Seller Won't Move Out by Closing Day: Buyer Options in Ontario

You have waited for closing day, and then you learn the seller is still living in the home, or has not finished moving out. It is stressful, especially if you have movers booked, a lease ending or a mortgage set to fund.

This article explains, in general terms, how to think about the problem and what steps tend to help. The right answer depends on the exact wording of your agreement and the facts, so a lawyer should review your situation quickly.

Start with your agreement of purchase and sale

Your agreement of purchase and sale is the starting point. It sets the closing date and usually says when you are to receive possession and what condition the home should be in. Read the clauses on closing, possession and any schedules or added terms.

Look for what the seller promised, whether anything was agreed about a later move-out, and what the agreement says about delay. Whether you have a right to a particular remedy depends on that wording and on the facts, which is why a lawyer should confirm before you act.

Why the problem happens

Sellers sometimes miss the move-out because their own purchase has been delayed, because moving arrangements fell through, or because of illness or a dispute. Sometimes there is a misunderstanding about the time of day or what was agreed. Knowing the reason helps, because a seller who wants to leave but cannot is often easier to work with than one who refuses.

If the seller says they need more time, do not agree to anything informally. Anything that changes closing or possession should be in writing and reviewed by your lawyer first.

Protect the deposit and avoid making things worse

Your deposit is normally held by the brokerage in a real estate statutory trust account. It can be released only with a mutual consent or release signed by all parties, or under a court order, and neither RECO nor the brokerage can pay it out until all parties agree.

If the dispute drags on, there is a limit. If a brokerage holds a deposit for two years and it is still not clear who is entitled to it, the deposit goes to RECO, which also pays out only on consent or a court order.

Be careful about doing something drastic yourself. Paying a deposit late or withholding it can itself breach an agreement, and RECO has given the example of a buyer who held back a deposit due on acceptance and may have given the seller grounds to terminate and seek damages. How this applies to your situation depends on the facts, so it is worth confirming with a lawyer before you change course.

Practical steps in the first day or two

• Call your real estate lawyer as soon as you hear there is a problem, not after closing day has passed.
• Ask the seller's side, in writing, whether they will be out and when.
• Do not move your belongings in or hand over keys or funds until your lawyer says it is safe to.
• Keep a record of dates, messages, calls and any costs you incur, such as movers, storage or hotel stays.
• Tell your lender and your insurer about the delay if your lawyer advises you to.
• Do not sign any extension, waiver or release unless your lawyer has reviewed it.

How these situations are often resolved

Many of these situations end with a written agreement between the parties. That might involve a short delay, a new possession date, or an arrangement about money while the seller stays on. Any such deal should say exactly what happens if the seller misses the new date again, and it should be put in writing and signed by everyone, so ask your lawyer how best to word and document it.

If the seller will not cooperate, a lawyer can explain the options under your agreement, including whether a formal demand letter or a court application makes sense. What is available, how long it takes and what it costs depend on the circumstances, so do not assume a particular outcome.

What to do next

Gather your agreement of purchase and sale, any amendments, your lawyer's contact details, your mortgage commitment and a list of costs the delay is causing. Then speak with a lawyer about your timing and options before closing day passes or you sign anything new.

• Bring the full agreement, not just the first page.
• Bring all messages with the seller and the real estate representatives.
• Note your lender's funding deadline and any lease or moving dates.

Frequently asked questions