What happens to my closing if a non-resident seller's clearance certificate hasn't arrived in time?
A closing does not necessarily need to stall completely just because a non-resident seller's clearance certificate has not yet arrived from the CRA. The common approach is for the buyer's lawyer to hold back the required withholding amount in trust at closing, based on the full purchase price in the absence of the certificate, rather than delaying the transaction indefinitely while waiting for the CRA to respond. Once the certificate eventually arrives, the held-back funds can be adjusted and released or remitted appropriately based on what the certificate actually confirms.
This arrangement generally needs to be addressed directly in the purchase agreement, or agreed to by both sides' lawyers as the transaction approaches closing, since it affects how much of the sale proceeds the seller actually receives on closing day versus later. Because this can be a point of friction if it is not anticipated early, both buyer and seller benefit from raising it well before the scheduled closing date rather than discovering the issue at the last moment.
If you are a non-resident seller, start the clearance certificate process early and make sure your purchase agreement anticipates a possible holdback if it has not arrived by closing.
Key takeaways
- A missing clearance certificate does not automatically have to delay closing outright.
- A holdback of the required withholding amount is a common way to manage the timing gap.
- The holdback is later adjusted once the certificate confirms the actual amount owing.
- Address this possibility directly in the purchase agreement well before closing.