Take the pressure out of real estate closings by not selling and buying on the same day.
Axess Law times real estate closings to happen in a way that doesn’t leave you struggling if your deal is delayed, for any reason.
The Closing Process in Real Estate
Two Closings in Real Estate
Ontario real estate sellers have two closing dates:
- The day you countersign the final offer.
- The completion date when the buyer gets legal possession of their/your home.
Real Estate Closings and Sellers
When you sell your home to buy a new one, you commit to turning over the keys on a mutually agreed-to time and date. Depending on what you negotiate, your buyer usually has until noon or end of business day for tasks essential to real estate closing, and so do you.
The real estate closing process in Ontario is the final stage of buying or selling a home:
completing home inspections
arranging soil or water tests
searching property titles
buying fire insurance
discharging older mortgages
getting new mortgages
depositing sales funds
reviewing and signing closing documents
and picking up the keys.
How a real estate lawyer can help.
Buyer’s Responsibilities in Real Estate Closings
On top of all that, when you close the sale of a new home the same day as your old home, you and your lawyer have a responsibility to:
settle property tax adjustments
negotiate lien payouts
review the e-parcel register or property history
request mortgage payout statements
provide a financial statement of adjustments for both transactions.
Unfortunately, real estate deals can and do go wrong at the last minute. Can a buyer back out after signing closing papers? That would be a breach of contract. You could be sued for the expense and inconvenience of finding a new buyer, and any difference between your offer and the property’s final selling price.
Discharging mortgages – your lawyer’s role.
Three Ways Your Deal Can Go Wrong
You’re counting on the sales transaction to be flawless. Anything could trip you up.
1. Your buyer can’t get mortgage financing.
Astoundingly, many home buyers jump in on the basis of a preapproved mortgage or vague idea of what they can afford. By the time they have signed an agreement of purchase and sale for your home, they are emotionally committed to buying. But their mortgage pre approval may have expired or higher interest rates have squeezed them out of your price range.
Hardest (especially first-time home buyers) to hear is that they may not be qualified to borrow the amount they need. Without that 20 per downpayment, your buyer will have to turn to an insured mortgage from CMHC, Canada Guaranty or Sagan. That requires them to pass a strict mortgage stress test.
When a private mortgage makes sense.
Offer Too High
Ontario buyers face another potential cash crunch: making up the difference between what they offered and the appraised value of your home. Bidding wars can drive a home’s price way up beyond what mortgage lenders are willing to advance.
Family, friends who want to go in together or paying higher interest rates at a private lender may be their last resort. If financing falls through altogether, you may have to relist your home. There goes the deposit on the legally binding offer you made to buy a new home yourself and close the same day.
Do you lose your deposit if finances fall through?
2. Insurance rejected.
Fire insurance is mandatory when buying a home. What buyers may not realize is that some mid-century homes have aluminium electrical wiring. And heritage properties can have antiquated knob and tube or patchwork wiring that poses a fire hazard. Finding a home insurer prepared to take the risk can be challenging, particularly on closing day.
3. You timed it too tightly.
Your buyer typically has until end of the closing day to complete the legal paperwork and collect the house keys. Your new home purchase depends on it. You’ve put your furniture in storage and booked the move. Now you’re just waiting for your lawyer’s call with the all-clear.
When is it too late to back out of buying a house in Ontario?
Cliff Hanger Closing
You signed a contract committing to close on your new home by the end of the day. As the day wears on, you get increasingly antsy. Turns out the buyer truly plans to show up at the very last minute to finalize the sale. Once they do, you no longer have legal possession or title to your home.
Is there a penalty for a buyer not closing on time (Ontario law)?
Seller Walks Away
Now your seller is growing impatient. Unless you can get a next-day extension, they may just walk away and hand you the bill for the cost and inconvenience of reselling their home. That includes any profit they may lose if the next offer isn’t nearly as rich as yours. Keeping your deposit is non-negotiable.
What happens to the deposit when buying a house?
Improbable you say? It depends how motivated the seller is. Home prices may have gone up since you signed the agreement of purchase and sale. Any delay could be an excuse to void the contract and accept a better offer.
Avoiding Same-Day Transactions
Why stress, when you could:
- Get bridge financing from your lender. It pays the mortgage on a new home while you wait for your existing home to sell. You get the luxury of moving whenever you want.
- Sell and rent or squat with relatives. Sit back, relax and watch the market until you find a home (and price) that appeals.
- Arrange your own closing a few days early. Move out and rent a hotel room until your home buyer closes their deal.
How long after closing on a house can you move in? The move-in time and date are in your agreement of purchase and sale, or ask your lawyer to confirm when vacant possession will occur.
Why You Need a Lawyer
Axess Law closes real estate deals for buyers and sellers — or both deals if you opt for a same-day transaction. Only a lawyer can finalize your home sale in Ontario.
We search your title for construction or financial liens. Our real estate lawyers locate easements and restrictive covenants you need to know about before your sale goes through.
Questions to ask a lawyer when buying a house
We discharge existing mortgages and finalize new mortgage financing you arrange through a bank, credit union, mortgage broker or privately. If property taxes or utilities are outstanding, our real estate law professionals ensure they are paid up.
And we give you a statement of adjustments, showing deposits, fees and disbursements you paid to buy or sell your home.
Legal Services You Can Afford
Axess Law makes getting legal advice affordable.
You pay only $999.99 and up plus HST to buy a home or $799.99 and up plus HST when you sell.
An Axess Law real estate lawyer (Toronto, Greater Toronto Area and Ottawa) can transfer title to property you own. Title transfers are $649.99 plus HST and refinancing a mortgage starts at $799.99 and up plus HST.
Ask us about your mortgage, title transfer, purchase or sale.
Book Lawyers Online or By Phone
Our mortgage lawyers meet online via convenient video conference call, anywhere in Ontario.
You can visit Axess Law locations near you in Greater Toronto Area or Ottawa. Make day or evening appointments, 7 days a week. We have onsite parking and easy access to public transit.