Extending or Delaying a Closing Date in Ontario Real Estate

Closings do not always go to plan. A buyer's financing may be delayed, a seller may not be ready to move out, or a lawyer may need more time to finish the paperwork. When you cannot close on the date in the agreement, the key question is whether the other side will agree to a new date.

This article explains in general terms how an extension usually works, what an amending agreement does, and what can go wrong if the date passes without a signed change.

Can the closing date be changed?

The closing date is a term of the Agreement of Purchase and Sale. Whether and how it can be changed depends on your agreement and on how the other side responds. If you do reach a new arrangement, it is sensible to put it in writing and have it signed, because a casual email or a verbal promise from one side is a weak foundation if the deal later becomes a dispute.

Whether the other side will agree to a new date depends on the facts and on the wording of your agreement, so it is worth confirming with a lawyer. Some agreements also contain their own wording about adjustments to the closing date, so read yours closely and have your lawyer review it before you ask for more time.

If the agreement is still conditional, the picture is different. A conditional offer does not bind the seller and the first buyer until every condition has been fulfilled or waived. A delay in meeting a condition is a separate issue from a delay in closing.

What an amending agreement does

An amending agreement is a short written document, signed by the buyer and seller, that changes one or more terms of the original agreement. For a delay, it usually states the new closing date and confirms that everything else stays the same.

Sellers and buyers sometimes agree to adjust other terms at the same time. Examples include who covers extra costs, how the new date affects interest or utilities, or whether the buyer receives early access. These are negotiated points, not automatic ones, so each should be written down.

• The new closing date, with the time of day if it matters.
• A clear statement that all other terms of the original agreement continue.
• Any agreed adjustment for extra costs or a change in possession date.
• Confirmation from everyone named in the agreement, in the form your lawyer advises.

What a late closing can risk

If the closing date passes with no signed extension, the side that is ready to close may take the position that the other side is in breach. The consequences depend on the agreement and the facts, which is why a lawyer should look at it before anyone decides to walk away.

• The deposit: when a deal fails, the brokerage should release the deposit only under a release or direction signed by all parties to the Agreement, or under a court direction. RECO's consumer deposit insurance does not apply where a deal has failed and the parties simply cannot agree on who gets the deposit.
• A lawsuit by the buyer: starting a lawsuit that puts an interest in land in question is not notice to outsiders until the court issues a certificate of pending litigation and it is registered on title. A court that can order specific performance may award damages in addition to, or instead of, specific performance.
• Loss of the certificate: the court may discharge a certificate of pending litigation in several cases, including where the party claims money instead of the land or does not pursue the case with reasonable diligence.

Money and tax effects of a new date

Ontario land transfer tax is payable when the transfer is registered, which happens on closing. A new closing date therefore moves the date you need those funds. Eligible first-time homebuyers can get a refund of up to $4,000, which may be claimed at registration to offset the tax or later from the Ministry of Finance.

Other items can also be affected by a move in date, such as mortgage commitments, rate holds, insurance, movers and rental arrangements. Ask your lender, insurer and lawyer whether a later date changes any of them. Who bears the risk if the home is damaged between the original and new dates depends on the agreement, so ask your lawyer to confirm it.

What to do next

Raise the problem early. The sooner the other side hears about a delay, the more room there is to agree a fix.

• Contact your lawyer as soon as you suspect you cannot close on time.
• Ask your lawyer to read the closing date and any related wording in your agreement.
• Request the extension in writing and propose a specific new date.
• Sign an amending agreement before the original date passes.
• Tell your lender and insurer about the new date.

Frequently asked questions