Closing Date vs Possession Date in Ontario: Are They the Same?

Many agreements show both a closing date and a possession date. Often they are the same day, so people treat them as one. When they differ, it raises fair questions: who owns the home in between, who pays for what, and what if something goes wrong.

This article explains the difference in plain terms, what the law and the registry tie to each date, and what to settle in writing if your dates are not aligned.

What each date means

The closing date is when the sale is completed. The buyer's lawyer tenders the transfer for registration, the tax is paid, and the money moves. Land transfer tax is paid by the person who tenders the conveyance, and it is payable when the conveyance is tendered or before. An electronic conveyance is treated as tendered when it is submitted under Part III of the Land Registration Reform Act.

The possession date is when the buyer gets the right to occupy, which usually means getting keys and moving in. In most sales it is the same day as closing. When the agreement separates them, it is because the parties negotiated something different, such as giving the seller a few days to move out after the money is paid.

When the dates differ and why that matters

A gap between the two dates can work in both directions: the buyer may have to wait to move in after closing, or may be asked to occupy the home before closing. Who holds which rights during the gap depends on the wording of your agreement, so it is worth confirming with a lawyer. Either arrangement creates questions that the agreement should answer clearly.

• Who is responsible for utilities, insurance and upkeep during the gap.
• What happens if the home is damaged before the buyer takes possession.
• Whether anyone pays rent or an occupancy charge for the gap.
• What happens if the person in possession does not leave or the buyer does not close.
• How the lender and the buyer's insurer are told about the arrangement.

The answers depend on the wording of your agreement and the facts, and they are not set by a single simple rule. If your dates differ, it is worth having a lawyer review the arrangement before you sign, and ideally record any agreed terms in writing.

Risk, default and the deposit

Risk between the two dates is a common worry. Who bears a loss such as damage or a fire depends on the agreement and on insurance, so confirm both with your lawyer and your insurer before closing rather than assuming.

A different risk is default. When a purchaser repudiates and fails to close, the Ontario Court of Appeal has said the deposit is forfeited without the seller having to prove loss, because the deposit stands as security for performance. A buyer who wants some of it back faces a two-part test: whether the forfeited deposit was out of all proportion to the damages suffered, and whether it would be unconscionable for the seller to keep it. Relief is not automatic, and the outcome depends on the facts.

For this reason, a buyer who is thinking of not closing, or a seller who is considering a different date, should get advice before acting.

If the home has a tenant

Possession can be more complicated when someone is renting the property. Under the Residential Tenancies Act, 2006, the word landlord includes the landlord's assigns and successors in title, so a buyer who takes title steps into the landlord's role.

A buyer who wants the home for personal use cannot simply assume the tenant leaves on possession day. A purchaser's own-use notice requires an agreement to sell, applies only to properties with no more than three residential units or to a condominium, and requires 60 days' notice ending on the last day of the rental period or term. The application needs the purchaser's affidavit, and the tenant can dispute it at a hearing. Compensation rules for these notices are changing, so confirm the current rule before relying on it.

A tenant's rent deposit is limited to one month's rent, or one week for weekly tenancies, and must be applied only to the last month or week of the tenancy. How the deposit is handled on a sale is something to settle through your lawyer.

What to do next

• Locate both dates in your agreement and confirm whether they are the same.
• If they differ, ask your lawyer what the agreement says about risk, utilities and insurance in the gap.
• Tell your insurer and lender about any early or late possession arrangement.
• If there is a tenant, ask your lawyer how notice, the deposit and timing will be handled.
• Do not decide to skip closing without advice, because the deposit may be at stake.

Frequently asked questions