Can You Extend or Change the Closing Date in Ontario?

Plans slip. A mortgage is delayed, a move is not ready, or the other side needs more time. If you are a buyer or seller in Ontario facing a closing date you cannot meet, you may wonder whether you can simply move it.

You can ask, but the other side may not agree. This article explains how to approach the request, what a written amendment should cover, and what is at stake if closing does not happen on time.

Changing the date is a matter of agreement

The closing date is a term of your agreement of purchase and sale. How a change can be made depends on the wording of your agreement and on what the other side is prepared to do, so approach it as a conversation and confirm the details with a lawyer. If time is of the essence and neither party is ready to close on the agreed date, the agreement stays in effect, and either party can restore time of the essence by setting a new closing date and giving the other party reasonable notice.

Expect the other side to ask why you need more time and how long. Some sellers will agree if they are not planning around the date. Others may want something in return, such as extra money or a firm new date.

What time of the essence means

Many agreements say time is of the essence, which means the closing date is strict. If time is of the essence and neither party is ready to close on the agreed date, the agreement stays in effect. Either party can restore time of the essence by setting a new closing date and giving the other party reasonable notice.

This matters because a missed date can be treated as a breach. Before you let a date pass, speak with a lawyer about where you stand, since the result depends on the wording of your agreement and the facts.

What a written amendment should say

Any change to the closing date is best recorded clearly in writing, and a lawyer can help you word it. Points that are commonly addressed include:

• The new closing date and time, stated clearly.
• Whether time remains of the essence on the new date.
• Any change to the price or adjustments, such as extra interest, carrying costs or a payment for the delay.
• What happens to the deposit while the date is moved. A brokerage holding a deposit in trust may release the balance owing to the seller only when the transaction is completed or with the mutual written consent of both parties.
• Confirmation that all other terms stay the same.

If you have a mortgage, check with your lender, because a new date can affect the mortgage commitment and any rate hold.

What is at risk if closing does not happen

If a buyer repudiates the agreement and fails to close, the deposit is forfeited to the seller without proof of any damage, because the deposit is security for performance and not damages. A court can grant relief against forfeiture under s. 98 of the Courts of Justice Act. For real estate deposits, courts have asked whether the forfeited deposit is out of all proportion to the seller's damages and whether it would be unconscionable for the seller to keep it.

A seller can also claim damages beyond the deposit. These are typically the difference between the agreed price and the property's value on the date set for closing, and the seller must take reasonable steps, such as reselling, to limit its loss.

The risk runs both ways. When a seller fails to close, the buyer's damages are presumptively the difference between the contract price and the market value on the closing date. An order forcing the sale to close is not granted as a matter of course. The party asking must show the property is unique and that damages would be inadequate, and courts should be reluctant to order it for a property bought solely as an investment.

New builds and what to do next

New homes have separate protections. If a builder misses the firm closing date (freehold) or firm occupancy date (condo) without a mutual extension or an unavoidable delay, the buyer gets delayed closing compensation of up to $7,500, including $150 per day for living expenses without receipts. Signing a mutual extension can affect this, so read any builder extension carefully before signing.

• Ask for the change as early as possible and explain the reason.
• Do not assume silence means agreement; get it in writing.
• Have your lawyer review any amendment before you sign.
• Tell your lender and update your moving and insurance plans.
• If the other side will not agree, speak with a lawyer before the original date passes, since what follows depends on your agreement and the facts.

Frequently asked questions