The home purchase process can be a long one involving lots of paperwork. Closing, however, is the final stage in this process and is the day the Buyer takes legal ownership of his or her new house. On or prior to the closing day, the Buyer signs the mortgage loan agreement, and the title in the property moves from the Seller to the Buyer. There are a number of events that happen during closing and in our blog post today, we will discuss the significance of this final stage and how Buyers can adequately prepare for it.

What happens on Closing Day?

Canadian Mortgage and Housing Corporation provides a great summary of the three main events that happen on closing day:

  1. The mortgage lender will provide the mortgage sum to the Buyer’s lawyer
  2. The Buyer pays the remainder of the property purchase price to their lawyer, along with closing costs
  3. The Buyer’s lawyer pays the Seller, registers the home in the Buyer’s name(s) and gives the buyer the electronic copy of the Deed and confirms the location of the keys to the new home to the Buyer.

The Buyer will be provided with a Closing Disclosure or closing funds summary beforehand to know how much to pay for closing costs and the remainder of the purchase price. The Buyer usually provides a bank draft or certified cheque in the amount stated in the closing funds summary and gives that to their lawyer. A statement of adjustments which details the payments made and those outstanding, will also be given to the Buyer which details the credits and debits for the seller and the buyer.

There will be a lot of paperwork to be signed by the Buyer, and these documents could include promissory notes, mortgage agreements, acknowledgements and directions, land transfer tax affidavits, etc.

After all the documents have been signed and monies successfully transferred, registered title will be transferred to the Buyer in nearly all instances through Ontario’s electronic land registration system, Teraview.

How to prepare for closing

In order to avoid any delay in closing, there are some important steps for Buyers to put into consideration ahead of the day:

  • Review documents and ask questions when unclear: Since there will be a lot of paperwork to be signed by the Buyer, it is very important for the Buyer to understand the terms used in any document before signing. The Buyer should ask questions when unsure about any terms used in the closing documents – in particular documents signed as part of any financing.
    • Payments: Many fees may become payable before closing day so it is important for the Buyer to plan ahead of the day to avoid any delays. It is also advisable not to close at the end of the week in case of any glitches in bank transfers. Monies that will be paid include the remainder of the purchase price, title insurance, property insurance, appraisal fees, inspection fees, legal fees, registration fees, etc.
      • Appraisals: Lenders usually ask for appraisals of the home to ensure they are lending the market value of the property. An appraisal is done in advance of the closing day and is almost always the .

Closing these days is often done by way of exchange of documents between the lawyers electronically through email or other means, and similarly funds are often direct deposited or delivered by wire transfer into the seller’s lawyers trust account. Once the money and documents have been delivered and the transfer of the property to the buyer is registered, keys to the property will have to be delivered to the buyer. The protocol for the transfer of keys to the buyer during the COVID pandemic has generally been dealt with by providing the buyer with a code to the realtor’s lockbox on the property. Once the Buyer receives the keys – they can move into their new home!

What happens after closing?

After closing, the buyer’s lawyer will generally provide a full summary report which will include a copy of the transfer, mortgage documents and other signed documents – once received this report should be kept in a safe place. The Buyer should also inform companies, subscription services, postal service and other governmental authorities of the change in address.

At Northview Law, we would love to discuss any questions you have about selling and purchasing real property. You can book a free consultation with Northview Law on this link, or contact us at 416-639-7639. We look forward to hearing from you soon.