How to Extend a Closing Date on an Ontario Home Purchase

Sometimes a closing date cannot be met. A mortgage is delayed, a sale is delayed, or a seller needs more time to move. Asking for more time is common, but it is a request and the other side does not have to agree.

This article explains how extensions generally work in Ontario, what a written amendment should cover, and the risks if closing does not happen.

Why an extension needs agreement

The closing date is a term of your agreement of purchase and sale. Changing it generally means both parties agree to an amendment, signed by both. A casual text or a verbal promise can leave you exposed if a dispute arises later.

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.

What a written amendment should cover

• The new closing date and, if relevant, the new time and possession date.
• Whether time remains of the essence on the new date.
• Whether the deposit stays in trust and whether it is affected.
• Any payment or adjustment one side will make for the delay, such as extra carrying costs.
• Whether other dates in the agreement, such as condition or requisition dates, also move.
• Signatures from every buyer and every seller.

Your realtor or lawyer can draft this for you. Do not rely on a vague email chain for something this important.

What costs may apply

There is no standard price for an extension. Whether anyone pays for it depends on what the parties negotiate and on what the agreement says. A seller may ask for compensation if the delay causes extra expenses, and a buyer may ask for the same if the seller needs more time.

Other costs can arise outside the contract. You may have to talk with your lender about whether a mortgage commitment still works on a later date, and with your lawyer about whether moving, storage or interim housing will need to be arranged.

For a new home from a builder, the rules are different. 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 with no receipts needed. Be careful before you sign any extension with a builder, since agreeing to one may change what you can claim.

What happens if closing does not happen

When a buyer repudiates the agreement and fails to close, the deposit is forfeited to the seller without proof of any damage. A court can grant relief against penalties and forfeitures under section 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.

Seller's damages are typically the difference between the agreed price and the property's value on the date set for closing, and the seller has a duty to take reasonable steps such as reselling. 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.

A court does not grant specific performance, an order forcing the sale to close, as a matter of course. The party asking for it must show the property is unique and that damages would be inadequate.

What to do next

• Tell the other side and your lawyer as soon as you know you cannot close, and ask in writing.
• Say how long you need and why, and offer something reasonable if the delay costs them money.
• Get the amendment drafted and signed by everyone before the original date passes.
• Confirm your mortgage approval and any rate hold still apply to the new date.
• If the other side refuses, speak to a lawyer before the closing date arrives.

Frequently asked questions