Real Estate Law: Closing a Real Estate Transaction
Choosing a closing date
The closing date can be whenever the parties agree upon, however selecting a closing date on a weekend or statutory holiday will prevent your transaction from being registered because the land registry offices and the electronic registration system are unavailable. If parties so choose to close on those days, alternative arrangements such as closing in escrow can be made with caution. Other days such as the last day of the month or Fridays are typically very busy for real estate transactions for various reasons such as having the weekend to move in and concluding payment cycles. Therefore, if possible, avoiding those days may be prudent especially if someone is planning on selling and buying on the same day.
Right after completion, vacant possession is to be provided according to the Agreement of Purchase and Sale unless a tenancy is to be assumed by the buyer or the Seller or Buyers have made arrangements for the Seller to move at a later date. If this is the case, the necessary provisions should be provided in the Agreement. It is especially important to note that if a Buyer is agreeing to allow the Seller to stay in the purchased home for a specific amount of time, the Buyer would typically not want to be in a landlord – tenant relationship with the Sellers because then the relationship could be governed by the Ontario Residential Tenancies Act, 2006, which provides for a wide array of tenant’s rights and landlord’s obligations.
According to the Ontario Real Estate Association (OREA) standard form agreement of purchase and sale, vacant possession is to be provided until no later than 6:00 p.m. on the completion date. However, transactions have to be registered before 5:00 p.m. being the daily deadline that the land registry offices and electronic registration system accepts registrations. Therefore, although a Buyer may be the legal registered owner of the property before 5:00 p.m., he or she must allow the Seller until 6:00 p.m. to provide vacant possession of the property because the Agreement takes precedence. Vacant possession can become a contentious issue whenever someone is planning their move on the closing date because the buyers are eager to move in and typically hire movers expecting to move in economically and expeditiously. This scenario should be contemplated at the time the Agreement is being negotiated in order to specify a time for vacant possession and to avoid complications.