“Closing day” is yet another real estate term that seems simple at first glance. However, when you look a little deeper, there’s actually a lot going on before the keys and title to a house can change hands.
Both the seller and buyer have plans to make, and a clear understanding of what happens on closing day will help ease the stress for everyone. In this post, we’ll answer all of your questions and then some.
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What Is a Closing Date?
The closing date is the day and time that the ownership of a real estate title transfers from the seller to the buyer. The typical closing date on a house is between 30 and 90 days, but can be earlier or later depending on the terms outlined in the Agreement of Purchase and Sale.
Sellers often prefer a faster closing, especially if they have an offer on a new house. Each situation is nuanced, and being flexible whenever possible can actually be an unexpected competitive advantage.
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Completion Date Vs Closing Date
There are a lot of similar terms in real estate which can lead to some bewilderment over the closing process. For example, you’ll often hear people talk about their completion date when they are getting ready to take possession of a house. In this case, no confusion is necessary as the “completion date” is essentially the same as the “closing date.”
Whatever you call it, this is the day all legal and financial aspects of the transaction are finalized. The seller receives all funds from the sale and the lawyer registers the title in the buyer’s name.
Looking for more real estate advice before buying a house? The posts below are a great place to begin your research:
- Buying Your First Home: A Guide to Toronto’s West End
- What Is a Loft in Toronto?
- How Much Is Land Transfer Tax in Toronto?
Closing Date Vs Possession Date
Are “closing date” and “possession date” the same? Unlike closing and completion, there is a subtle distinction between these two events.
The closing date is the day all legalities of the transaction are completed. The possession date is when the buyer actually gets the physical keys and is able to move into their new home. Closing and possession often take place on the same day, but there can also be a delay between becoming the new owner on paper and moving in.
Some lawyers recommend a possession date one day after closing so they can ensure all funds clear before the buyer begins moving in. It reassures the seller that the transaction will go off without any problems. It also saves the buyer the stress of waiting in the driveway but not being able to move in due to an unforeseen complication.
Often, the seller or buyer will also want an extra day to fully prepare for the transition.
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The Closing Day Process
The closing process is highly detailed, and an experienced and knowledgeable lawyer is essential for a seamless transition. Both the buyer and the seller will want professional counsel. Your real estate agent can likely make a recommendation if you need a lawyer who you can be sure is up to the task.
- To start with, the lawyer will review the Agreement of Purchase and Sale and ensure the contract is valid and that all conditions are either fulfilled or waived.
- If there is a mortgage, they will prepare the financing documents for the buyer’s signature.
- A title search will ensure the seller has clear ownership of the property and the authorization to sell it. Any liens or encumbrances that could affect the transaction will come to light during this time.
- The buyer’s lawyer will arrange for title insurance. While not mandatory, this will protect against potential issues such as survey errors or even fraud.
- Lastly, the lawyer will prepare a Statement of Adjustment, which breaks down the remaining balance of the purchase price minus the deposit, any prorated adjustments for property taxes, utilities, or other expenditures that the seller has paid for that extend beyond the closing date.
- Once the funds are confirmed, the seller’s lawyer will release the Transfer Deed to the buyer’s lawyer, who will register the new ownership with the Land Registry Office. The buyer is officially now the new homeowner.
Closing a real estate transaction can be stressful; however, open communication and clear expectations will make the process more straightforward for all parties. Now, all that’s left is to get to know your neighbourhood and begin planning for a new set of adventures!
Are you ready to start searching for your new house? Our West Toronto Realtors® are happy to guide you, whether you’re downsizing, searching for your first home, or moving up the property ladder. Contact us today at 416-788-1823 or email kim@kimkehoe.com to learn more.
