What about the money? When we are ready to meet with you, we will send you an e-mail. It will contain details of the amount required to complete your purchase. This amount (shortfall funds) will include various adjustments such as property taxes, condominium fees (if required) and the amount required to pay our invoice. The shortfall funds must be in the form of a bank draft.
Whenever real estate changes hands, one of our tasks is to make sure each party pays their appropriate share of the property taxes. We refer to this is a property tax adjustment. Property tax adjustments can either increase or decrease the funds required to complete your purchase. We will send you details of the actual adjustments on your purchase in a future communication. If the current owner is on a monthly payment plan for property taxes, we calculate the exact amount of taxes owed by the seller up to the closing date. We then look at what they have actually paid and then credit the appropriate party with the difference. This can range from under $10 to about $200, depending on the timing of the closing date and the actual payments the seller has made.
If the current owner pays annually, the adjustment can be much larger. If the current owner has paid the taxes for the entire year in full, you will have to reimburse them for your share of taxes to the end of the year. If the taxes have not been paid, then your cash-to-close will be reduced by the current owner’s share of this year’s anticipated tax bill. Please note the due date for annual taxes in Edmonton, St. Albert and most other cities in Alberta is June 30 (this can vary somewhat in some outlying areas). Taxes are calculated on a calendar-year basis. When paying annually, the payment tendered on June 30 covers the period from January 1 to December 31 of that particular year.
Many newer communities in Edmonton have a mandatory community fee. This fee is used to maintain common elements in the community such as community recreation facilities or community landscaping. These fees tend to range from $50 per annum up to $350 per annum. There will be an adjustment on closing to ensure the seller pays their appropriate share and you pay your share of the community fee for the current year.
All condominium fees must be paid up to and including the Completion Day. It is the seller’s responsibility to pay all condominium fees when they are due. You , as the purchaser, are required to re-imburse the seller for your share of the closing month’s condominium fees. For example, if your purchase closes on the 5th day of the month, the seller must pay the monthly fee in full, even though the seller’s portion is quite small. The Statement of Adjustments will contain a credit to the seller for your share of the montly fee. The credit becomes part of the closing costs.
Sometimes, the condominium board of directors will determine they require special extra payments to pay for needed repairs and upgrades. These are called special assessments. The seller has a responsibility to disclose to the buyer everything they know about any upcoming special assessments. Payment of these assessments can then be negotiated between the parties.
Once you become the owner of your new home, you may be able to enroll in the monthly property tax program. This allows you to pay your taxes on a regular monthly basis on automatic monthly withdrawal rather than one large annual payment. Two things to remember. First, you cannot enroll in the program until you are the actual registered owner at Land Titles. Second, enroll within the first few days after you become the owner of the property, otherwise, in certain circumstances, penalties can be triggered. Please note, that some lenders insist that you pay the property taxes as part of your mortgage payments. In this case, you will not be able to enroll in the monthly program directly with the municipality.