The Agreement of Purchase and Sale (the “Agreement”) has been signed by both you and the other party and now you are contemplating your next step. The first thing that you should keep in mind, whether you are a seller or a buyer, is that there are usually conditions in the Agreement that benefit the buyer and allow the buyer to do certain things before the Agreement is “firm”. For instance, there is usually a provision in the Agreement where the purchase of the property is made conditional upon the buyer obtaining satisfactory financing, or conditional upon a home inspection that is satisfactory to the buyer. If the purchase is of a condominium, the buyer will likely make the Agreement conditional upon the buyer’s solicitor reviewing a status certificate which outlines the status of the condominium including its financial stability and liabilities.

The Purchase of a Re-sale Home or Condominium

If you are purchasing a re-sale home or a condominium, you should note that you will have to pay land transfer tax on the purchase price.

In addition, there may be certain adjustments on closing. For instance, if property taxes for 2006 were assessed at $2,000.00 and the seller has pre-paid $1,000.00 of that amount and the closing date is on June 2, 2006, the seller is entitled to a credit in the amount of $1167.12. This refund would be added to the balance of the purchase price that must be paid to the seller on the closing date. Examples of other adjustments include common expenses, water billed on a flat rate, and oil (if oil is used to heat the home).

Once the Agreement has been signed, you should notify your lawyer of the closing date and provide him/her with a copy of the Agreement. In addition, if you have not already done so, you should visit financial institutions to inquire about rates and obtain approval for financing. The financial institution will ask you to provide the name of the lawyer and the law firm that will be acting for you on the purchase to enable them to forward the mortgage documents and the mortgage funds to the law firm.

If permitted by the Agreement, the buyer should promptly arrange to have an inspector attend the home to conduct a home inspection.

If it is a condominium that you are purchasing, you or your agent will request a status certificate from the property manager of the condominium. Once the status certificate is ready, it is delivered to the buyer’s lawyer for review. The buyer’s lawyer reviews the status certificate together with the accompanying documents and informs the buyer of any concerns that he or she may have. At that point, it is the buyer’s decision as to whether he or she wishes to proceed with the purchase, based on the items that were revealed by the status certificate.

The approval for financing, the home inspection and the review of the status certificate must be completed within the time specified by the Agreement. A waiver must also be signed at the same time as evidence that the conditions have either been complied with or waived, otherwise the Agreement becomes null and void.

Once you have arranged financing, and if it is a house that you are purchasing, you should consult your insurance broker to arrange home insurance. This will be a requirement for most financial institutions prior to advancing any loan amount. Your insurance broker will require the name and address for service of your chosen financial institution which will appear in the Charge/Mortgage registered on title. If you are purchasing a condominium, it is wise to arrange content insurance, as the condominium building and common areas are insured by the condominium corporation but your personal belongings in your unit are not insured.

Once your lawyer has received the waivers, he or she will conduct an in depth review of your Agreement, and conduct the necessary title and execution searches in order to submit his or her requisitions on title to the seller’s lawyer. He or she may contact you to ask some questions that are pertinent to the creation of the closing documents, such as your marital status. At this time, the buyer’s lawyer will typically send an introduction letter to the buyer indicating that he or she has been retained to act on the closing of the purchase of the property.

Thereafter, the buyer’s lawyer will prepare the documentation in regards to the transfer and the mortgage that the buyer will be required to sign for closing. Typically two to four days before the closing of the transaction, the buyer will attend at its lawyer’s office to deliver the closing funds as well as sign the necessary documents.

With the advent of electronic registration, closing will take place in escrow pursuant to an escrow agreement between the buyer’s lawyer and the seller’s lawyer. Both the seller’s lawyer and the buyer’s lawyer will exchange the relevant closing documents including the funds and keys in advance to be held by the respective lawyer’s until the closing formalities have been completed . On the day of closing the buyer’s lawyer will register the transfer and the mortgage (if applicable), at which time the keys to the property can be released to the buyer and the closing funds can be released to the seller. Since registration and the subsequent release of keysl typically takes place in the afternoon movers should be scheduled accordingly.

The Purchase of a new Home or Condominium

The procedure discussed above also applies to a new home or condominium with a few exceptions. If you are purchasing a new condominium, once you and the builder have both signed the Agreement of Purchase and Sale and the builder returns the Agreement to you with the Disclosure Package you have 10 days to cancel the Agreement referred to as the “cooling off” period. During these 10 days it is advisable to take the Agreement to your lawyer along with the Disclosure Package for review. Upon review by your lawyer, potential concerns can be discussed.

Unlike homes, new condominiums have two closing dates. The first closing date is referred to as the Interim or Occupancy Closing Date. This is when the unit is ready for occupancy. At this time, the buyer must sign occupancy closing documents, pay an additional deposit (if specified in the Agreement) and is permitted to move into the unit. The buyer is not registered on title as the owner and must pay a monthly occupancy fee which comprises interest on the balance of the purchase price, an estimate for realty taxes and maintenance fees.

The final closing takes place after the condominium has been registered, which is typically 2-5 months after occupancy closing. At this time, the buyer will be required to sign additional documents and deliver the balance of the purchase price subject to adjustments. It is important to have a lawyer review the Agreement within the 10 day cooling off period so that you are aware at an early stage of unexpected costs and adjustments that may be payable by you upon final closing.

New home buyers must also pay adjustments on closing. Nonetheless, new homes are not subject to the 10 day cooling off period. Therefore, you may wish to have your builder insert a condition into the Agreement allowing for lawyer’s approval or have your lawyer review a copy of the Agreement before you execute it.

For both new homes and condominiums, a land transfer tax refund of up to $2,000.00 may be available to the buyer. To qualify for the refund:

  • The purchaser must be at least 18 years old;
  • Application for refund must be made within 18 months after the date of conveyance or disposition;
  • The purchaser must occupy the home as his or her principle residence within 9 months of the date of conveyance or disposition;
  • The purchaser cannot have previously owned a home, or an interest in a home anywhere in the world;
  • A spouse or same-sex partner of the purchaser cannot have owned a home, or an interest in a home, anywhere while the spouse or same-sex partner of the first time purchaser; and
  • The purchaser cannot have received an Ontario Home Ownership Savings Plan (OHOSP) based refund of land transfer tax.

In addition, for both new homes and condominiums, before closing (occupancy closing for condominiums) the buyer will be required to conduct a pre-delivery inspection with a representative of the builder and record all deficiencies on the Certificate of Completion and Possession which should then be remedied by the builder within the time as specified in the Agreement.

The Sale of a Re-sale Home

If you are selling your home or condominium, you will need to provide a copy of the Agreement to your lawyer. In addition, your lawyer may request additional documentation from you such as your deed/transfer, a mortgage statement, a survey, and/or a tax bill. Once your lawyer has all the required information, he or she will request a mortgage discharge statement from your financial institution which will indicate the deduction to be made from the sale proceeds to pay off your mortgage balance.

Thereafter, the seller’s lawyer will respond to the requisition letter received from the buyer’s lawyer and will prepare the deed/transfer as well as other closing documents requiring the seller’s signature.

The closing of the transaction will take place in the same manner as discussed above for a purchase.


While this article provides an overview of the procedures involved in a real estate transaction, it is by no means exhaustive of all of the steps that are taken in a given transaction and does not take into consideration any problems that may arise along the way. A buyer or a seller should always consult with his or her lawyer and ask questions to ensure that he or she completely understands what his or her obligations and rights are in the real estate transaction.