What Happens If Your Mortgage Funds Are Late on Closing Day in Manitoba?

Closing day depends on many people moving at the same time. If your lender has not released your mortgage funds when they are needed, the whole chain can stall, and it can feel urgent and frightening.

This article explains what a delay can mean, what usually matters most, and the practical steps to take. The exact consequences turn on your agreement and the facts, so speak with a lawyer right away if you are in this position.

This article covers the law of Manitoba.

Why funds can be late

Lenders release money to your lawyer only once their own conditions are met. A delay can come from a missing document, an unsigned form, a question about the property, a change in your finances, or simply a processing backlog on the lender's side.

Because your lawyer usually deals with the lender, the lawyer is often the first person to learn that funds are held up. Make sure your lawyer can reach you all day.

What the delay can affect

A transfer of land is completed by registration. In Manitoba, registration is completed when the certificate of registration is signed or the data is accepted in the electronic system, and it takes effect from the day the instrument is assigned a serial number. Registrations run electronically through Teranet Manitoba. If the money is not there, your lawyer will generally not be in a position to complete the steps that depend on it.

• Possession: the seller may not hand over keys until the sale completes.
• Costs: your agreement may allow the seller to claim extra costs or interest for the delay.
• Default: a long delay can put the buyer in breach of the agreement.
• Moving plans: movers, a lease ending and a seller's own purchase can all be affected.

Whether any of these apply, and how much they cost, depends on the wording of your agreement and the facts. Do not assume the outcome either way.

Steps to try to fix it

• Call your lawyer immediately and say exactly what the lender has told you.
• Contact the lender or broker and ask what is missing and when funds can be released.
• Ask your lawyer to tell the seller's lawyer promptly so the other side is not surprised.
• Ask whether the seller will agree in writing to a short extension or later closing time.
• Check whether you have savings or other funds that could bridge a short gap, and talk to your lawyer before using them.

Any agreement to change the closing time should be in writing. Informal assurances can lead to disputes later.

Other costs that still come due

Land transfer tax is due when the transfer of title is registered. The buyer is generally the one who pays it, along with a registration fee. If registration is delayed, these costs are delayed with it, but they are still part of the money you will need to have ready.

If you are a first-time buyer using a withdrawal from a registered savings plan, timing matters as well. Ask your lawyer and your financial adviser how a delay could interact with the rules for your withdrawal.

Reducing the risk next time

• Send the lender every document it asks for as soon as you can.
• Tell your lawyer about any change in your job, income or credit before closing.
• Ask your lender how early funds are usually released on closing day.
• Keep your lawyer's and lender's contact details with you on closing day.

Frequently asked questions