters More
You should absolutely ask your real estate lawyer about fees before retaining the firm. The goal is not to discourage clients from asking for a quote. It is to educate and help clients understand what amount can realistically be confirmed at each stage of the transaction.
For example, the lawyers initial quote could change based on the number of searches that need to be conducted to ensure that a clean title is transferred. Lawyer cannot anticipate the extent of searches that need to be conducted until they look at your parcel register. Therefore, many lawyer can only quote an estimate amount even when it pertains to the work done by their office.
Your lawyer should be able to explain the fee structure, what is included, what may be charged separately, and what circumstances could affect price increase for the legal work.
A transparent real estate closing therefore does not necessarily mean receiving one final number on the first day. It means understanding where every amount comes from, who determines it, whether it is an estimate or a confirmed figure, and when it should become available.
If you are planning to buy, sell, or refinance property in Ontario, MBLAW Professional Corporation can guide you through the legal and financial stages of the closing process, explain the applicable fee structure, and help you understand what to expect as your transaction progresses. Contact our office before your closing to discuss your transaction and the legal services required.
