Closing day is the finish line of a process that probably felt very long. Here is what to expect in the final stretch — and how to make sure nothing gets in the way of getting your keys.
Buying your first home is one of the most significant financial commitments you will ever make, and the closing process is where everything comes together legally and financially. For many first-time buyers, the weeks leading up to closing are a mix of excitement and anxiety, largely because the process involves unfamiliar documents, terminology, and deadlines that nobody explained when you signed the Agreement of Purchase and Sale.
This guide walks you through everything that happens between conditional acceptance and closing day in Ontario, what your real estate lawyer needs from you and when, what closing costs to budget for, and what to do once the transaction is complete. The goal is to make the process feel manageable, because with the right preparation, it genuinely is.
Note this guide reflects the process when purchasing a resale home. If buying a home from a builder, the process, while quite similar, can be different in some important ways.
What Happens After You Remove Conditions
Once you have waived or satisfied the conditions in your Agreement of Purchase and Sale, your transaction becomes firm. At that point, both you and the seller are legally bound to complete the purchase on the agreed closing date. The deposit you paid when the offer was accepted is held in trust by the listing brokerage until closing, at which point it is applied to the purchase price.
Your real estate lawyer’s involvement begins in earnest once the transaction is firm. Your agent will send them a copy of the fully executed Agreement of Purchase and Sale, and your lawyer will begin the legal work that needs to be completed before closing day. The sooner you contact your lawyer after going firm, the more time everyone has to address anything that comes up.
What Your Lawyer Needs From You
Your real estate lawyer will require a number of things from you before they can complete the closing. Being organized about providing them promptly will make the process smoother and reduce last-minute stress. Here is what to expect:
Mortgage Instructions
Once your mortgage is approved and finalized, your lender will send mortgage instructions directly to your lawyer. These are the legal and financial instructions governing the mortgage being registered on title. Your lawyer reviews these instructions, prepares the mortgage documents, and ensures the conditions your lender has imposed are satisfied before funds are advanced. You will be asked to review and sign the mortgage documents, usually a few days before closing.
Identification
Your lawyer is required by law to verify your identity before closing. Bring two pieces of government-issued identification, one of which must include a photograph. A driver’s licence and passport are the most commonly used combination. If you are purchasing jointly with a partner or spouse, both purchasers need to provide identification.
Closing Funds
The balance of the purchase price, less the deposit already paid and the mortgage proceeds your lender is advancing, must be delivered to your lawyer’s trust account before closing. Your lawyer will provide you with a final figure once the statement of adjustments is prepared, usually a few days before closing. This amount must be delivered by certified cheque or bank draft, or by wire transfer directly to the trust account. Personal cheques are not accepted. Give yourself enough time to arrange this with your bank, as wire transfers and certified instruments can take a business day to process.
Additional Information
Your lawyer may also ask for your Social Insurance Number for land transfer tax reporting purposes, contact information for your home insurance broker (your lender will require proof of insurance before advancing mortgage funds), and details about any conditions or arrangements in your Agreement of Purchase and Sale that require follow-up.
Understanding the Statement of Adjustments
The statement of adjustments is one of the most important documents in your closing package, and one of the least explained. It is a financial summary that calculates the final amount you owe on closing day, taking into account the purchase price, the deposit you have already paid, the mortgage your lender is advancing, and a series of financial adjustments between you and the seller.
Adjustments are made for items that have been prepaid or are owing as of the closing date. The most common adjustments include:
- Property taxes: if the seller has prepaid property taxes beyond the closing date, you reimburse them for that period. If taxes are outstanding, the seller pays you a credit for the period up to closing.
- Utility and maintenance fees: if the property is a condominium, prepaid maintenance fees are adjusted in the same way as property taxes.
- Fuel oil or propane: if there is a tank on the property, the seller is typically credited for the value of the fuel remaining at closing.
- Other prepaid items: depending on the property, other adjustments may apply.
The net result of all these adjustments, combined with the purchase price, the deposit credit, and the mortgage advance, produces the final cash-to-close figure: the amount you need to deliver to your lawyer. Review the statement of adjustments carefully when your lawyer sends it, and ask questions if anything is unclear. It is a straightforward document once you understand its structure.
If you are buying a new construction from a builder, the statement of adjustments will be substantially different. New build agreements typically permit the builder to adjust for a variety of costs they incurred in building the property, including development fees, tarion enrollment, installing utility meters, legal fees, and a variety of other expenses. Together these adjustments may total up to $20,000, possibly more. If closing on a new build it is important to anticipate and budget for these additional closing costs.
Closing Costs: What to Budget For
One of the most common surprises for first-time buyers is the total cost of closing beyond the down payment. These are the costs you should budget for:
Land Transfer Tax
Land transfer tax (LTT) is a provincial tax payable on the purchase of any property in Ontario. It is calculated as a percentage of the purchase price on a tiered basis. For a purchase in the City of Toronto, a second municipal land transfer tax is also payable on top of the provincial amount. Your lawyer will calculate the exact amount owing based on your purchase price.
First-Time Home Buyer Land Transfer Tax Rebate
If you are a first-time buyer and you have never owned an eligible home, or an interest in an eligible home, anywhere in the world, you may qualify for a rebate on the provincial land transfer tax of up to $4,000, which effectively eliminates the tax entirely on purchases up to approximately $368,000 and reduces it on higher-priced properties. Toronto residents may also qualify for a municipal rebate of up to $4,475.
To qualify for the provincial rebate, you must be at least 18 years old, you must be a Canadian citizen or permanent resident, you must occupy the home as your principal residence within nine months of closing, and you must never have owned an eligible home, or an interest in an eligible home, anywhere in the world. If you are purchasing jointly with a spouse who owned a home while married to you, no rebate is available. If you are purchasing with a co-purchaser who is not a first-time buyer, you may still qualify for a rebate proportionate to your ownership share. Your lawyer will confirm your eligibility and apply for the rebate on your behalf at closing.
Legal Fees
Your real estate lawyer’s fees cover the legal work involved in the transaction: title search and due diligence, mortgage document review and execution, closing coordination, registration of title and the mortgage, and disbursements for searches and registrations. Ask your lawyer for a clear estimate of total fees and disbursements early in the process so there are no surprises.
Title Insurance
Title insurance is a one-time premium paid to a third-party title insurer at closing that protects you and your lender against title defects, survey issues, and certain other risks that may not be visible in a title search for the duration of your ownership. Your lawyer will advise you on the appropriate coverage and arrange it on your behalf. The cost varies based on the purchase price but is typically modest relative to the protection it provides.
Title insurance has been industry standard in Ontario for over 20 years and it is extremely unusual for a transaction to close without title insurance. Besides protecting you for the duration of your home ownership against mortgage fraud, pre-existing work orders, tax arrears, and encroachments, title insurance reduces the scope of work your lawyer has to do on the purchase transaction, and therefore your legal fees. Prior to title insurance become standard, legal fees on a residential purchase were significantly greater – if you insist on closing without title insurance, your lawyer may refuse to act, or charge substantially more in legal fees to address the additional legal work required.
Home Insurance
Your lender will require proof of home insurance as a condition of advancing the mortgage. Arrange your policy before closing and have your broker send confirmation directly to your lawyer. The cost varies considerably depending on the property type, location, and coverage selected.
If purchasing a condominium, the condominium corporation’s insurance will likely be sufficient, however this insurance will not cover the floors, your personal property, or protect you from liability in the event someone is hurt in your home. Most insurers offer a policy that compliments the condominiums insurance and fills in the “gaps”.
Adjustments Owing
As described in the statement of adjustments section above, you may owe the seller reimbursement for prepaid property taxes or other items. These are typically modest amounts but should be factored into your closing budget. As noted above, on new construction builds the adjustments can be substantially more.
The Days Before Closing
In the final days before closing, your lawyer is coordinating a significant amount of activity behind the scenes: confirming mortgage instructions from your lender, preparing the transfer of title and the mortgage electronically, confirming receipt of funds, and ensuring that all conditions have been satisfied.
A few things you can do to help the process go smoothly:
- Confirm your closing funds are ready and deliverable in the required form. Do not leave this to the last minute.
- Make sure your home insurance is in place and your broker has provided confirmation to your lawyer.
- Stay in contact with your lawyer and respond promptly to any requests for additional information or documents.
- Complete your final walkthrough of the property before closing to confirm it is in the condition described in the Agreement of Purchase and Sale and that all agreed chattels are present. If you notice any issues with the Property or conditions not satisfied, notify your lawyer as soon as possible.
Your lawyer will arrange to meet with you either virtually or in person to go over the closing documents and explain them to you and answer any questions you may have. If you are meeting virtually, your lawyer will be required to verify your identity using a 3rd party ID verification program.
Closing Day: What Actually Happens
On closing day, your real estate lawyer registers the transfer of title and the mortgage electronically through Ontario’s land registry system. Once registration is confirmed and funds have been exchanged between the lawyers, you are the legal owner of the property.
In most cases, you do not need to be physically present for closing. The legal work is done by your lawyer on your behalf, using documents you signed in advance. What you will need is a way to collect the keys, which are typically left at the property in a lockbox. Your lawyer will let you know as soon as closing has occurred..
Closings can happen at various points during the business day. If you are also selling a property on the same day, the two closings need to be coordinated carefully, as the proceeds from your sale are often the source of funds for your purchase. Your lawyer will manage this coordination, but it is worth understanding that in chain transactions, there can be timing dependencies beyond anyone’s control.
Where possible, it is recommended that you do not schedule work on the property or plan to move until at least the next day. While rare, closing can be delayed through no fault of the purchaser. Typically delays in closing are no more than one business day.
After Closing: What to Keep and What to Do
Once closing is complete, your lawyer will provide you with a reporting letter summarizing the transaction, along with copies of the key documents: the registered transfer, the mortgage, the title insurance policy, and the statement of adjustments. Keep these documents in a safe place. You will need them for future reference, including when you eventually sell the property. Your lawyer will also notify the city to switch over the property tax to your name.
A few practical steps to take in the days following closing:
- Update your address with Canada Post, your bank, the CRA, your employer, and any other relevant institutions.
- Arrange utility accounts in your name if they were previously in the seller’s name.
- Locate the property’s main water shutoff and electrical panel, and familiarize yourself with the systems in the home.
- Review your home insurance policy to confirm the coverage reflects the actual replacement cost of the property and its contents.
- Confirm all chattels and fixtures are in working order and notify your lawyer immediately if there are any issues.
- If purchasing a condominium, you will need to notify the condominium management that you are the new owner, and also make arrangements to book the elevator for moving into the property (if not done already).
Buying Your First Home in Ontario? We Are Here to Help.
At Goldstein & Grubner LLP, our real estate lawyers work with first-time buyers across Ontario to make the closing process clear, organized, and as stress-free as possible. We take the time to explain what is happening, answer your questions, and ensure that the most significant purchase of your life is handled with the care it deserves.
Contact our office to speak with a member of our real estate team.
Goldstein & Grubner LLP
100 Cowdray Court, Suite 100, Toronto, ON M1S 5C8
(416) 292-0414 | info@gglawyers.ca
This article is intended for informational purposes only and does not constitute legal advice. Closing processes and costs vary depending on the specific transaction. For advice specific to your purchase, please consult a qualified real estate lawyer.
