A closing day for a new home calls for a celebration. For starters, it’s a significant milestone in many people’s lives. Also, after spending so many days or months searching for the ideal home, you are now just one step to hitting that mark.
But what does this day entail? What happens on closing day in Ontario?
Well, one thing you can be sure of is some tedious paperwork that can sometimes be overwhelming. But that’s not all! There are so many things that take place during the closing day that new homeowners should be aware of.
This guide shares everything you need to know about closing day in Ontario, and what you should expect.
What Happens on Closing Day, Ontario?
This is the final step before you are given those keys to your dream home. And to help make that day as unforgettable and less tiring as it should be, here is a list of things you should expect—all as dictated by the Canada Mortgage and Housing Corporation.
- Your financier or bank prepares several documents for you to sign. These documents, which relate to your mortgage loan and other home purchase details, are brought to you by your lawyer.
- You are provided with the remaining money necessary for the house purchase (down payment plus closing costs), which you should clear using a bank draft. You give this bank draft to your lawyer to close the purchase.
- After all the funds have been successfully received, the lawyer/notary registers the purchase. This is done at the Land Title Office, and you will be listed as the property’s new owner.
- The seller receives their money, and you, as the new homeowner, get the home deed and the keys.
Sometimes, the lawyer or notary is proactive, preparing all the necessary documents and the final figures a few days before the set-closing day. If this happens, they can arrange for you to sign these documents and even provide the necessary bank drafty in advance.
All this ensures that you don’t have much to do on the closing day except to receive your new home keys and deed. And maybe celebrate later.
However, while all this seems like an easy and straightforward process, you must make several prior preparations. So, how do you prepare for it?
Closing Day Preparations, Ontario
Here are the steps you should take in preparing for the closing day.
- Ensure your Documents are in Order
Double-checking your documents will help ensure that everything is in place. Go through them to ascertain they are all complete and error-free.
The documents you should re-check before the closing include the disclosure forms, loan documents, and any other paperwork you might have. Clarify any areas that seem unclear to ensure you know what you are entering into.
- Inspect the property
Conduct a final inspection of the house to guarantee that everything is as it should be. This might help you identify any issues that need to be fixed before the closing day. It’s advisable to let professionals inspect to avoid any unpleasant surprises along the way.
- Check Your Finances
The closing day will require you to have your finances ready and available. This is because you have to pay for the deposit/down payment and closing costs.
You will also be required to cater to several other fees such as legal fees, land transfer fees, CMHC insurance, etc. Therefore, ensure that your pockets are well prepared for this.
Can you Back Out of Buying a House before Closing in Ontario?
The simple answer to this question is YES! You can certainly back out of a house purchase deal on closing day. However, this can only happen if both parties haven’t completed signing the home purchase agreement.
If the signatures are appended, backing out becomes more complex, as both the buyer and the seller are bound by the contract. And, while it’s not entirely impossible to back out from a signed purchase agreement, you should be wary as some losses might be incurred.
In Ontario, buyers of newly built condominiums have a cooling-off period of 10 days to cancel their purchase agreements. After this, they might lose their deposits or even more.
Walking away from a home purchase agreement might render you liable for damages caused to the other party, such as:
- Unexpected costs from delayed move
- Lost sale opportunity to another buyer
- Loss of deposit from another intended home purchase
Generally, “specific performance” (which requires you to see through the purchase) might be unlikely. However, the court might still find you liable, requiring you to cater to the total purchase price, plus any additional court costs.
Closing Date vs Possession Date in Ontario
Two dates are worth noting in a new home purchase process: the closing date and the possession date. However, many people still can’t differentiate between the two. But to help set the record straight, here is a clarification of these two terms.
The closing date, also called the completion date, refers to the day when the final payments on the home are made, and the home’s ownership is transferred to the new buyer. The process is conducted by the buyer’s and seller’s notary or lawyer.
On the other hand, the possession date denotes the day the new homeowner can physically possess the new home or property. It means the day the buyer is given the keys and legally allowed to move in. Possession day mostly follows the completion/closing day to ensure that all the transactions are complete.
Since possession is usually around noon, it sometimes becomes challenging to have both the completion and possession dates on the same day.
Generally, the completion day is vital, especially in terms of homeownership transfer and risk assumption of the property. The time at which all these changes are crucial, especially if there is any damage to the property. It helps to explain who was responsible for the house – the seller or the buyer.