- Land transfer tax is payable when the transfer is registered, which happens on closing.
- Most transfers of title must be signed for completeness by a lawyer, and generally by two different lawyers, one for each side.
- If a deal fails, the brokerage should release the deposit only under a release signed by all parties or a court direction.
Closing day is the date your purchase becomes final. Money moves, ownership is registered in your name, and you get the keys. For a first-time buyer it can feel like a blur of phone calls and waiting, even though most of the work happens behind the scenes.
This article walks through the usual order of events, explains what real estate lawyers do on your behalf, and covers the problems that can delay a closing. Your own agreement and your lender's requirements can change the details, so treat this as a general map.
What closing actually means
Closing is the date set out in your Agreement of Purchase and Sale when the sale is completed. By then, any conditions in the agreement should have been fulfilled or waived. A conditional offer does not bind the seller and buyer until every condition has been fulfilled or waived.
On closing, the transfer of title is registered, and Ontario land transfer tax is payable at that same moment. In plain terms, closing is not just handing over keys. It is the point where the paperwork and the money line up.
What real estate lawyers do on closing day
Your lawyer prepares the documents, deals with the seller's lawyer, receives the funds from you and your lender, pays what is owed and registers the transfer. Registration has a special rule. Only a lawyer may sign for completeness a document that requires compliance with law statements, and most transfers of title contain such statements. Non-lawyers may sign these documents for release only.
Generally, a transfer of title must be signed for completeness by two different lawyers, one acting for the transferor and one for the transferee. Some transfers, such as transfers within a family, between related parties or in remote communities, may be completed by one lawyer acting for both sides, under the Law Society's professional standards.
- Reviews the final statement of adjustments, which splits items such as property taxes between you and the seller.
- Receives your mortgage instructions from the lender and makes sure the mortgage is registered.
- Collects the balance of the purchase price and the tax payable on registration.
- Registers the transfer and confirms the closing with you, usually by phone or email.
The money side of the day
Who holds your deposit depends on the terms of your agreement, so it is worth confirming with your lawyer or agent. A deposit that a brokerage is to hold under the Agreement must be put into that brokerage's real estate trust account within five business days of receipt. How the deposit is dealt with on closing is set by your agreement, and your lawyer can explain how it shows up in your closing figures. The remaining funds, including your down payment and mortgage advance, go through your lawyer.
| Item | What to know |
|---|---|
| Land transfer tax | Payable when the transfer is registered on closing, generally based on the purchase price plus any mortgage or debt assumed. |
| First-time homebuyer refund | Eligible first-time buyers can get a refund of up to $4,000 for registrations on or after January 1, 2017, claimed at registration or later from the Ministry of Finance. |
| Non-Resident Speculation Tax | Foreign nationals, foreign corporations and taxable trustees buying residential property anywhere in Ontario pay 25 per cent, in addition to land transfer tax. |
| Municipal land transfer tax | A separate municipal tax may apply depending on where the property is, and refund rules can differ. Ask your lawyer whether it applies to you. |
What can delay or derail a closing
Most closings happen on schedule, but a few problems come up often. A lender may be slow to release funds, a document may be missing, or a problem may turn up with the title or the seller's own mortgage. Your lawyer will usually raise these before closing day and try to resolve them.
If a seller refuses to close, a buyer who sues can use a certificate of pending litigation. Starting a lawsuit that puts an interest in land in question is not notice to outsiders until the court issues the certificate and it is registered on title. A court may discharge it in several cases, including where the claim is for money instead of the land, or where the claimant has no reasonable claim to the interest. Separately, a court that can order specific performance may award damages in addition to, or instead of, specific performance.
If the deal fails and the sides disagree about the deposit, the brokerage should release it 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 buyer and seller simply cannot agree on who gets the deposit.
What to do before closing day
- Hire your lawyer early and send them the signed agreement as soon as conditions are removed.
- Confirm your mortgage approval is final and ask your lender what it needs from your lawyer.
- Arrange funds for the balance and closing costs, and ask your lawyer to explain the amounts.
- Ask whether any municipal land transfer tax or the first-time buyer refund applies to you.
- Arrange home insurance to start on closing day.
- Book your move and confirm with your agent when and where you will collect the keys.
If something unexpected happens, such as a delay or a dispute with the seller, speak to a lawyer promptly. The right step depends on the terms of your agreement.
Frequently asked questions
Do I have to be there on closing day?
Often you do not need to attend in person, because your lawyer registers the transfer and handles the funds. You may need to sign documents beforehand. Your agent or lawyer will tell you when you can pick up the keys.
Why do I need a lawyer to sign the transfer?
In the electronic land registration system, only a lawyer may sign for completeness a document that requires compliance with law statements, and most transfers contain them. Non-lawyers may sign these documents for release only.
Is my deposit protected?
RECO's consumer deposit insurance covers deposits held in a brokerage's real estate trust account against events such as brokerage theft, fraud, insolvency or misappropriation, up to $200,000 per claim, at no cost to consumers. It does not apply where a failed deal leaves the buyer and seller unable to agree on who gets the deposit.
When do I pay land transfer tax?
Land transfer tax is payable when the transfer is registered, which happens on closing. Eligible first-time buyers may claim a refund of up to $4,000 at registration to offset the tax.
Sources
- RECO – conditional offer on buyer selling existing home — reco.on.ca
- RECO – Failed Agreements of Purchase and Sale — reco.on.ca
- RECO – Consumer deposit insurance — reco.on.ca
- Law Society of Ontario – Two-lawyer requirement for transfers of title — lso.ca
- Ontario.ca – Land Transfer Tax — ontario.ca
- Ontario.ca – Land Transfer Tax Refunds for First-Time Homebuyers — ontario.ca
- Courts of Justice Act (e-Laws) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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