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Whether you have found your dream home in Ontario or are finally selling your property and moving on to the next chapter, navigating the real estate process can be complex. For many, the closing process can be overwhelming and may raise questions and concerns. This seemingly complex series of steps finalizes the transfer of ownership from seller to buyer and involves extensive paperwork and legal work to ensure a smooth process.

This blog will explore the processes involved in pre-closing preparations and will provide an overview of what happens on closing day in order to complete the transfer of property from the seller to the buyer.

Pre-Closing Preparations

In the lead up to the closing date, several important steps are needed to help ensure the closing process runs smoothly. Some of these key steps are outlined in detail below.

Review the Agreement of Purchase and Sale

It is important to review the Agreement of Purchase and Sale (OREA Form 100), also referred to as the “APS”, in advance of any property closing. This binding contract outlines the terms of the property sale, including the purchase price, closing date, and any contingencies (i.e. conditions that must be met for the sale to proceed). The buyer and seller should thoroughly review the Agreement of Purchase and Sale with their lawyer to ensure that nothing has been missed and all responsibilities have been met. This agreement becomes a legally enforceable contract after both parties have executed it.

Obtain Financing Approval

If you are financing the purchase, ensuring your mortgage is finalized before the transaction closes is critical. The buyer must apply for a mortgage loan with the financial lender, which will consider the buyer’s financial status, credit history, and the property in question. Your real estate lawyer will work with the lender to ensure all necessary documents are in order prior to closing.

Conduct a Title Search and Obtain Title Insurance

A title search is necessary to verify that the seller has clear ownership of the property in question and will confirm that there are no outstanding liens or encumbrances that may negatively affect the transaction. Your real estate lawyer will conduct this search and will raise any issues with you beforehand.

After a title search has been completed, title insurance is typically purchased to protect the buyer and lender, if applicable, against title issues.

Account for Property Taxes and Adjustments

Property taxes are adjusted between the buyer and seller based on the closing date. Your real estate lawyer will calculate these adjustments, as necessary, and will ensure proper allocation of these adjustments.

Obtain a Property Inspection

In most cases, the buyer will arrange a professional property inspection before the closing date. The inspector will generally check for structural integrity of the building, electrical systems, HVAC, plumbing, roofing, and other key property features. If the home inspection revealed any issues, negotiations with the seller regarding repairs or holdbacks might occur before closing.

Closing Disclosure Review

In the days leading up to closing, the buyer will be provided an opportunity to review the relevant document disclosure, including financing terms, closing costs, and any other relevant paperwork. The buyer will also be required to sign all necessary documents prepared by their lawyer, including the mortgage agreement, transfer of title, and property tax forms.

What Happens on Closing Day?

There are several key steps and processes that generally occur on or immediately prior to closing day, some of which are described in further detail below.

Final Walkthrough

The buyer will return to the property to confirm that the property is in the condition that was agreed upon with the seller in the Agreement of Purchase and Sale. If any repairs are needed, the buyer can also confirm that these have occurred. Additional negotiations may occur between the buyer and seller if any issues are noted.

Payment of Closing Costs

In addition to the purchase price, the buyer must also account for closing costs associated with the property transaction. Closing costs can include, among other things, legal fees, property taxes, and title insurance.

Transfer of Funds From Buyer to Seller

The buyer will pay the agreed-upon purchase price for the property and the money is provided to the seller, subject to any existing mortgages or other liens on the property being paid off. The lawyer ensures the transfer of the purchase price from the buyer to the seller occurs, after accounting for closing costs and other applicable adjustments.

Document Recording

After the closing, your lawyer will register the new ownership documents, including the deed, with the appropriate land registry office. This process establishes the buyer as the new legal owner of the property by creating a public record of the property transfer.

Keys and Possession

The buyer will obtain the keys to the property after executing all documents and agreements, paying closing costs, and completing the closing procedure. This serves as a formal transfer of property possession, allowing the buyer to assume ownership and inhabit the property.

Ensuring a Smooth Closing Process

Working with a trusted real estate lawyer can give you peace of mind, particularly when navigating the closing process. Your lawyer will prepare all the necessary documents, will communicate with the seller’s lawyer, conduct the title search and ensure all necessary documents are in order and registered, if applicable. Your lawyer will also ensure your rights and interests are protected throughout the process. When working with a real estate lawyer, it is crucial to maintain open communication with your lawyer and realtor. It is important to ask questions and address any concerns promptly.

Contact the Real Estate Lawyers at Bader Law in Mississauga & Oakville for Assistance With Residential Real Estate Transactions

At Bader Law, our skilled team of real estate lawyers frequently represent individual and corporate buyers and sellers in both residential and commercial real estate transactions across Mississauga, Oakville, and throughout Ontario. We can help you manage your property transaction from the beginning, and will advise you on your rights, responsibilities, and options at every stage of the process. We will secure your interests and protect your financial investments. To speak with a member of our team regarding your real estate matter, contact us online or by phone at (289) 652-9092.