Vacant Possession - Complete Uncertainty In Ontario
The standard form Agreement of Purchase and Sale provides that the completion will take place BEFORE 6:00 pm on the day of closing.
The specific clause reads as follows:
“2. COMPLETION DATE: This Agreement shall be completed by no later than 6:00 p.m. on the .............. day of ...................................................
20 ............... Upon completion, vacant possession of the property shall be given to the Buyer unless otherwise provided for in this Agreement.”
The actual wording was “no later than..”. That has the same meaning as “before”, or I suppose precisely at 6:00:00 pm
So What Time Does it Close? When can we move in?
Who knows! Could be anytime that day, up to 6:00 pm.
Lawyers’ Choice: The real difficulty here is that the two lawyers pick a time for closing sometime on the closing date.
Registry Office: The Registry Office (in Ontario) opens at 9:00 am closes at 5:00 pm. So, they cannot close after that, since title cannot be registered.
Escrow Closings: The problem is that the OREA standard form Agreement of Purchase and Sale, adds an additional hour. This was likely unintentional. On busy days, the Registry Office would often stay open until 6:00 pm. However, that is no longer the case with electronic registrations by computer. This means that there is an additional one hour to close, but that closing would have to take place in escrow. The problem is that there were no escrow arrangements set out, as there should have been had this been intended in the first place. Naturally, the parties can always agree to an escrow closing at any time that day, should they wish.
Selecting the time: The completion time is the ad hoc time picked by the lawyers on the closing date. That could be 9:30 am. If that’s the case, then the Seller has to be out by 9:30 am.
Selecting the Precise Time: You could, of course, amend the Offer to move up the closing to 11:00 am, and that time would then be the latest time for completion on the closing day.
Last Minute Problems: There are many issues that come up at the last minute. There’s damage to the building. There was a flood or sewer backup. There are unresolved title issues. The Buyer’s house deal hasn’t closed yet, so, he’s short the closing money. It’s supposed to be soon! The Lender has discovered some last minute issues. The file is back in underwriting. The Buyer “forgot” to disclose something of major importance.
Closing Procedure: It only takes the two Law Firms about 12 to 20 minutes to get “online” and complete the transaction. The Seller’s solicitor will have delivered the original signed Transfer/Deed and all other related closing documents to the Buyer’s solicitor. The Buyer’s solicitor will have delivered various signed documents and the closing funds to the Seller’s solicitor. If everything is in order, the “registration transfer will take place online”, and that process shuld only take a few minutes.
Caution to Real Estate Agents: Always have the Buyers speak to their lawyers about the closing time. Don’t say: you have until 6:00 pm, or you can get in first thing in the morning. Don’t say something like you might sell your house at 9:30 am but you can stay until 6:00 pm or midnight for that matter. When it closes, you are supposed to be “out”.
Basically, "vacant possession" goes with the time stamp on the transaction through the electronic registration system sponsored by Teranet.
Most problems arise because either the Buyer or the Seller or their respective advisors do not know the rules.
Brian Madigan LL.B., Broker