A real estate closing is supposed to be the final step in a purchase or sale, but legal issues can sometimes delay the transaction or make closing more complicated than expected. Common real estate closing problems in Ontario can involve title, financing, documents, property conditions, or disagreements about what the parties agreed to do before closing.
Some issues can be resolved quickly. Others may require an extension, negotiation, or legal action. Knowing what can go wrong helps buyers and sellers recognize problems early and avoid last-minute surprises.
Title Problems Can Hold Up a Closing
Before closing, the buyer’s lawyer reviews title to confirm that the seller can transfer ownership as required by the Agreement of Purchase and Sale.
Problems may include:
- an old mortgage that has not been discharged
- liens registered against the property
- errors in the registered ownership
- easements or rights-of-way
- boundary or encroachment concerns
- other registrations affecting title
Some title issues can be addressed through documents, undertakings, title insurance, or corrections before closing. More complicated problems may take longer to resolve.
Title concerns are among the real estate closing problems Ontario buyers and sellers should address as early as possible.
Financing Problems May Appear Late in the Transaction
A mortgage pre-approval does not always guarantee that funds will be available on closing day.
A lender may raise concerns after reviewing the property appraisal, the buyer’s finances, or new information about the transaction. The lender may also require additional documents or conditions to be satisfied before advancing funds.
If financing is delayed or withdrawn after a purchase agreement has become firm, the buyer may still be legally required to complete the transaction.
Buyers should keep in contact with their lender and avoid making major financial changes before closing without understanding how they may affect mortgage approval.
Unfulfilled Terms in the Purchase Agreement Can Cause Disputes
The Agreement of Purchase and Sale may require the seller or buyer to complete certain steps before closing.
For example, the agreement may address repairs, vacant possession, included fixtures or appliances, removal of belongings, tenancy issues, or delivery of documents.
If one party believes these obligations have not been met, a dispute may arise shortly before closing.
The wording of the agreement becomes especially important when deciding whether an issue must be corrected before the transaction can proceed.
Tenants and Vacant Possession Can Create Timing Problems
A property with tenants can create additional complications if the buyer expects to move in after closing.
A seller cannot simply remove a tenant because the property has been sold. Ontario’s residential tenancy rules must be followed, and the timing of that process may not match the scheduled closing date.
If the seller has promised vacant possession but the tenant remains in the property, the seller may have difficulty meeting their contractual obligations.
This is another example of how real estate closing problems in Ontario can involve more than the transfer of money and title.
Last-Minute Document or Closing Issues
Closings also depend on documents and funds being available at the right time.
Problems can arise if identification, mortgage instructions, insurance information, corporate documents, closing funds, or signed paperwork are missing or delayed.
If a corporation is buying or selling the property, additional corporate records or signing authority may also need to be confirmed.
Key Considerations
When a closing problem appears, timing matters. Buyers and sellers should contact their lawyer as soon as they become aware of an issue rather than waiting until closing day.
Depending on the circumstances, the parties may be able to correct the problem, negotiate new terms, or agree to extend the closing date. Any extension or change to the agreement should be properly documented.
Conclusion
Many real estate closing problems in Ontario can be resolved, but the available options depend on the agreement, the nature of the issue, and how quickly it is addressed. Early communication with your lawyer, lender, and other professionals involved in the transaction can help prevent a manageable issue from becoming a failed closing.
Closing problems are often easier to manage when they are identified and addressed before the scheduled closing date.
If you have questions about a closing issue or need advice about a real estate transaction, contact us or speak with Samantha Machado at 905-798-5770.
For further assistance, review the firm’s Real Estate Law services or read Beyond the Standard Closing: A Guide to Real Estate Transactions in Ontario.
Quick FAQ
The parties may agree to extend the closing date while the issue is addressed. If no agreement can be reached, the consequences will depend on the purchase agreement and which party is responsible for the problem.
Yes. Some title issues must be corrected or otherwise addressed before ownership can be transferred. Depending on the problem, a lawyer may consider options such as correcting the registration, obtaining documents, or using title insurance.
Potentially. If the Agreement of Purchase and Sale is firm, a financing problem does not necessarily release the buyer from the obligation to close. Buyers facing a financing issue should speak with their lender and lawyer immediately.
