When you’re budgeting for a home purchase, legal fees can feel like a black box. You get a quote, but what exactly are you paying for? And why do some costs seem to change or get added later in the process?
Understanding the difference between legal fees and disbursements – and why your lawyer sometimes can’t control certain requirements – helps you budget accurately and avoid closing day surprises.
Why Legal Fees Can Seem Complicated
Real estate lawyers have a unique role in property transactions. As lawyer Mark A. Epstein explains: “We’re acting for the purchaser, but we also act for the bank. If the bank wants wet ink signatures on documents, we need to get wet ink signatures on documents. It’s not necessarily our choice.”
This dual representation means some costs and requirements come from your lender, not your lawyer’s preferences.
Legal Fees vs. Disbursements
Legal Fees cover your lawyer’s professional services:
- Reviewing purchase agreements
- Conducting title searches
- Preparing closing documents
- Coordinating with lenders and other parties
- Attending to registration and closing procedures
Disbursements are third-party costs your lawyer pays on your behalf:
- Land Transfer Tax
- Title insurance premiums
- Search fees and certificates
- Registration fees
- Courier and administrative costs
Many clients expect legal fees to include everything, but disbursements are pass-through costs that vary by transaction.
Why Some Requirements Are Beyond Your Lawyer’s Control
Banking requirements drive many of the processes and costs in real estate transactions, and these can change without notice.
“There’s a disconnect between the bank lending department and the mortgage brokers. The lending department doesn’t always talk to the mortgage broker. So we talk to the mortgage broker, and the lending department talks to us, but they don’t talk to each other.”
This communication breakdown means:
- Document requirements can change last-minute
- Signing procedures may be dictated by the bank
- Timing is often out of everyone’s control
- Additional searches or certificates may be required
Your lawyer navigates these requirements but doesn’t create them.
Common Fee Questions and Answers
“Why didn’t you tell me about this cost earlier?” Some disbursements only become clear when banks provide final instructions, often just days before closing.
“Can I sign documents electronically to save money?” This depends entirely on your lender’s requirements, not your lawyer’s preference.
“Why do I need title insurance if you’re doing searches?” Banks often require title insurance as a condition for the mortgage regardless of other searches performed.
“Can you reduce the legal fee if the deal is simple?” Most real estate lawyers charge flat fees because every transaction involves the same basic legal requirements, regardless of complexity.
What’s Typically Included in Quoted Legal Fees
Standard legal fees usually cover:
- Review of the terms of the firm purchase agreement
- Title searches and examination
- Preparation of all legal documents
- Lender communications and document preparation
- Closing coordination and registration
- File management and client updates
What Usually Costs Extra
Additional costs typically include:
- Land Transfer Tax (government fee)
- Title insurance premiums
- Municipal certificates and searches
- Registration fees
- Any work outside standard residential transactions
- Delays caused by other parties
- Multiple mortgage registrations
Managing Expectations and Costs
Ask for a complete breakdown: Request estimates for both legal fees and expected disbursements upfront.
Understand bank-driven costs: Many requirements come from your lender, not your lawyer.
Plan for variables: Some disbursements can’t be calculated until closing details are finalized.
Choose experience: Lawyers familiar with different lenders can often anticipate requirements and costs more accurately.
The Value of Transparency
The best real estate lawyers provide detailed fee breakdowns and explain what drives various costs. When you understand where requirements are coming from, it’s easier to budget appropriately.
Your lawyer’s job is to navigate these requirements efficiently while protecting your interests – not to create unnecessary complications or costs.
For comprehensive guidance on real estate transaction costs and to understand what legal fees cover for your specific situation, contact us to discuss your purchase and get accurate fee estimates based on your transaction details.
