Does a minute matter in a real estate deal? – Moneyville.ca

The standard Ontario real estate contract says deals must be concluded no later than 6 p.m. on the day of closing. But if you’re a minute late, will that kill the deal?

On Friday, Nov. 30, 2007, lawyer Michael Gatien went to the Cornwall, Ont., registry office to register a deed on behalf of his client, who had just bought a plaza. He had wired the purchase funds to the trust account of the seller’s lawyer just after 4 p.m. and received the final go-ahead to register the deed at 4:53 p.m. But when he tried to register the deed, he missed the 5 p.m. deadline by one minute. The registration system would not accept anything after 5 p.m.

The seller then tried to cancel the deal, claiming the deed was not registered in time. The buyer’s lawyer argued that since all steps had been taken to close the deal, the deed registration could take place when the registry office reopened on Monday.

The sale had involved difficult negotiations and there were some hard feelings, which all contributed to the seller trying to cancel the deal. It went to court in March 2009 and a judge ruled the seller could not refuse to close.

Normally, real estate deals close when the money has been delivered from the buyer’s lawyer to the seller’s lawyer and title has been transferred to the buyer. Funds are usually sent by wire transfer. The seller’s lawyer releases the deed for transfer on the government computer registry system and the buyer’s lawyer then completes the computer registration.

Why does the standard agreement say that deals can be completed by 6 p.m. if the computers close down at 5 p.m.?

In order for the computer registration process to operate efficiently, lawyers for the buyer and seller sign an agreement that says all the money will be held in escrow until the deed gets registered. In many cases, buyers are waiting for their own sale deal to close in order to get the money to close their purchase. As a result, there is often not enough time to get the money wired into the trust account and to complete the electronic registration before 5 p.m. This is especially true at the end of the month, when many deals are closing on the same day.

As a result, in many cases, the deal closes after 5 p.m. “in escrow.” The lawyers agree that even though the deed is not registered, the buyers can move into the home, the seller’s lawyer will hold the money overnight in their trust account and the deed will be registered the next morning. This escrow agreement is typically completed before 6 p.m.

Can a seller get out of the deal if the money is not delivered to their lawyer before 5 p.m.?

While this did not occur in the above case, a judge will also look at the local practice of how real estate deals are conducted.

In another case, a buyer’s lawyer was late getting the cheque to the seller’s lawyer. The seller tried to cancel the deal. The court found that the seller contributed to the deal closing late by delaying the final closing visit of the buyer and not giving the buyer’s lawyer instructions as to how to make the cheques payable until late in the afternoon.

Another question that arises on closing is when does a seller have to let the buyer into the house?

This should happen as soon as title registration takes place and not later than 6 p.m. if it is an escrow arrangement. In one case, a buyer’s movers sat in the driveway from 6 p.m. on the day of closing until 9 p.m., waiting for the sellers to leave. It cost the sellers more than $1,000 to pay for the buyer’s additional moving costs, since they were late leaving the home.

Sellers also cannot leave junk in the house on closing. If they do, the buyer can sue to pay for the cost of removing it.

Sellers, vacate your home early on the date of closing and take everything with you. If you need more time, make changes in the contract at the time you sell it.

Buyers and sellers, do not try to change your mind and cancel a deal because a deed cannot be registered in time. Let your lawyers complete the escrow and move on.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com



Categories: Tips & Advice

Tags: ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: