What happens on closing day when you buy a home in Ontario

The short answer

Closing day in Ontario is the day the home legally becomes yours. CMHC describes it in three moves. Your lender provides the mortgage money to your lawyer. You provide the rest of the purchase price and your closing costs. Your lawyer then pays the seller, registers the home in your name and gives you the deed and the keys.

For a first-time buyer in Markham, most of that happens out of sight. The two lawyers exchange money and documents with each other and the transfer is registered electronically. Your part is mostly done in the days before: signing, sending funds and arranging insurance. This post walks through the day in order so you know what is happening and what you are waiting for.

It explains how the process generally works. It is not legal advice, so your own lawyer’s instructions come first.

How the closing date is chosen

The closing date is set in your agreement of purchase and sale. CMHC’s newcomer guide says it is usually 30 to 90 days from the date of the agreement. LawPRO’s buying and selling guide adds that it must be a business day when the government registry is open, so weekends and holidays are out.

The same guide points out that the 1st of the month, the middle and end of the month and Fridays are very busy days for everyone involved in a real estate transaction. If you have flexibility, a quieter weekday can make the day less rushed. RECO’s buyer checklist raises a related point: have a plan in case your closing date does not line up with the day you need to leave your current home.

What you do in the week before closing

Most of a smooth closing is decided before the day itself.

1. Meet your lawyer and sign. Your lawyer prepares the documents for the purchase and your mortgage. LawPRO’s guide says the buyer’s lawyer also runs title and off-title searches and other inquiries to confirm you will get what you contracted for.
2. Send your funds. You provide your lawyer with all the money needed to close other than the lender’s funds. That is the balance of your down payment plus your closing costs. CMHC says this is usually a certified cheque. LawPRO’s guide also mentions bank drafts and wire transfers. Your lawyer will tell you the method and the deadline.
3. Put home insurance in place. CMHC is direct about this: property insurance must be in place on the day you close the sale. The Financial Consumer Agency of Canada explains that a mortgaged home’s policy usually names the lender in a loss payee clause.
4. Book utilities in your name. LawPRO’s guide says buyers should contact the utilities and service providers themselves to register and set up billing.
5. Do the pre-closing visit if your agreement allows one. See the section below.

If any of these is late, the closing can be late, so ask your lawyer for their deadlines early.

What happens on the day itself

Here is the sequence, drawn from CMHC and LawPRO.

Step	Who does it	What it means for you
Lender advances the mortgage	Your lender, to your lawyer	The borrowed part of the price is ready
Funds sent to the seller’s side	Your lawyer	The purchase price, less your deposit, is paid
Deposit applied	Held in trust until closing	Your deposit counts toward the price
Transfer registered	Your lawyer, electronically	The home is now registered in your name
Land transfer tax paid	Your lawyer, at registration	Paid from the funds you sent
Keys released	Seller’s side to your lawyer, then to you	You can move in

A few details are worth knowing.

The 6:00 p.m. deadline. LawPRO’s guide says the standard agreement gives the seller until 6:00 p.m. on the day of closing. The lawyers have to deliver the keys, money and documents and register the transfer, commonly called the deed, within that day. Plan your move on the assumption that the keys could arrive late in the afternoon.

Registration is electronic. Ontario’s land registry is run through an electronic system that only authorized users can register in. ServiceOntario then reviews and certifies the registration and updates the title. You do not need to attend a registry office.

Land transfer tax is paid on registration. Ontario land transfer tax is payable when the transfer is registered. If you qualify as a first-time buyer, the refund of up to $4,000 can be claimed in the electronic land transfer tax affidavit at the same time. Ontario’s refund page says you must occupy the home as your principal residence within nine months of the transfer. LawPRO’s guide notes that Toronto is the only Ontario municipality with its own land transfer tax, so a Markham buyer pays only the provincial tax.

Undertakings. LawPRO’s guide explains that once money and keys change hands, the deal is treated as complete. That is why the lawyers exchange undertakings on closing, which are written promises to deal with anything left over afterwards, such as readjusting an amount one side should have paid.

The statement of adjustments

Your lawyer will send you a statement of adjustments before closing. It shows the purchase price, your deposit and the amounts that are split between you and the seller.

LawPRO’s guide describes the property tax split this way: the seller is responsible from January 1 to the day before closing and the buyer from the closing date onward. If the seller has already paid more than their share for the year, you reimburse them on closing. CMHC describes these adjustments as reimbursing the seller for amounts already paid, such as property taxes or filling an oil tank.

Rental equipment such as a furnace or water heater should be named in your agreement. LawPRO notes that this lets you decide whether to take over the rental contract.

Our post on closing costs for Markham buyers covers every one-time cost in detail. For the tax itself, see how property tax works on a Markham home.

The pre-closing visit

If your agreement allows a visit before closing, RECO’s guidance on pre-closing visits suggests using the visit to check that:

• the home is in the same condition as when you last saw it
• appliances and systems work
• no fixtures included in the agreement have been removed
• any repairs the seller agreed to have been done

RECO also notes that until closing, the property still belongs to the seller. Visits are usually open only to the buyer and their agent. Bringing a contractor, designer, inspector or family member needs the seller’s permission first.

On keys: RECO’s rules say an agent must not give the lockbox code to anyone, including the buyer, without the seller’s express written consent. Until the lawyers confirm the deal has closed, expect to wait.

If something is wrong at the visit, tell your agent and your lawyer immediately, before closing. It is much harder to raise afterwards.

After you get the keys in Markham

A few Markham-specific steps follow closing.

• Property tax account. The City of Markham has an ownership change form for telling its tax department about a new owner. Ask your lawyer whether they have already notified the City, then confirm the next bill will come to you.
• New build supplementary bill. If you bought a newly built home, the City says owners of new homes receive a supplementary tax bill based on the assessed value at the occupancy (closing) date. Budget for it.
• Water and utilities. Water and wastewater are billed by the City of Markham. If you have questions about your account, the City’s Waterworks Department can be reached at [email protected].
• Your refund. If you did not claim the land transfer tax refund at registration, Ontario allows you to apply within 18 months after registration.

For the bigger picture on buying your first home here, from the down payment to the stress test, read our first time home buyer guide for Markham and the mortgage stress test explained. The buyers page sets out how we work with buyers.

A closing day checklist

1. Confirm the closing date and ask your lawyer when they need your funds.
2. Send the balance of the down payment and closing costs by the method your lawyer asks for.
3. Put home insurance in place for the closing date and send proof to your lender or lawyer.
4. Book utilities, internet and movers with room for a late afternoon key release.
5. Do your pre-closing visit if your agreement allows it and report problems at once.
6. Keep your phone on during the day. Your lawyer will call when the deal has closed.
7. After closing, confirm the City of Markham has your ownership and mailing details.

If you are buying your first home in Markham and want help planning the timing, contact us and our team will walk you through it.