Closing Extensions and Amendments in Ontario Real Estate: How They Work

Life rarely follows a legal calendar. Mortgage approvals get delayed, movers cancel, chain transactions shift, and sometimes both parties simply realize the original closing date no longer works. In Ontario, when a real estate closing needs to be moved, the parties must formally amend the agreement — a casual phone call or handshake does not suffice. Understanding how closing extensions work, who bears the cost of the delay, and what pitfalls to avoid is essential for both buyers and sellers.

Why You Cannot Simply "Move" a Closing Date

An agreement of purchase and sale is a binding contract that specifies an exact closing date. Standard agreements in Ontario include a "time is of the essence" clause, which means the closing date is not approximate — missing it can legally constitute a breach of contract by the party who is unprepared.

As a result, any change to the closing date must be agreed upon in writing by both parties before the original date arrives (or, if necessary, on the day of default, though this requires careful handling). A verbal agreement to extend, no matter how friendly, is not enforceable for a land transaction in Ontario.

What Is an Amendment?

An amendment to the agreement of purchase and sale is a written document — signed by both buyer and seller — that modifies one or more terms of the original agreement. Most real estate brokerages use a standard form amendment (Ontario Real Estate Association forms are common).

A closing extension amendment typically specifies:

• The new closing date
• Whether per-diem compensation is payable (and to whom, and at what rate)
• Whether any other terms of the original agreement are modified (e.g., inclusions, price adjustment)
• A confirmation that all other terms remain unchanged

Both parties and their lawyers should review the amendment before signing. A simple date change can sometimes open the door to renegotiating other terms — a risk that both sides should be aware of.

Per-Diem Compensation: Who Pays When a Closing Is Delayed?

When the closing delay is caused by one party's failure to be ready, the other party is entitled to per-diem compensation — a daily amount meant to compensate them for the cost of the delay.

If the buyer is not ready: The seller incurs costs for every extra day they are without the sale proceeds: carrying costs (mortgage interest, property taxes, utilities, insurance) and sometimes temporary accommodation if they have already bought elsewhere. The buyer typically agrees to pay a per-diem rate as a condition of the seller agreeing to the extension.

If the seller is not ready: The buyer may be incurring costs: bridge loan interest (if they have already closed on a new purchase), temporary accommodation, storage for their belongings. Per-diem compensation flows to the buyer.

As of writing: typical per-diem rates are negotiated between the parties based on the seller's actual daily carrying costs. There is no fixed statutory rate — verify the approach with your lawyer.

If both parties agree the delay is mutual or no one's fault, they may agree to a "no cost" extension. This is more common in chain transactions where both sides simply need the same extra time.

Mutual Agreement Is Required: The Seller Cannot Be Forced to Extend

A critical point for buyers: the seller has no legal obligation to agree to a closing extension. If you need more time, you must ask — and the seller can say no.

If the seller refuses an extension and the buyer is not ready on the original date, the buyer is in default. The seller may then be entitled to declare the agreement at an end and pursue damages, including retaining the deposit.

This is why buyers should:

• Monitor mortgage conditions closely and flag problems as early as possible
• Talk to their lawyer the moment a delay becomes foreseeable — not the night before closing
• Never assume the seller will be accommodating simply because they have been friendly throughout the process

How to Request a Closing Extension

Step 1: Contact your real estate lawyer immediately when you know you need more time.

Step 2: Your lawyer contacts the other side's lawyer to request the extension and propose terms (new date, per diem if any).

Step 3: Both lawyers negotiate and agree on terms, or exchange counter-proposals.

Step 4: The amendment is drafted, sent to both clients for signing, and returned to the lawyers.

Step 5: The new closing proceeds on the amended date.

All of this must happen before the original closing date, which is why early communication is so important. Trying to negotiate an extension on the morning of closing is possible but chaotic.

Chain Closings and the Cascade Effect

Many transactions involve a chain: Buyer A is purchasing from Seller B, who is simultaneously purchasing from Seller C. If Buyer A cannot close, Seller B cannot close on their purchase either — and the disruption cascades. In these situations:

• All three parties (and their lawyers) typically need to agree on any date change
• The per-diem cost structure becomes more complex
• The risk of total collapse is higher if one link refuses to extend

If you are in a chain closing, make sure your lawyer is aware of the entire chain and build in extra lead time on the financing side.

Frequently asked questions